The biggest names in UK retail are preparing for another tough year on the high street.
A new survey of around 30 retail giants – who together account for about 40 per cent of all high street sales – revealed that there’s little confidence that the recession will loosen its grip on consumer spending.
Two thirds of the surveyed group do not expect a revival of the retail market before the end of 2009. In fact, a third of respondents said the market wouldn’t recover until 2011 or even later.
Just 13 per cent expected the market to pick up this year, while an overwhelming majority (94%) expected the recovery to be slow.
The surveyed retail chiefs include bosses from the likes of Tesco, Marks & Spencer, JJB Sports, Next, John Lewis and BHS.
Andrew Higginson, chief executive of Tesco’s Retail Services division, encapsulated the pessimism that’s felt across the high street.
“I think the market will be flat at best at Christmas and part of that will be deflation,” he said. “Although currency falls suggest we should see a bit of inflation I don’t think the competitive market will allow it.”
Over 40 per cent of respondents believe Christmas trading will be better than last year. Half believe trading will be flat on last year, while six per cent expect the situation to get worse.
“This is the most severe downturn I have had in my 20-plus year career,” one anonymous retail chief stated in the report. “The low visibility about whether it has further to go marks it out.”
Nearly two thirds of those surveyed claimed they may need to cut jobs to survive the drought. 80 per cent expect more store closures and takeovers.
The government’s recent 0.5 per cent VAT cut was criticised by a huge majority (93%) of the survey’s respondents. Many store bosses said it had not helped because stores were offering much larger discounts. One retail chief described the cut as “fundamentally stupid.”
The survey was commissioned by PR firm Kreab Gavin Anderson.