As anticipated, February retail sales were roughPosted: March 8, 2011
As reported all over the media today, February was the weakest month in retail for nearly two years, with consumer spending driven down by higher bills, the full impact of the VAT rise, and low levels of confidence.
In a couple of weeks time, George Osborne will unveil his second budget – which, judging from the hints that have been dropped so far, will be a “budget for business” rather than a “budget for the consumer”.
(Interesting diversion – back when Kindle users were still young, chancellors like Barber or Healey might have talked about a “budget for the housewife”. Obviously, that’s archaic and demeaning. But a “budget for the housewife” implied support and reward for thrift and good sense. A “budget for the consumer” suggests tax cuts and extra dosh to spend on imported electronics and personal debt. Given that “hard-working families” and – worse – the “squeezed middle” are ugly formulae, how should politicians address the fundamental good sense of the electorate, rather than inflating a bubble and encouraging fecklessness?)
Anyway, a budget for business would be a good thing – cut red tape, reduce the cost of employment, encourage investment for the medium and long term, sort out the banks (more than Merlin), and support industries in which the UK can lead the world, whether we’re manufacturing Oscar winners or nylon bicycles.
With four years until the next General Election, I suspect that Osborne will be happy to let the retailers whistle for support while he reinvents the business landscape. And tries to avoid a double-dip, of course.
So, I believe the outlook for the next year or two in retailing is going to be tough. More traditional businesses will fail – because the drift to online shopping will continue throughout this period – and bright start-ups who know their customers and can own their niche will flourish. The big retailers will have to continue delivering Value above all other qualities (the supermarkets will continue to grow) and smaller players will have to behave like proper specialists.
Doug Stephens’ Guide to Specialty Retail is a useful primer for small businesses, whatever their aspirations. You can’t beat Tesco or Amazon or Primark at their own game – concentrate on your customers and do this instead.