What a difference a year makes. This time last year just about everyone was fearing the worst following the collapse of Lehman’s. Retailers in particular were feeling very pessimistic, with stories about sales falling off proverbial cliffs, and bloodbaths on the high street quickly emerging.
This year the headlines are almost completely the opposite. Last week saw a whole host of retailers including: House of Fraser, Home Retail and DSG International announce upbeat results, while figures this week from the likes of Next and Kingfisher are expected to lift spirits further.
Of course there is still a but - there always is in retail it seems - with concerns that trade will dip next year as unemployment and taxes rise. Indeed, our own forecasts suggest the number of retail businesses going under next year will remain high.
However, I think it is fair to say that conditions are much better than last year, with consumers increasingly becoming more confident. In turn, retailers are increasingly planning for the future rather than just planning for short-term survival, with some starting to think about traditional growth drivers, such as capital rising and M&A, both of which have been completely off the radar since Lehman’s.
For example, reports suggest that young-fashion retailers Blue Inc and Superdry are investigating IPOs, while grocer Ocado has also publicly confirmed that it is considering a float next year. In addition, rising valuations are also bringing closer the ability of private equity groups to crystallise investments, thereby helping to encourage a new round of activity.
Although talk like this may seem premature, in what is still a difficult market, planning early does make sense. For well positioned and well prepared retailers opportunities are beginning to emerge.
If you would like advice on any subject relating to this article, please contact Don Williams, Head of Retail & Wholesale.