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Two weeks in the UK - 13th March

With an albeit brief appearance of spring over the weekend setting gardeners into life, retailers are hoping that the first shoots of recovery will also begin to emerge soon.

Earlier this week the Organisation for Economic Co-operation and Development (OECD) said its composite leading indicators, a survey designed to anticipate turning points in the economic cycle, had signified stronger but tentative signals of improvement for the year in all major countries with the global position driven by growth in the US and Japan. The measure had previously declined for the previous 10 successive months.

And in the BRC-KPMG Retail Sales Monitor released last week, sales were up 2.3% in February, an improvement on January’s 2.1% rise and driven partly by shoppers stocking up because of the cold.

The BRC’s measure of shop price inflation also recorded its lowest measure for nearly two years with the announcement of the BRC-Nielsen Shop Price Index for February last week showing overall shop price inflation fell to 1.2% last month down from 1.4% in January.

Although the CPI and RPI figures from the Office of National Statistics (ONS) aren’t released until next week the ONS did this week reveal that the changing habits of consumers was now being reflected in its annual revision of the basket of goods and services used to measure inflation with the addition of tablet computers and teenage fiction as well as bundled communication packages. Rather bizarrely the basket now also includes cans of stout, hot oat cereals and takeaway chicken and chips.

But footfall figures for February still showed a caution for hitting the shops. Figures from Ipsos Retail Performance said that store footfall in non-food stores across the UK hit an all-time low last month with the Retail Traffic Index registering a decline of 7.8% in shopper numbers for February against the same month in 2011. It claimed that footfall was also down by 9.3% compared to the previous month in the sharpest January to February fall since 2007.

Dr Tim Denison, director of retail intelligence at Ipsos Retail Performance, said shoppers were beginning to grow numb to promotional activity. “Promotions which retailers used to great effect last year are also beginning to lose their punch in driving footfall into stores. They are simply fading into the everyday fabric of a difficult period for retailing, leaving little else in retailers’ first-aid boxes to nurse shoppers back to health.”

February figures from Experian FootFall also showed a drop for the month – down by 4.8% compared to the same time last year and the largest year on year demise for any month since 2005. It blamed the cold weather for the fall but said that multichannel retailers benefited from shoppers staying indoors.

Talking of cold fronts the fortnight also saw Iceland boss Malcolm Walker finally buying back the remainder of the frozen food retailer he founded, in a deal backed by Lord Kirkham and The Landmark Group. Morrisons and Asda had both been interested in the firm. The retailer also bought seven former Peacocks stores off its administrator as the sell-off of the 153 stores not purchased by Edinburgh Woollen Mill last month continues.

Former Peacocks managing director Tim Bettley was also snapped up – appointed by Morrisons as the retailer’s first commercial director for clothing. He starts at the business next month. The two businesses already had a close working relationship with three standalone Peacocks concessions and 21 stores supplied with kid’s clothing by Peacock’s. The news followed the revelation that the supermarket giant had enjoyed its best year yet with underlying profits before tax up 8% to £935m in the year to January 29, total sales up 7% to £17.7bn and customer numbers up 400,000 a week.

Meanwhile market leader Tesco revealed plans to steal back some of the ground it has lost recently with the announcement of the creation of over 20,000 jobs over the next two years as it focuses on store and service revamps.

But for entertainment retailer Game, and fashion retailer Fenn Wright Mason, the news was not so good with Fenn Wright Mason entering into administration and the same fate likely for Game which has had turbulent few weeks in which refusals by major games suppliers to supply product has already left the business on a back foot and in a statement earlier this week the retailer admitted it was battling to secure the funding it needs to survive. Deloitte has already been approached about insolvency options.

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