The summer has been pretty eventful to say the least for retailers. With many stores already struggling due to weak consumer confidence and signs that the economic recovery was stalling, the last thing retailers wanted was a bout of rioting and looting.
Apart from further damaging already fragile consumer confidence, the disruption meant that almost a week’s trade was effectively lost. The results were predictably bad.
According to our High Street Sales Tracker survey, which covers mid-market chains, August was the worst month for spending across the high street in more than two years. In particular, discretionary spending and big ticket purchases related to housing suffered with consumers reluctant to make major spending commitments.
Amid this gloomy picture a host of retailers have issued profit warnings with Peter Marks, the boss of the Co-operative Group, describing conditions as “the worst I have seen in 40 years of retailing."
However, for all the pessimism there are still reasons for optimism.
The economic situation is improving. The economy maybe limping rather than bouncing out of recession, but with interest rates set to remain low I don’t think we are heading into a double dip.
Consumers also have notoriously short memories and will tire of being miserable. This so called ‘fed-up being fed-up’ factor means that whilst most of us are concerned about the state of the economy, our own economic situation and what this means in terms of spending, we still love our retail therapy.
Whilst I don’t expect the pressure on consumers to ease that much in the immediate future – or the cash in our pockets to increase – retailers should bear in mind consumers are a resilient lot. Offering perceived value through compelling products and offers, along with good customer service, is still a winning combination.
In addition, the continuing strength of sales made through online channels should also give retailers some comfort. On the back of gains in both traffic and conversion online sales are still growing at double digit levels. Furthermore, with momentum starting to build behind new platforms such as mobile commerce, getting online right can make a real different.
With autumn now on its way, and the slow build up to the crucial Christmas trading period starting, retailers will be saying good riddance to summer bring on the golden quarter.
If you’d like more information about how BDO's retail team can help you, please contact Don Williams, Head of Retail & Wholesale.