The tip of the iceberg? High Street gloom shows no sign of slowing

  1. Francois Badenhorst

    Francois Badenhorst Business Editor, UKBF & AWEB Staff Member

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    The Beast from the East has created a grim atmosphere these past few weeks. It shouldn’t be snowing this deep into March, surely?

    But the frost has been appropriate mood music for chilly economic times. The Chancellor has tried his best to muster optimism, but on the ground the situation doesn’t seem to be improving.

    Here’s an ominous roll call:

    Speaking to the BBC, John Lewis Partnership’s chairman Sir Charlie Mayfield noted that 2017 had been a "challenging year" as expected, with "subdued" consumer demand.

    In a statement, the company stated, “We expect trading to be volatile in 2018-19, with continuing economic uncertainty and no let up in competitive intensity. We therefore anticipate further pressure on profits.”

    Reacting to these grim tidings, UKBF member Antropy wrote, “Indeed we're hearing from some of our clients that conditions are tough.

    “How are people here in the ecommerce forum finding it at the moment?” he asked, “Is this the tip of the iceberg for another 2008-esque financial crash? Or are things just a bit slow and likely to improve soon?”

    The government would say there’s light at the end of the tunnel, but perhaps that light at the end of the tunnel, as the poet Robert Lowell quipped, “is just the light of an oncoming train”.

    Replying to Antropy, Mr D offered an optimistic if pragmatic assessment, noting that “the administration (and closure) of Toys R Us and House of Fraser closing stores helps my business”.

    “We may pick up more customers. And their closures will likely strengthen or at least reduce threats to other companies selling similar things to those companies,” they said. “Companies going under is nothing new, it’s been happening for probably centuries.

    “The weak, the unlucky, the overstretched, the under marketed, the poorly positioned, the unwilling to change - they may well be the ones who go under.

    “Buyers still wanting the same items turn to other companies. Strengthening jobs in those companies and maybe even the companies taking on more staff to cope with increased demand.”

    But there’s no doubt times are tough out there. As Marcus Bond pointed out, the UK's GDP Growth for the fourth quarter was just 0.4%. “Compare that to, say, the fourth quarter of 2014 which was 2.2% and It's easy to see that all is not well with the UK economy at present.

    There are a complex range of factors at play, wrote Marcus. “It seems clear to us that Brexit's effect on the currency has further increased pressure on disposable income.”

    Brexit uncertainty combined with the Bank of England's decision to start raising interest rates has affected future plans and triggered a rise in unemployment. More crucially, Marcus added, continuing Brexit uncertainty has made it hard to plan for the future.

    “We've looked at everything and decided that things are not likely to improve soon, and that the UK economy is likely to remain fairly bleak for some years. The downside risks could be quite bad, but we don't see much in the way of upside for at least three years, and probably for at least five years.

    We think protecting cash, and cutting costs is our best strategy over the next 12 months, and as a small business, that's about our only advantage compared with larger companies: we can move quickly. We think the cuts we should make can be fairly brutal.”

  2. Steve Taylor

    Steve Taylor UKBF Newcomer Free Member

    5 1
    This is way too complex to narrow down to just the economy or the doom and gloom some would say that Brexit would bring. It's the bringing together of so many factors the high street has been building up for the last 20 years. It's everything from a customer educated to expect discounts and offers with constant sales, all impacting margins through to increases in rents and the knock on effect on rates. Add to that the drive to open more and more stores funded by debt, and a lack of investment in e-commerce and you get a perfect storm.

    If anything the small retailer is the one who can benefit with the advantage of flexibility not just in cost control but also the ability to offer a level of customer service, online experience and product speciality that can really be appealing to a consumer who is looking for a different shopping experience.

    We haven't' seen the last of the problems, with Moss Bros, House Of Fraser and more bubbling along the edge this has the potential to downgrade the high street and rebalance the landscape in favour of the small retailers who are the backbone of this countries commerce. We new this would come eventually and perhaps now the chains will realise it's not all about undercutting each other with sales and discounts, it's about service, product and value for money.
    Posted: Mar 27, 2018 By: Steve Taylor Member since: Mar 9, 2016
    Bob Morgan likes this.
  3. Lansing

    Lansing UKBF Newcomer Free Member

    2 1
    the global environment is tapped out with tooo much debt.
    Posted: Apr 5, 2018 By: Lansing Member since: Apr 5, 2018
    Bob Morgan likes this.