Optimism about the UK’s economic outlook has surged in the past year among retailers, according to a survey of retail chairmen.
The study showed 90% of the chairmen who took part in The Chairmen’s Confidence Index by headhunter firm Korn Ferry Whitehead Mann, said they predicted growth in the coming year.
The index also showed that 73% of chairmen are optimistic about the economic outlook in 2014 – a significant increase from the 15% who declared themselves optimistic last year.
Sir Stuart Rose, chairman of Ocado, Blue Inc and Fat Face, and former executive chairman of Marks & Spencer, said he was “very optimistic.” He added: “The economy has improved. For those retailers that offer value for money, the outlook is good.”
Asos chairman Brian McBride agreed, saying: “Last year I thought it wouldn’t get better or worse. This year I am more optimistic.”
Sainsbury’s chairman David Tyler sounded a note of caution. He said: “The economy is in growth and is stronger than I had anticipated it would be but the general economic backdrop does still remain uncertain for many.”
The index showed that 67% of chairmen believe there is a return to growth, although not everything is rosy just yet. Stefano Pessina, executive chairman of Alliance Boots, summed this up saying: “I struggle to see countries where there is tougher competition than in the UK.”
M&S chairman Robert Swannell said the economy was barely in growth. “Confidence is certainly higher but, with inflation outstripping wages, the same isn’t yet true of consumer spending power,” he said.
Dixons chairman John Allan, meanwhile, said the economy was returning to growth “falteringly and unevenly, yes, but it depends on location. It’s not explosive growth. Wages are rising slower than prices and real incomes are still falling.”
The survey’s respondents also said customer confidence will improve - 70% expect customers to be more optimistic in the coming year, a near threefold improvement on the 24% who predicted greater optimism last year.
Kingfisher chairman Daniel Bernard said: “Customers will be more optimistic – but they will still seek out deals.”
Burberry chairman Sir John Peace added: “Intuitively I expect customers to spend more next year, but it will be interesting to see where they spend it - in shops, online, or on moving house, or on a holiday they have not had for a few years.”
Sir Charlie Mayfield, chairman of the John Lewis Partnership, said the economy needs “a steady hand on the tiller.”
McBride added that the most important area of focus for retailers this year is technology: “The most significant trend is the increase from mobile. These are inexorable trends – if you don’t have a mobile strategy, you won’t be around in two to three years. It’s about email, Twitter, Instagram, Facebook, Google Plus – how you drive customers to your site,” he said.
Sally Elliott, head of the retail practice at Korn Ferry, said the change in sentiment from last year’s survey is striking. She added: “Growing momentum in the economy is clearly translating into a new mood of optimism.
“While concerns over the breadth and sustainability of the recovery remain, the broadly-based nature of this improvement in confidence is likely to have important implications for growth and investment in the sector, the volume of retail sector IPOs and the political environment in the run-up to the UK general election.”