Retail woes could signal start of winter chill
Dave Miller (pictured), client account manager, Spicerhaart Corporate Sales
The start of November has brought with it a slew of unwelcome news about struggling high-street brands. Most obviously there was the announcement on 5 November that Mothercare was entering administration. All 79 UK stores are set to close with the loss of up to 2,800 jobs.
While this was the most notable piece of bad news, there have also been sharp falls in profits at some of the stalwarts of the British retail scene, Marks & Spencer, Sainsbury’s and Clark’s. A good Christmas can make all the difference to brands like these, but that depends on consumer confidence. On this front, too, the outlook is at best mixed.
Recent figures from the Money Charity showed unsecured consumer credit had leapt by £456m in a single month – a small fraction of the overall total but still a significant increase. That could be read as a sign that people are willing to spend money, but if it’s all going on credit, that’s hardly sustainable. In any case, there’s plenty of evidence to suggest that people are borrowing for everyday spending, to pay bills rather than fund lifestyle extras. That’s clearly very worrying.
When you set that alongside Q3 figures from the Insolvency Service, which showed individual insolvencies jumping by more than 20% compared to the same time last year, the picture starts to look even less rosy.
It’s certainly the case that the continuing uncertainty around Brexit is causing problems for a lot of businesses and consumers, but there’s an argument to be made that there are some more deep-seated problems which won’t just evaporate when and if the politicians eventually get a Brexit deal done.
The nation’s finances are delicately balanced and an unhelpful shove – including the impact of a likely wider global downturn – could easily see the UK stumbling as we go through the winter. Many businesses will feel the effects of that directly, meaning they will be looking to reduce overheads to survive. And if that feeds through into higher unemployment, more and more people will begin to struggle with their everyday bills, including rent and mortgage repayments.
Both main parties are talking about increasing public spending, and the Bank of England is hovering over the button marked ‘interest rate cut, with a view to giving the economy a jolt in the right direction, but there’s a real risk that for many people the New Year could be anything but happy.