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Two weeks in retail - 27th February 2013

With the horsemeat saga showing little sign of abating retailers are going to have to put huge amounts of effort into the security and transparency of their food supply chains in the coming months if they are to win back customers.

Retail bosses are of course taking the problem seriously – the saga has dented both sales and trust in their “value food” offers and have promised to get to the bottom of exactly what happened.

According to new figures from Kantar Worldpanel, in the four weeks ending 17 February, frozen burger sales dropped 43% while frozen ready meal sales fell by 13%.

For consumers who remain cash strapped the problem is further exacerbated by their now lack of faith in retailers’ value ranges – the one thing all retailers were pushing to increase loyalty amongst their customers.

As ever retailers are fighting for sales. The latest figures from the CBI’s latest quarterly Distributive Trades Survey, which covers the first two weeks of February, revealed that 37% of retailers saw an increase in their volume of sales in the year to February and 29% reported a reduction. The resulting balance of +8% was the lowest figure since September 2012 (+6%) and was the third consecutive month in which the pace of growth had slowed.

Retailers themselves still face huge challenges and new research from Oxford Economics for the British Retail Consortium says that retailers’ operating costs have surged 21% over the past seven years to £116bn. Sales values over the same period rose only 12%. The BRC is using the results to push for change in the budget later this month asking it to freeze business rates, ease regulation and introduce other measures to boost growth.

Meanwhile the BRC/Springboard footfall and vacancies monitor for January revealed this fortnight, showed the sharpest fall in shopper numbers for nine months. Footfall in January was 4.6% lower than last year and the weakest footfall figure since April 2012 when shopper numbers declined 6.9%.

The figures were impacted by snow during the second half of the month and footfall fell across out of town (-7.2%) followed by shopping centres (-5.2%) and high street (-3.3%) locations.

The post-Christmas administrations have continued thanks to the harsh climate. Store closures have begun for fashion chain Republic, the latest retailer to hit administration earlier this month. Matalan founder John Hargreaves’ son Jason, in addition to retailers Blue Inc and Sports Direct, are all interested in the retailer.

The administrators of HMV have also revealed that a further further 37 HMV stores are set to close in the next month or two on top of the 66 already announced.

Blockbusters, which also went into administration last month, has seen 49 of its stores bought by Morrisons in the last fortnight. The grocery retailer hopes to use the stores to grow its M Local convenience fascia. The retailer has already bought seven Jessops stores from administration.

There is no doubt the retail scene is changing, 2013 will have many more surprises yet.

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