WITH echoes of Winston Churchill’s view on Russia, the retail sector is a riddle wrapped in an enigma. The industry chips in a hefty 10 per cent of GDP, but is as clear as multi-faceted mud.
The Scottish Retail Consortium has revealed that its members have had their best August since 2009, with total and like-for-like sales both rising. A shaft of survey sunshine, and not the first one in the past year.
But underlying trading is testing, with many retail names collapsing in recent times: Blacks Leisure, Blockbuster UK, Jessops, La Senza, Clinton Cards. Comet, HMV, JJB Sports and Peacocks.
That uniquely British retailing yardstick, Marks & Spencer, has posted eight consecutive trading quarters of falling underlying sales in its general merchandise division, including its pivotal clothing business.
Even the high street’s most resilient sub-sector, food retailing, has talked of the pressures on consumers making it the toughest, price-conscious trading environment in a generation.
But, confusingly, an unashamedly upmarket operator like Waitrose goes from strength to strength, while the supermarkets’ smaller convenience stores exert a crush on the corner shop.
It is unsurprising in this climate that some of the best performers have been discounters such as Poundland, while walking through any shopping centre the giveaway signs are boarded-up shops, pawnbrokers, and much space given over to charity operations.
A report out yesterday from the Local Data Company said high street vacancies remained “stubbornly high”: more than 17 per cent in Wales, just under 15 per cent in Scotland and 14 per cent in England. These vacant shops are also fetching low prices at auction.
A maverick card has been the march of the internet into the sector. It has changed the whole trading dynamic of bookshops, for instance, while some retailers have campaigned for a relaxation of business rates and red tape to help provide them with a moat against the plunderings of the web siege engines.
Some retailers report impressive percentage rises in online sales, but from low bases; others have ambitious targets for online sales over the coming years; others don’t break out internet sales figures because they are supported by the general costbase.
Meanwhile, the relentlessly successful Primark marches to its own drum, ditching its online experiment with the Asos website and announcing it is to open an extra one million square feet of physical retail space instead.
Retail is having to cope with an unforgiving consumer climate as it also undergoes systemic change. As such, we are likely to hear an uneven narrative from the high street for some time yet, with sunshine occasionally breaking through the cloud.
Privatisation rumours suggest banks on mend
SHARES in Lloyds Banking Group hit a three-year high yesterday, and the political party conference season has hoved into view.
Will the coalition government try to gild the respective Conservative and Lib Dem gatherings by the seaside with a little banking-apocalypse-over gold dust via a sell-down of the state’s stake in the bank? I suspect so. Politicians have decent antennae for opportunity knocking, and such a move at Lloyds would complement the bank having just launched TSB as a separate brand in another suggestion banking is on the mend.