Making sense of the past seven days
Consumers are poorer today than they have been in the past five years.

That is the shocking finding of Ernst & Young's latest survey of disposable spend, which we report in today's issue.

The study confirms what store chiefs have feared for some months and will cement the air of nervousness that has been growing in retail boardrooms. Interest rate rises, climbing mortgage bills and higher taxes are taking their toll, denting consumer confidence and having a concrete effect on people's purses.

The effects have already been obvious in the performance of some big-ticket retailers, which are the first to reflect a slowdown typically. But shoppers are reining in spending generally, as the slowdown of Tesco's non-food sales shows.

Tesco, Asda and Morrisons have all launched high-profile price offensives and the price war atmosphere is likely to spread to other retail sectors struggling under the weight of price deflation. Panmure Dorgan analyst Philip Dorgan has even raised the terrifying prospect that the big grocers will account for the entirety of retail sales growth for the next three years.

The change in conditions is likely to accentuate the trend seen last Christmas - a polarisation between the weak and the strong. Big retailers will reap the benefits of defensive qualities such as scale and reputation, while some smaller specialists will be squeezed until the pips squeak.

At times like this, traditional retail values such as product quality, value and service come into their own and become genuine differentiators. It looks as if it's time to visit the armoury and get ready for action.

Battle for Dobbies

Sir Tom Hunter's ongoing battle against Tesco to control - or at least influence - the future of garden centre group Dobbies has made good entertainment.

The entrepreneur has certainly wrong-footed the big grocer, forcing it to change the terms of its offer for Dobbies and has manoeuvred skilfully. He has prompted unadulterated delight among other retailers, which have laughed to see Tesco forced to react, rather than dictate. Whether he eventually wins or loses, he has shown that Tesco doesn't always get its own way. That will provide inspiration for many others in the industry.