Retail health slips further

New figures show retail health has slipped for the seventh quarter running.
Author:
Publish date:
Social count:
0
5_Pocoyo.jpg

The KPMG/SPS Retail Think Tank has released its latest ratings for the third quarter, showing retail health has slipped a further three index points to 92.

The rating is slightly better than the panel predicted and declined at the same pace as the first and second, rather than deteriorating any quicker as predicted.

In predictions for the fourth quarter, the panel issued its most pessimistic predictions yet. Members believe retail health will fall to an RHI value of 86.

The projected worsening rate of decline in health mainly on deterioration in margins and demand, the board was keen to point out it is not all bad news as costs have stabilised and retailers will benefit from a relief in costs in the next quarter.

RTT members also predict a fall in demand in Q4 with non-food retailers taking the brunt. With the latest unemployment figures up by 164,000 in the last quarter, the board feels fear of unemployment will further hit consumer confidence and demand.

Declining margins are also set to hit retailers as they may now have reached the limit of how far suppliers can be pushed while still attracting customers at prices that protect margins.

Inflation, increased staff costs and redundancies in China are likely to affect the prices paid for products sourced there, as will the maturity of currency hedge deals with the pound continuing to be weak against the Euro and the Dollar.

However, there is some good news in the report, the board expects costs will begin to decline as the price of oil falls, quarterly rent changes to monthly payments and rent inflation rates fall.

Professor John Dawson of universities of Edinburgh and Stirling summarised the thoughts of the RTT:

“It’s important to state that despite the somewhat negative predictions, we are not harbingers of doom. Yes, some smaller, weaker, just plain unlucky or poorly financed retailers will fail in the coming weeks and months.

“However, those wily retailers who constantly monitor and modify their entire operations, both online and in store, will come out of this difficult period fitter and stronger.”

Meanwhile, at a presentation for property consultancy EC Harris, retail analysts Verdict Research are forecasting that UK shoppers will spend more this Christmas despite the current financial crisis, but extra spend will be driven by the higher food costs.

Consumers, therefore, will be careful with gift purchasing, buying fewer items. This means retailers will have to fight much harder for a share of their Christmas spend.

EC Harris head of retail, Catherine Tobiasinsky, said: “In the toughest economy for years; all instincts are telling retailers to baton down the hatches. In reality, anything is possible, with it being the best time in the last 15 years to reduce operational costs and beat inflation by maximising built assets.

“Tenants are becoming customers, retailers are becoming developers undoubtedly times are tough, but now is the time to innovate.”

Related

Featured Jobs

Vivid Job Logo 620 x 349

Digital Marketing Executive - Toys & Games

Vivid is Britain’s biggest toy company and the 20 largest in the world. With offices across the globe, they sell an amazing portfolio of toys and games to over 60 countries. Vivid is best known for its association with blockbuster brands and is very excited about future opportunities around the world.

Liberty

UK Sales Agents

Liberty House Toys have been appointed as the exclusive UK distributor for the BiOBUDDi brand, and we are pleased to introduce this new unique, innovative and exciting range of 100% environmentally-friendly toy building blocks. We are seeking experienced sales agents with existing network in the toy retail market.

Gameplan Job Logo 620 x 349

Head of Product Development & Marketing

Our client is a privately owned French toy and games manufacturer which sells through distributors in forty countries. The company develops and sells innovative electronic interactive toys and games for the educational and gaming markets, and also takes suitable licenses. To progress its successful business development a Head of Product Development & Marketing is to to recruited.

HIT Entertainment Job Logo 620 x 349

Licensing Systems Administrator

The Contract System Coordinator is a newly created role to support the deal term entry process into Mattel’s new Contract Management System for its Licensing business. The role will support the Business Teams at the Deal & Amendment phase of the contracting process and act in conjunction with the System Administration team.