Retail Reflections: Tough times, but a glimmer of hope on the horizon

Alan Monahan writes: Like me, I’m sure that many of you have been niggled by the constant media references – BBC Breakfast is a repeat offender – to failing retail outlets being on the high street, when they are clearly not.

So I punched the air in approval when I read a letter in the i newspaper from Somerset resident Michael Cooper, who wrote: “It seems rather odd to refer to the failure of Toys R Us as the demise of another ‘high street name’ when they were responsible for the death of many high street toy shops by opening out-of-town warehouse stores’.”

The upheaval in retailing is being felt across the UK, and the British Retail Consortium’s analysis of the latest labour market data contained some startling figures. Although the number of jobs in retail over the last festive period was higher compared to the previous year, employment was down by 73,000 compared to Christmas two years ago.

Many of you will have witnessed at first-hand what the BRC’s Rachel Lund describes as ‘significant structural change’. In the last two years, taxes on physical stores have increased by an estimated 8% and employees’ wages by 10% at the same time as overall sales have grown by less than 3%. And pounds spent on non-food products in bricks-and-mortar premises have fallen by 5%.

Rachel Lund

The BRC says that February’s retail sales figures showed that consumers are continuing to feel the grip of inflation on their spending power. And yet despite research to the contrary, my own eyes tell me that people are still eating out, going to the cinema, taking holidays and seeking new experiences.

So, could it be true, as some have suggested, that many consumers now consider that they have enough ‘stuff’. Certainly, you’d be pushed to find anyone under the age of 50 who is cluttering up their home with figurines from well-known potteries.

When I visit auctions these days there is often an abundance of once sought- after painted ladies that can now be picked up for a tenner or less. They look so forlorn – literally on the shelf, waiting for a buyer at any price. I am reminded of Battersea Dogs & Cats Home.

But the problem goes much deeper. I’m not sure that there is an appetite among younger generations to spend in the same way as seniors – who I suspect grew up being more acquisitive – unless it’s the self-gifting of techy things like smartphones and iPads. And homes are more minimalist than they once were.

There were no surprises among February sales, with shoppers taking advantage of credit facilities to buy furniture and Valentine’s Day inspiring the purchase of jewellery and watches.

Although we are now descending from the peak of inflation caused by the fall in the pound, prices are still growing faster than wages, meaning shoppers’ budgets are still stretched. The BRC suggests that conditions for retailers will remain tough for the foreseeable future.

One wonders what else it can say, apart from repeating that ‘retailers are having to radically rethink how they operate in order to survive, investing more in technology and restructuring their store portfolio and workforce’.

And while this re-think will raise productivity in the industry, the BRC admits that the transition will not be painless and will affect some communities more than others. It is estimated that a million jobs in retailing will be lost by 2025.

With that in mind, I mentioned a few weeks ago that I would ignore the pull of technology and happily queue at the supermarket check-out with my weekly shop, passing the time of day with the person on the till while hopefully helping to keep them in work – at least for the time being.

It seems I am not alone. A study published in the journal Communications of the ACM by Dr Bran Knowles, a Lancaster University academic, has revealed that older people can and do use email and the internet. Their reasons for shunning it are largely social. Apparently, seniors are worried about missing out on opportunities for social interaction and people’s jobs being replaced by the internet – as well as losing the sense of community which comes from town centres rather than online shopping.

But there may be a glimmer of hope on the horizon, and I am indebted to Iain Martin, who wrote in The Times that the EU wants to tax the turnover of Google and Amazon. He describes the ‘wrecking ball of Amazon – so cheap, so easy to order from … hollowing out the high street and retail parks, where conventional retailers find it increasingly difficult to compete with the online giants’.

Martin added: ‘Britain’s aim has been to reach a global agreement but in a paper released by the Treasury, Corporate tax and the digital economy, ministers hinted that they could move unilaterally. The Treasury is asking interested parties to comment on the proposal by the end of the year. Let’s hope it is not too late by then, because the high street is getting murdered.’

Although he, too, identifies Toys R Us as being on the high street, I’ll forgive him that. His heart is in the right place.

I do hope that your Easter sales have gone as well as can be expected and that you find some time to relax with friends and family over the coming days.