Retail Reflections: Will you be ordering products to stockpile?

Alan Monahan writes: Tennyson was, of course, correct when he penned the line, ‘In the spring a young man’s fancy lightly turns to thoughts of love.’ But I am an old man, it’s the end of January and my thoughts are turning to a promised tax rebate and Spring Fair, which opens its doors on Sunday February 3 and runs until Thursday February 7.

I’ll be at the show and I hope that you will be too. In the Press Office, trade magazine hacks will no doubt be debating the possible ramifications for our industry of Brexit, as will buyers and sellers on the various stands.

Will you be ordering products to stockpile in the event that we make a messy exit from the EU? Apparently, that’s what some of Britain’s biggest retailers and wholesalers have been doing. The Confederation of British Industry’s monthly distributive trades’ survey reveals that businesses raised the ratio of stocks to expected sales in January to its highest level since February 2008.

Rain Newton-Smith, chief economist at the CBI, said: ‘There are early signs of companies bracing themselves for a no-deal Brexit: some of our wholesalers are now reporting that they’re building up stocks in case the UK exits the EU without a deal. It’s absolutely vital politicians act immediately to take ‘no deal’ off the table, protect the UK economy and avoid devastating disruption.’

I doubt that many small retailers will have the inclination – or the room – to buy-in extra stock, unlike WH Smith which is reportedly holding six months’ worth of stationery instead of the usual four months’ worth.

According to the CBI, retail sales volumes were unchanged in the year to January, following a decline in the previous month. The employers’ lobby group says that the outlook for this month is better, with the retailers it questioned expecting sales volumes and orders to rise in the year to February. This is something positive to cling to, but I do appreciate that this survey isn’t truly representative of most of you.

Last month, online sales rose at a similar pace to that seen in December 2018, slightly above the long-run average, although growth is expected to slow in the year to February.

On this subject, The Times has reported that an online sales tax to help high street shops has in effect been ruled out by the Treasury because it would fall foul of EU rules. The paper says it has learnt that Mel Stride, financial secretary to the Treasury, has written to Nicky Morgan, chairwoman of the Treasury select committee, to tell her there was a ‘high risk’ that any such tax would breach the bloc’s state aid rules. Although Britain is due to leave the EU on March 29, the UK has accepted ‘dynamic alignment’ with Brussels on state-aid rules under the draft withdrawal agreement.

A number of major retailers have called for an online tax, including Dave Lewis, chief executive of Tesco, and Mike Ashley, owner of Sports Direct, who said that without it the high street would be dead by 2030.

And the government adviser, Sir John Timpson – whose High Street Report I discussed recently – also told parliament that ‘it is quite clearly the right thing for government to do, to level the playing field between bricks-and-mortar retailers and internet retailers’. Even the chancellor, Philip Hammond, said, ‘We want to ensure that taxation is fair between businesses doing business the traditional way and those doing business online.’

But it seems that an online tax is not to be, and while the Treasury will continue to point to the £1.6 billion plan in last year’s budget to help the high street, it is still not enough to redress this imbalance.

At the moment, with Brexit seemingly occupying the minds of politicians every waking moment, there is little hope that this injustice will be rectified any time soon. Meanwhile, Amazon is laughing all the way to the bank, paying just £63 million in business rates in the UK after ramping up retail sales of more than £8 billion.

As I recently reported, Poundland has launched a selection of dummy engagement rings in the run-up to Valentine’s Day which consumers can use to propose with, enabling them to visit a jewellery shop later to buy the real thing if the wooed one says ‘yes’.

Now it has come up with another wheeze. This one has upset environmentalists who say that the ‘Gift of Nothing’ creates unnecessary plastic waste because the retailer is selling nothing except heart-shaped packaging for Valentine’s Day. The jokey gift costs £1and carries the messages ‘less is more’ and ‘exactly what you asked for’. Did it make me smile? I’m afraid it did, but I do promise to carry on recycling my household plastic waste.

Whether you’re buying or selling, have a great Spring Fair!