Retailers reveal the business resolutions that they will be sticking to during the good and bad of 2012. By Gemma Goldfingle and Alex Lawson.
Many retailers had a pretty grisly 2011 and will hope for an improvement in trading conditions in 2012. Sadly, as January dawns, it looks as if this year is likely to bring more of the same.
At the end of last year, consumer confidence was bumping along at a level close to the lows of the 1990 and 2009 recessions, and the expectation among industry watchers was that shopper sentiment and spending power will remain fragile this year.
The new year brings big public events and festivities, such as the Olympics and the Queen’s Diamond Jubilee, but their impact on retail is uncertain.
At the very least they are likely to lighten the downbeat mood with a dose of the feel-good factor. Sainsbury’s boss Justin King, whose business is sponsoring the Paralympics, is among those convinced that the sports spectaculars and similar national events bring a great opportunity to lighten gloomy sentiment.
However, some retailers fear the Olympics in particular is unlikely to result in much extra spending and are concerned at the extent of associated disruption, such as longer travelling times for staff into central London as well as distribution worries.
Industry observers believe that, in general, retail conditions will remain torrid. Seymour Pierce analyst Freddie George says he does not expect a post-Christmas sales rebound of the sort that happened after the difficulties of 2008.
He says: “Despite the sector passing the anniversary of the last 2.5% VAT hike to 20% on January 4 and the expectation of reduced inflation from falling commodity prices, we still expect a difficult 2012 for the industry as real disposable income remains under pressure, credit vanishes and job security is far from clear.”
Retail research house Verdict also takes a pessimistic view of what the new year holds for many retailers. A study undertaken by Verdict and technology firm SAS forecasts spending growth in 2012 of 1.2% – the third lowest rate of growth in four decades.
Retailers in home-related sectors such as electricals, furniture and DIY are expected to be among the worst hit, losing spend of £900m year on year and contributing to a fall in non-food spending since the start of the recession of £9.5bn.
Along with food and health and beauty, fashion sales are expected to rise this year – but only by the equivalent of £14 per head.
Verdict practice leader Maureen Hinton says: “Clothing being such a fragmented market, few retailers will benefit from this and value retailers that are dependent on volume sales will find it even more challenging, despite the predominance of cash-strapped consumers.”
She says young fashion retailers will no longer have the advantage of a fairly resilient target market. “Young people are feeling the pinch with fewer job prospects, high further education fees and a broke bank of mum and dad.”
Retailers cannot change the big picture, so will be concerned primarily to ensure their own businesses deliver as good a performance as possible.
Here, some of retail’s top leaders reveal their new year’s business resolutions and thoughts about how 2012 is likely to play out.
Justin King - Sainsbury’s chief executive
“2012 will be another tough year for the economy and will mean continued pressure and uncertainty for customers.
“We expect customers to continue to savvy shop and retailers will be as competitive as ever fighting for their hard-earned pound. That is why we will continue with our commitment to help our customers Live Well For Less.
“Despite this caution, there are also several reasons to be cheerful next year. The Queen’s Diamond Jubilee, followed by the London 2012 Olympics and Paralympics, are all once-in-a-lifetime opportunities for us to celebrate the best of Britain.
“At the same time we will continue our expansion plans, investing in our stores and our colleagues as we create more jobs and opportunities across the country.”
Miriam Lahage - eBay global head of fashion
“My retail resolutions will help achieve my aim of attracting more great brands to eBay to boost our thriving fashion offering.
“Everything we do is focused on giving our customers the ultimate shopping experience and the opportunity to choose from a vast selection of products from the brands they know and love, at great prices.
“I want to make defining steps to evolve consumer perceptions of eBay and raise awareness that it is a fantastic place to shop for quality brands at great prices. To encourage this appraisal, 2012 will see eBay create and deliver unique, engaging campaigns that have consumers at their heart.
