Retail health stabilises in third quarter - ToyNews

Retail health stabilises in third quarter

Clear signs of improvement shown in retail health in the third quarter of 2009.
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The KPMG/Synovate Retail Think Tank (RTT) has unveiled its latest Retail Health Index (RHI) evaluation.

In its latest meeting, the RTT confirmed that the state of retail health in the UK in quarter three has now stabilised, as it had expected it would do this quarter, but it remains at its lowest level since the metric was launched.

The panel reported clear signs of improvement to the pressures on margins beginning to positively affect retail health towards the end of the quarter three and pointing the way to better health to come.

After deteriorating for nine consecutive quarters, before levelling out, the panel expects that the state of retail health will improve in quarter four, albeit marginally.

The RTT is anticipating that in quarter four, the RHI index will rise from 82 to 83 compared with the metric’s starting base of 100 in quarter one 2006.

Mark Teale, CB Richard Ellis, summarises the thoughts of the RTT: “The stronger than expected resilience of the retail sector that became apparent in sales figures earlier in the year, has been maintained.

“Volatility continues sector by sector, and region by region, albeit this volatility varies considerably by shopper demographic. However, because we have been on a downward path for so long, some pent up demand is likely to be released in quarter four. All the usual family pressures look set to give a boost to spending at the end of the year.

“The impending VAT rise in January will give retailers an opportunity to push ‘buy now’ messages and have a positive impact on demand in the quarter. Margins will be better maintained, except where imperatives to beat competitors are paramount and stock levels will be tighter than last year so consumers should not expect a bargain-heavy Christmas.

“Those seeking a bargain-basement Christmas are likely to be disappointed. The few retailers likely to be panicked into full-on sales before Christmas are also likely to be those at highest risk of failing in the New Year.”

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