Business confidence plummeted in the aftermath of last week’s tragicomic general election.
An Institute of Directors survey following the vote found that only one fifth of its members were optimistic about the outlook for the economy over the next 12 months. More than half were pessimistic.
The downbeat mood was not surprising. Business leaders can be just as susceptible as anybody else to the hurricane force of events beyond their control.
But, as seems to be the case with so many polls and surveys these days, the short-term sentiment may not be borne out over time.
“Better than looking at what people think at a given moment, or say that they will do, it’s more useful to look at what they actually do”
Better than looking at what people think at a given moment, or say that they will do, it’s more useful to look at what they actually do.
And the behaviour that matters so far as retailers are concerned is that of the consumer.
There are worrying signals on that front.
The latest footfall data from the BRC and Springboard showed a 1% fall across all locations in May.
The weather and timing of Easter played a part, but slower footfall growth in the evenings perhaps indicated that consumers are less keen on hanging around and eating out. A sign that spending will be more tightly controlled?
That conclusion could also be drawn from the BRC-KPMG Sales Monitor for May.
It showed that amid rising food price inflation, spend on general merchandise – much of which of course is discretionary – edged down like-for-like on a three-month basis.
What can retailers do about the volatile political environment in which they find themselves? Other than make sure their voices are heard in the national debate, absolutely nothing.
Nothing that is, apart from focus on their shoppers.
That mindset, as it has so often in the past, helped fashion specialist Ted Baker post an impressive quarterly sales rise.
Full-year profits should meet expectations. “We are very pleased with customer response… despite the current uncertain macro environment,” the retailer said, attributing its success to “unwavering focus on quality and attention to detail”.
As Ted’s numbers showed, in these turbulent times, making decisions in the interests of the customer is surely the best way to ensure the success of the company.
Boohoo raises the online bar
In our latest annual Retail Power List, the new generation of etailers account for a fifth of the entries, and Amazon founder Jeff Bezos retains the number-one spot.
Among the highest risers are Boohoo joint chief executives Carol Kane and Mahmud Kamani, and last week’s trading update from the online specialist showed why.
In the three-month period reported, Boohoo’s sales rocketed 106%, while active customer numbers soared 146% year on year to 1.6 million.
“Whether such a hefty valuation of Boohoo is justified will become clear in the years to come”
The pace shows no sign of slowing and the recent acquisitions of Pretty Little Thing and US business Nasty Gal should help Boohoo carry on motoring overseas.
AIM-listed Boohoo has, at the time of writing, a market cap of almost £3bn. That compares to main-market-quoted Dixons Carphone’s £3.6bn and Sainsbury’s £5.8bn. And Boohoo only floated three years ago.
Whether such a hefty valuation of Boohoo is justified will become clear in the years to come.
Online now accounts for about 20% of general merchandise retail sales. The direction of travel is clear.
There are some retailers, such as Primark, which are the successful bricks-and-mortar exceptions that prove the rule.
As multichannel retailers battle to win custom in an uncertain environment, the online bar is constantly being raised and they must match the standards set by the new breed of businesses or find convincing ways to differentiate themselves.