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You shop, the economy drops

Douglas Fraser | 21:13 UK time, Thursday, 18 December 2008

What are we to make of the strange statistics for the Great British shopping habit?

Today, we learn that British retail figures for last month have seen slightly more money going through the tills, compared with October, and an even higher rise, of 1.5% on November last year.

The British Retail Consortium simply doesn't believe the Office of National Statistics data. It doesn't feel like things are that rosy.

Nor does the CBI, which reckons its retail members are more down than up by a 46 point margin.

The BRC put out its own figures this week showing November sales down by 2.6% on the same month last year.

North of the Tweed, the Scottish Retail Consortium this week reported total sales in November were up 2.8% on last year.

But they prefer to refer to 'like for like sales', meaning comparison of the sales at shops that also existed last year.

They are down by 0.8%, the first fall in this downturn, and since August 2008. Non-food like for like sales have been falling for six months.

The breakdown includes, oddly, the sustained popularity of champagne sales. Children's clothes and footwear was doing better than the fall in adults', which are being seen as discretionary purchases rather than essential.

Shoes for work are doing better than those for leisure time, reinforcing a finding a few weeks back that people are smartening up with their job insecurity.

Perhaps with retraining in, brain-training computer games are doing relatively well.

So is the Wii, as the popular Christmas gift. In the health and beauty sector, "bronzing held up for some and nailcare remained popular".

Three points: one, Scottish retail seems to be holding up at least as well as the rest of the UK.

Scotland may be holding up better because its bigger public sector should logically mean less job insecurity, at least in this part of the recession cycle.

Two: it seems odd to stress 'like with like', when it is the intention of the big retailers to draw people into big new shopping centres that weren't there last year. Silverburn, in Glasgow's Pollok area, for instance, is bound to hurt takings elsewhere. Isn't that the point of it?

And three: given the dire statistics coming from every other facet of the economy, shopping overall doesn't seem to be doing all that badly.

Why? Well, the figures hold up well for food sales. Inflation early this year left people facing higher prices for their food.

Inflation is falling, but that doesn't - yet - mean the prices are doing so. It seems people are putting a higher proportion of their spending into food.

It's no surprise to find that big ticket items are in much steeper decline, including furniture and white goods, and particularly fitted kitchens and bathrooms.

People who need credit to purchase them are finding it harder to get any, and everyone is holding off purchases that aren't necessary while facing job insecurity.

Anecdotally, shopping centres can seem as busy as ever. But there's more evidence of what's going on today coming out of retail consultant Experian.

It tries to measure footfall - the number of people walking past shops - and they find it this week down more than 10% on last year, which is a widening year-on-year gap than measured in previous weeks.

It also notes that people are getting more comfortable with internet shopping, suggesting many of these shoppers are browsing the goods on offer, and then logging on when they get home to see how much cheaper they can buy.

That's no way to sustain shops in the high street, of course. And my guess is that this recession will leave high streets changed irrevocably.

Woolworths is going. So is Klick, twinned in 60 Scottish shopping centres and streets with Munro dry cleaners. Zavvi, the music and games retailer, is in trouble.

Who's next? Look for shops that don't have a clear selling proposition when you walk into them. For years, Woolies has seemed muddled about what it's been trying to do.

Then look for those facing changes in technology. Photo developing shops are being undermined by digital printing on cheap home printers.

Fewer clothes these days require dry cleaning and the public smoking ban has made cleaning less necessary for those that do. Music and anything else digitised is being sold far more online.

The very short-term good news for shops is that the last online ordering day is upon us, and last minute Christmas retail, by disorganised people, will have to be the old-fashioned variety.

That includes me.

Comments

  • Comment number 1.

    The ONS is part of the great Labour spin machine so why would you expect to see anything other than data that suggests the Dear Leader's action on VAT etc is working?

  • Comment number 2.

    #1 it really has nothing to do with Labour spin there is not enough historic data to make a tie between VAT and sales as it's not even been 20 days in force - and sorry but VAT will not make a difference on the high-street it will only affect large VAT bills for retailers not the customer. I believe the public will only benefit, not to a great extent, through VAT cuts on phone and energy bills.

    Apart from that, the data suggests otherwise anyway as Non-Food retail sales (the highstreet) 'value' are down 0.3% over three months and the growth is driven largely by Food-Stores - which backs up the popular thought of more people eating at home and substituting restaurants for supermarket brands, and maybe a lot of people buying in the christmas food early in hope for a bargain.

    Douglas I think you've hit the nail on the head - the high street will be changed 'irrevocably' unless it gives itself a shake - considering the data suggests online sales are up as the highstreet is in decline. Another piece of bad news for those employed on the highstreet. Entertainment will get hit hardest with people buying online - fashion I think will sustain better as people like to know it will fit.

  • Comment number 3.

    When the high street learns to compete, then sales might recover . I have been looking at cookers recently, the price in the so called cheap electrical stores, are all around the same price, but these prices are on anerage £75 - £100 more expensive than on line dealers for the same item. I know the high street overheads are higher but it looks like they all get together and maintain prices within a narrow band to keep profits up. If they do not match online prices where competition is fierce then they will be out of business.

  • Comment number 4.

    Arent we in trouble because of careless spending leading to heavy debts, which was traded without responsibility?

    If so, how does spending more and more solve this problem. I would hate to think every financial crisis is the same with a same solution.

    Would it not be reasonable to assume that we will only be out of the brown patch (not a pun intended) until we have decreased national and personal debt to a controllable rate?

  • Comment number 5.

    Douglas:
    It is sad, when someone is trying to spend [money] the economy drops...

    ~Dennis Junior~

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