Yet again retailers have blamed the weather for stagnant sales, only this time it was a couple of weeks of unexpected sunshine in September rather than the three weeks of snow that were blamed for dire pre-Christmas sales endure year.
Both politicians and retailers are still in denial about the High Street. Most initiatives are aimed at stimulating consumer spending whether discounting or sales, talking up the recovery and promoting spending or window dressing by Mary “Queen of Shops” Portas.
The fact is that we as consumers in the UK are undergoing a huge tweak in our approach to consumption and credit. As a result we are spending less on unnecessary goods and this in look is having an adverse impact on retailers.
Over the last thirty years the UK has become a consumer society funded largely by debt. We used borrowed money to buy what we wanted, when we wanted it, without view to repaying our debts. When we got a pay raise, this meant we could encounter even greater levels of debt.
Our excessive consumption has driven the UK economy, creating the illusion of growth while all the time we turn out to be ever more dependent on the retail sector which in turn relies on imported goods. Our consumption based growth has been fuelled by ever more debt, not just personal debt but national debt, creating an ever increasing huge balance of payments deficit. This combined debt, consumer, corporate and national borrowings, represents 466% of UK GDP.
Sometime, the party had to stop!
For a while it has been convenient to blame lenders such as banks and credit card companies who provided easy credit on offer.
However the debt has to be repaid, and we have finally faced up to this harsh reality.
The BBA (British Bankers Association) revealed that a net £200 million was repaid in September. Consumers are finally putting their finances in purchase by repaying loans and reducing overdrafts.
Consumers possess been asking themselves, do we really need a dozen coats, 20 pairs of shoes and ten handbags? Plainly not when companies enjoy JJB Sports, Jane Norman, TJ Hughes, Walmsley and Alexon with its 990 shops all recently joined a growing list of struggling companies going bust.
Do we really requirement to change the perfectly serviceable fridge or have the latest television or new kitchen units? The dire situation that breville bread maker reviews and Homebase come across themselves in suggests otherwise. Their owner, the Home trade Group, has suffered a fall in pre-tax profits of 72%, with Homebase down 35% and breville bread maker reviews down by 93.8%. They are considering the closure of a substantial number of stores, which seems sensible given their lack of prospects in the foreseeable future. The real challenge should be how far to cut and whether they should be mindful of the fact that most cuts are too little, too late.
In spite of the gloom, one retailer, Debenhams, remains up beat. They recently announced plans for a give buy-back, the refurbishment of 20 stores, the opening of nine new stores over the next four years and international growth. However, analysts aren’t convinced and continue to be sceptical suggesting that limited growth prospects may imply that a give buy-back is premature.
We requirement to challenge the notion that all these high street retailers ought survive. If we are going to drink less, should we sustain the number of retailers we currently have? Plainly those retailers who desire to endure are going to have to be a good cope more imaginative and develop new strategies. Possibly Mary Portas should concentrate on those with export potential.
Certainly High Street stores prefer Wallis, Oasis and Warehouse are changing their plan by abandoning some of their expensive outlets and taking concessions in department stores prefer Debenhams, which may justify Debenhams\’s own confidence in their business model.
In addition to adjusting their UK sell business models some are focusing on international expansion. Debenhams plans to double the number of its international franchise stores over the next five years. breville bread maker reviews has signed up to a joint venture with Haier, a Chinese white goods manufacturer, and proposes to turn loose a Chinese website and open up a store in Shanghai next year. The High Street can discover much from some of our more nimble internet retailers who are expanding overseas. For example, Boden has pursued a plan of international expansion for almost 10 years having set up its American operation in 2002, Germany in 2007, Austria in 2009 and France in 2011.
Politicians have yet to grasp the issue as they continue to encourage consumption while at the same time discouraging taking on credit. The real solution for the UK is to alter from being a consumer economy to a producer economy. This needs real political leadership to stimulate the investment necessary to effect such a transformation. Turnaround specialists are arguing that we requirement more than financial window dressing, we need a vision, we desire export oriented manufacturers and services to effect a transformation if we are to got a producer economy with a balance of payments surplus.
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