As the sales figures are assessed post-Christmas, a number of retailers have done well but for others the sums have failed to add up.
That’s what I was expecting and, sadly but unsurprisingly, two high-profile administrations so far this year have proved me right.
Clearly, for some retailers, there are specific, and very relevant, issues about changing product technology and a revolution in the way customers choose to shop. That’s especially true for things like music and film but the troubles of these big names are also a stark illustration of the basic truth.
Consumer demand is weak and people are very price conscious. Costs of doing business are still rising. For some that’s a fatal squeeze that’s adding to shop vacancy numbers and compounding other long standing difficulties faced by many of our high streets.
The BRC’s December Retail Sales Monitor is always the first concrete indication of how the whole sector fared during its most crucial trading period, and the best starting point for mapping prospects and priorities for the year ahead.
Our figures showed spending down in real terms compared with 2011. Really a flat end to a flat year. Throughout 2012, household incomes remained under pressure and there was a real lack of confidence about jobs and the wider economy. The result was reluctance to commit to spending, especially on anything that wasn’t an immediate need.
Sales haven’t collapsed but the pressure on retailers is coming from adapting to economic conditions that consistently deliver minimal year-on-year sales growth. There is only so much cost cutting and new efficiency retailers can achieve.
As we look into 2013, utility prices are likely to edge up inflation and people are keen to continue paying down their debt, which means the amount of money they have in their pockets will remain under pressure. So this year will be characterised by more of the same and there’s every sign that the ongoing endurance test for retailers of trading in a largely no-growth environment will continue.
All the more important then that we succeed in convincing the Government of retail’s vital role in supporting investment, job creation and recovery, and that the Government can, and should, help the sector to maximise that.
For example, while we were pleased that George Osborne scrapped the fuel duty rise that was due on January 1 – welcome help for customers and businesses - he has yet to heed our call to freeze business rates.
Rates have risen by over ten per cent in the last two years, and they’re set to rise by a further 2.6% in April, adding £175m to retailers’ costs. Retail employs nearly three million people. It’s been an engine of growth, even through the recessions, but the recent roll call of retail tragedy shows the sector cannot be taken for granted.
My message to the Chancellor today is: retailers are already paying £19bn a year via the four main business taxes. It’s not too late to cancel that business rates increase.
Helen Dickinson is director general of the British Retail Consortium.
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