Analysis: Fleet-footed retailers can cash in on opportunities

THE latest SRC figures for January show a reduction in total sales by 1.5 per cent on the year before.

A sole statistic that will rightly be met with considerable concern by the Scottish high street, and reported with apprehension, at a time when retailers are channelling every effort into discounting and challenging the consumer squeeze exerted by high inflation, higher utilities and fuel prices.

At the risk of sounding defiant, when it comes to consumer confidence, as with Moody’s warning about the UK’s credit rating, a sense of perspective is needed. We should remember not to let the symptom of poor sales figures become the cause of more retail underperformance. By way of contrast, only yesterday the CBI announced that, despite high levels of uncertainty, growth, albeit subdued, will restart in 2012, particularly in the first half of this year. The CBI expects 0.9 per cent GDP growth in 2012, with the latter half of the year bringing even modest growth as inflationary pressures ease. This adjustment, whilst fractional, will relieve some of the pressure on household incomes, with consumer spending forecast as picking up in the second half of this year.

At a closer look, the SRC figures demonstrate that Scottish consumers are adept at budgeting in as many ways as they are spotting opportunities to spend, with meal deals, brand preference towards essential toiletry ranges, value clothing lines and multi-functional technology purchases, such as tablet computers and smartphones, showing a clear impression of a consumer base that has become savvy of how to see out rainy days after an indulgent Christmas.

Looking at consumer confidence nationally, it remains deflated in Scotland compared with the rest of the UK. This may represent a longer-term opportunity: at some stage those depleted levels may start to exert a gravitational pull back tomore appropriate activity. Retailers have adjusted the way they operate across every industry, with leaner companies readying themselves for even the slightest upturn or growth. For example, opportunities such as pop-up shops, once the domain of the seasonal fireworks outlet, are becoming a more common occurrence in Scotland with established retailers and more niche vendors taking temporary space to drive sales. It is also worth noting that some important forward looking indicators in the US economy have been drifting higher in the last three months signalling potentially positive impacts on consumer confidence and ultimately spending power. As retailers batten down the hatches for another tough year, it will be those companies fleet footed enough to exploit these perhaps transient opportunities that will emerge from the battle of the high street unscathed.

• Euan Murray is a relationship director at Barclays Corporate