Time for retailers to eat somebody else’s lunch
SHRINKING real incomes mean retailers are now operating in an “eat somebody else’s lunch market place”.
According to Don Williams, head of retail at accountancy group BDO, retailers that are thriving are only doing so at the expense of somebody else because consumers have less money in their pockets.
Speaking at a retail dinner organised by BDO he conceded that confidence was growing due to improving job security but the combination of wage freezes and inflation means we’re all poorer, although inflation fell to a four-year low of 2% last month.
“The good news is we’re getting poorer less quickly, that’s the silver lining,” said Mr Williams who expects straitened times to continue with total retail sales growth of 1.7% this year.
“The sunny uplands are not coming back. This is the new normal – to fight for everyone’s pound.”
He added: “It’s an eat somebody else’s lunch market place. If you’re winning, you’re winning at the expense of somebody else.”
Speaker David Hughes, the founder of the now defunct Allsports retail chain, continued this theme, stressing the dominance of e-commerce.
“Online shopping is devouring a massive chunk of the total retail spend in a way I considered impossible 10 years ago. Back then I thought online would replace catalogue sales, it might get to 6%-7%.
“I would argue forcefully that nobody would want to buy online anything that needed touching, feeling, seeing, and sizing – but now my wife and many others have no qualms about ordering an item in four different sizes. She tries it in her own bedroom and sends three back.”
But he said this style of shopping was creating an expensive problem for retailers who are experiencing a very high rate of returns.
“How on earth do you re-integrate and reabsorb large amounts of tried on, out-of-packaging, returned stock for re-retailing, at full margin, in the current season, on that scale?”
Mr Hughes founded Allsports in 1977 and grew it to a chain of 260 with a turnover of £180m before the rump of the business was bought out of administration by JD Sports in 2005.