“We’ll continue to build on our leadership in m-commerce; pushing barriers and seizing the mobile retail opportunity to deliver the ultimate consumer shopping experience.”
David Barford - John Lewis director of selling operations
“Our expectation for 2012 is that, initially at least, the retail market will see very little – if any – growth overall. We know that consumer spending is still going to be tight, so improvements in our own sales and profit will rely on winning market share from competitors.
“You can expect John Lewis to focus very clearly on ensuring customers understand how a shopping experience at John Lewis offers something different and more valuable than anywhere else.
“Looking at the wider picture, the UK has an opportunity during the London Olympics to prove that we can pull off a world-class event that will showcase the best of our creativity and sporting talent, while putting a spotlight on Britain that will drive economic growth.
“Along with the Queen’s Diamond Jubilee, I hope that the Olympic and Paralympic Games will create celebratory news. John Lewis will continue to focus on staying true to our trading principles and close to our customer.”
Dalton Philips - Morrisons chief executive
“Consumer confidence is at an all-time low, customers are feeling the pinch and unemployment is rising.
“That’s a pretty bad way to start 2012 but I am an optimist and, as the nation celebrates the Euro 2012 football, the Diamond Jubilee and the Olympics, things will get better.
“Nonetheless, customers will continue to spend very carefully this year and we expect the very professional approach to shopping that we noticed in 2011 to continue well beyond 2012.”
Peter Marks - Co-operative Group chief executive
“This time last year I forecast that there was no end in sight to the worst economic recession I have experienced in my long career.
“I regret to say, that as we enter 2012, little has changed to give me hope of an improvement in the foreseeable future. Consumer confidence is at an all-time low and this is impacting on businesses large and small.
“That said, I am pleased to report that we are in good shape thanks to four years of significant investment.
It is at times like these that I think the co-operative business model really does come into its own.
“The strength of our business allows us to plan for the future and consider what lies beyond the economic turmoil of today. So in the year ahead, which has appropriately been named the International Year of Co-operatives by the United Nations, my aim is to consolidate and build on the progress we have made by investing further in our business, creating scale where it is required, so that when the country emerges from this downturn the Co-operative is stronger than ever.”
Jacqueline Gold - Ann Summers chief executive
“My retail resolution for 2012 is to listen to our customers more than we ever have before.
“Customers will become increasingly aware of what they are spending and only make purchases that they see real value from.
“I will be listening closely to exactly what our customers want and making sure we provide this.
“I will also be making sure we offer innovative products that cement our position as one of the high street’s most unique retailers that has a product offer like no other.
“For all retailers a point of difference will be more important than ever in 2012.”
Andy Clarke - Asda president and chief executive
“Like most people, I will head into 2012 with the greatest intentions about gym attendance and healthy living.
Like most of us, I will probably have lost willpower by mid-February.
“But one thing I will remain committed to is doing the right thing by our customers – by working in our communities, creating jobs and giving our customers the lowest possible prices. And now I have said it in print I will make sure I go for the odd run now and again.”
Michael Sharp - Debenhams chief executive
“Further developing our multichannel business will be one of my main priorities – from our online and mobile offering to our investment in the British high street by giving 20 of our stores a facelift and also opening a new store in Chesterfield in September.
“This rejuvenation programme will mean more customers than ever before will have access to the UK’s top name beauty brands and our exclusive and ever-growing Designers at Debenhams offer.
“Clearly value for money will be at the forefront of our customers’ minds, and our job as a retailer is to ease this burden. Our commitment to deliver this through our well-recognised strong sales and promotions will be evident throughout the year.”
Darcy Willson-Rymer - Clinton Cards chief executive
“I’m not actually all that keen on making new year’s resolutions as that feels too temporary for me.
“However, I do have some very firm goals for 2012, which are to focus on putting our customers and store colleagues at the heart of our decision-making.
“I will do whatever I can to serve Clinton Cards colleagues, earn their trust and be the leader they deserve.”