UK retail gloom remains

23 September 2009

LONDON: Over a third of senior executives in the UK retail sector predict consumer spending levels in the country will not improve until 2011, while just 13% expect the situation to get better this year.

A poll of 32 industry leaders, commissioned by Kreab Gavin Anderson, the PR firm, found that 94% forecast that any recovery will be extremely slow, as increased taxes reduce disposable income levels.

Andrew Higginson, finance and strategy director at Tesco, the supermarket giant, warned that trading conditions will be poor over the festive period, typically a key part of the year.

"I think the market will be flat at best at Christmas and part of that will be deflation. Although currency falls suggest we should see a bit of inflation I don't think the competitive market will allow it," he said.

Similarly, Sir Stuart Rose, executive chairman of Marks & Spencer, argued "it will be a roller-coaster. Last Christmas was exceptional in terms of the global economic environment. This year there will be less background noise, but a bit more competition."

Carl McPhail, chief executive of New Look, the fashion chain, also took a pessimistic stance, based on the fact that shoppers remain highly negative about both their current and future prospects.

"I'm not convinced we'll see a recovery in the early part of next year as there will still be pressures not least from unemployment and our research shows customers are all concerned about that," he said.

More positively, two-thirds of participants were more confident now than seven months ago, while 41% thought Christmas trading would improve compared with the same period in 2008, although most believed a "price war" would break out among retailers.

Data sourced from Daily Telegraph; additional content by WARC staff