Retailing is different. If your store is perceived to be expensive or your products unappealing, shoppers go elsewhere. And, if the economy takes a dip, people shop less. That’s why in these more straitened times, it’s no surprise that retailers’ share prices have taken a hit.
The surprise is the scale of the carnage. DSGi is worth a third of what it was a year ago, Kingfisher’s value has halved in a year and Marks & Spencer is worth 25 per cent less than a week ago.
Even those reporting good news have been hammered. Debenhams turned things around with a respectable like-for-like rise and the shares fell 17 per cent in a day. And spare a thought for Game, set to be the best performing retailer at Christmas for the third year running, yet down 11 per cent the day it announced like-for-likes up more than 30 per cent.
No one could blame investors for taking fright at the basket cases of the sector – the quoted furniture minnows, for example – but the market’s judgment that M&S is now worth less than the 400p Sir Philip Green bid for it is absurd.
M&S fell just 2.2 per cent like-for-like after nine quarters of consecutive growth, in which two thirds of stores have been refurbished, the brand rehabilitated and ranges transformed.
But apparently that doesn’t matter to the herd in the City. Investors shouldn’t be swayed by sensationalist newspaper headlines and unsubstantiated gossip. By doing so, they are doing the retail sector a huge disservice.
Crucial victory on the cards
Coming just days before Christmas, the European Commission’s ruling against MasterCard’s interchange fee – a crucial victory for retailers – didn’t get the attention it deserved. But it was a significant and long-overdue judgment (page 24).
Card schemes play a crucial role in the industry, but in a market where pressure on margins is greater than ever, the costs to retailers need to be transparent and proportionate to the administration involved.