Green should not be underestimated
Lots of people have taken malicious pleasure in the downturn of Sir Philip Green's fortunes.

The tycoon is as famous for his brashness as for his audacious deal making and retail nous. Now, the bravado following his failed bid for Marks & Spencer is coming back to haunt him as industry rivals and the media gleefully recall that fighting talk about how he would trounce M&S in a trading war.

The reality has turned out to be rather different as a profits drop at Bhs was followed by another at his flagship Arcadia business. Yesterday, Green revealed that Arcadia's operating profit was down 8 per cent to£300.6 million and no dividend was declared.

But it would be foolish to write off Green, whose retail prowess and financial expertise are among the best in the industry. In the present trading climate, Arcadia's numbers may have been disappointing, but they were certainly not a disaster. From comparative minnows such as Alexon to sector giants such as Next, the story has been the same - the last year has been punishing.

When the going gets tough, the tough get going and they don't come much tougher than Green. He invests so much of himself in his enterprises that he will be more determined than ever to confound his critics and demonstrate his retail wizardry. Green may be famously aggressive, but he's also very prickly about criticism. Used to flattering headlines, no doubt he will be hating the critical ones he's getting at the moment. He will come out of his corner fighting and, as he battles to revive his fortunes, rival retailers are likely to feel the pressure.

Is the Primark effect now being felt in food? We reported in this week's issue on deep discounter Aldi's store opening adjacent to the Arndale centre and the retailer's attempts to woo upmarket shoppers as well as bargain hunters.

There has been a raft of features in broadsheets lately about the excellence of certain Aldi products and apparently the shops have become quite popular with the middle classes. In the same way as consumers now mix Prada fashions with Primark clothing, there seems to be a willingness to pick and mix when food shopping.

Last year, Aldi notched up an astonishing 210 per cent increase in profits at its UK and Ireland division to£43.9 million, so clearly it's doing something right.

Among food retailers there is a conviction that there is definitely room in the market for a hard discount business to be highly successful in the UK. The likelihood is that Tesco and Asda have already pondered specialist chains of their own.

For all the talk about supermarket monopolies, Aldi's financial success and ability to extend its appeal show that competition remains fierce.