Chairmans Message

Challenging Times!
This time last year (early 2007) house prices were rising at a steady level, retail sales growth was 3.9% like for like, shopping centres were changing hands at 5% and no-one had heard of the words “credit crunch” – the only slight black dot on the horizon at the time was a small level of sub prime mortgages somewhere on the other side of the Atlantic.

How a year can change things.
House price growth is negative at -3.7% per annum, retail sales is now negative at -1.6% like-for-like, hardly any shopping centres are being bought or sold due to both the lack of any debt availability and the fear that the investment market is still on the way down as opposed to having reached the bottom.

These factors, together with others, are hitting consumer confidence with a subsequent drop in retail spending.

This week’s Retail Week headline is “On The Critical List”. It reports that retailers are experiencing the toughest trading conditions since the early 1990’s and the climate is likely to worsen.  Since Christmas, there have been a number of administrations including Ethel Austin, Fopp, Dolcis and Au Naturale and the likes of JJB have axed 800 jobs, closed a number of stores and Baugur are trying to sell Mk One.

But is the doom and gloom really that bad? Other retail headlines this week include “JD unveils Bank vision as group profits rocket”, “Burberry bags 18% revenue jump as accessories perform” and “HMV game on with 7% growth”.

If one looks at total sales over the last year (as opposed to like-for-like) these are up 1.0%.

Further, there were some good Christmas like-for-like sale results: –

New Heights (32%); Game (31%); Primark (26%); JD Fashion (16%); HMV (13%); La Senza (10%); John Lewis (6%) and so on.  The more disappointing were Tesco (3%); House of Fraser (3%); Debenhams (2%); and Marks & Spencer (-3%).

One may suggest therefore that, whilst of course the general economy has a part to play, it’s current downturn is perhaps highlighting the differential between those retailers who “have it right” and those that perhaps “could have done better” by way of their own product and offer.

I think we all wait with interest to see how matters progress over the coming months – there are some important shopping centre openings towards the latter part of the year which will give a good gauge of retailer sentiment (Westfield London, Liverpool One, Leicester and Bristol).

In terms of the Shop Agents Society, we remain loyal to its original ideals of promoting business and social links within the retail agency sector but if you feel your Society can play a more significant part, and I, or any other member of the Committee, would be delighted to hear from you.

Maybe we should all go and work in China – retail sales growth is currently running at 22%!!