The chairmen of some of the UK’s largest retailers are cautiously optimistic about their companies’ growth prospects despite accepting a low growth economy as the “new normal”.
A survey by executive search firm Korn/Ferry Whitehead Mann showed that a large majority believed that their businesses would outperform the market in the coming year.
In the 2012 survey, 75% were pessimistic or very pessimistic about the outlook for the economy in the following 12 months. This year the proportion has shrunk to 50%.
Last year none of those surveyed looked forward to the coming year with any optimism but this year 15% said that they were optimistic about the future.
Majestic Wines chairman Phil Wrigley said: “[Consumers] are thinking, ‘we’ve done a damn good job of surviving four horrible years. If it stays the same, I can cope. It’s not comfortable, but I can cope.’”
Alliance Boots’ executive chairman Stefano Pessina adds: “Consumers have accepted the reality of the situation and they will continue to be prudent.”
Just 21% of chairmen believe the UK economy will grow in the next year but 47% think that growth will return in 2014.
DFS chairman Richard Baker said: “The consumer is over-borrowed, the banks are overborrowed and the Government is hopelessly over-borrowed.”
Fat Face Chairman Alan Giles said that “these quasi-recessionary conditions are the new normal”.
However, despite the highly competitive retail environment, the chairmen had higher levels of confidence in their own companies - 72% believed their firm would beat the market in 2013 and nearly half expected to invest more in the next 12 months than they did in the previous year.
The chairmen were, however, frustrated that large investment projects are getting caught up in bureaucracy and take too long to progress.
The Co-operative Group’s chairman Len Wardle said: “Other countries seem to find a way through, why do we lack resolve?”
John Lewis Partnership chairman Charlie Mayfield said: “The question we should be trying to address is not ‘how we fill empty shops?’ but ‘how do we create local vibrant economies.’”
Korn/Ferry head of retail practice Sally Elliott said: “The message from UK board rooms is clear: there are fragile signs of life in the retail sector and the first glimpses of optimism for a while. But very real concerns remain over the prospects for the UK economy and the resilience of consumer sentiment.”
Kingfisher chief executive and BRC chairman Ian Cheshire said: “Having battled the endurance test of a relentlessly low or no-growth environment for several years now, the overriding consideration for retailers in all parts of the sector is the health of the UK economy.”