UK retailers downbeat on prospects for 2010

30 March 2010

LONDON: The vast majority of major retailers in the UK do not expect shopper behaviour in the country to rebound this year, a new study has revealed.

Kreab Gavin Anderson, the PR firm, conducted a survey of 31 leading UK executives, and found that 73% did not believe trading conditions would improve until 2011 at the earliest.

This figure doubled the total recorded in a similar study in September 2009, during which time the number of respondents who said they were more optimistic than pessimistic also declined from 66% to 53%.

The major contributors to the overall negativity in the market included the continuing impact of the downturn, the forthcoming general election, and the possibility of increases in both inflation and VAT.

Over 20% of participants also said the outlook among their customers had worsened in the last six months, compared with just 3% who agreed with this statement in the third quarter of last year.

"I think this year will be flat and it won't pick up until the middle to the end of 2011," Sir Stuart Rose, the chairman of Marks & Spencer, the clothing and premium food retailer, argued.

"I'm more optimistic today. We had a much better Christmas than we were expecting ... Consumers are maintaining their spending and without growing debt," Simon Wolfson, ceo of Next, the apparel chain, added.

"I do not anticipate a continued recession, but any growth will be sluggish as the government continues to try and balance the books."

When identifying which area of their operations was set to provide the most substantial growth in 2010, 55% of the panel afforded this status to the web, while 34% thought international expansion would play such a role.

"Fundamentally we are planning our costs and activity for a negative market in the UK, but we do expect to see growth internationally," Ian Cheshire, ceo of Kingfisher, the home improvement specialist, said.

Data sourced from Retail Week; additional content by Warc staff