We're getting poorer... :(

It is big news really, but everyone has come to expect it of late.  For many many years we were all getting richer.  We can afford things our parents couldn't, and they more than their parents, for decades disposable incomes have steadily risen.  Well not any longer.  The impact of the recession & government spending cuts is hurting the disposable incomes of the middle classes significantly, but most are worse off to some degree.  Asda tracks the average income trends and spending trends and has just reported that on average we are now £6 poorer each week than we were a year ago. 

Could you live with £6 less a week.  I guess probably you could.  That's 2 very cheap pints.  So probably it is not pushing many to starvation rations, but if we all have £6 less then we are all spending about £6 less (unless we're getting further and further into debt*), and what impact is that having on all the businesses around us especially those competing for our discretionary spend.

* While I accept that given most of you are students your debt pile is probably growing, currently as a nation we are reducing our debt levels i.e. paying off loans, saving money - this can be quite problematic - we're saving because we are nervous about our financial security, but in so doing, we're suppressing the economy.  Not spending so much will drive more retailers etc etc to insolvency - rather causing economic issues and uncertainty.  If we all went out and spent our life savings the recession would be over!

JJB sports - for how long??

JJB sports has been commented on here previously.  It is already in breach of banking agreements, and in a statement early in December when it announced a profits warning it said it was relying on a good Christmas trade.  Well with the snow & their many out-of-town locations I guess Christmas trade has not been great.  So now they have announced that their chairman John Clare will step down with immediate effect - John Clare is a very experienced retailer if not the most dynamic; his departure is surely indicative of either Clares' lack of belief in the future of the company or board level conflict - either paint a bleak picture.  They have also gone cap in hand today to shareholders asking for £31.5m to help them stay afloat.  Surely there is the gamblers disease here somewhere - pouring bad money after bad in the hope of success.  Isn't it right to call time on JJB now??

The internet is taking over?

Some pretty striking figures today on the growth of e-commerce.  10.5% of all retail sales in November were made on-line in comparison to just 7.9% last year.  This is a really huge growth, and if these sales are simply being displaced from the High Street rather than additional sales then it will spell trouble for many more high street stores.  Already we have seen a shift in the nature of many high streets as book sellers, travel agents etc are in decline due to on-line alternatives, but thus far they have been replaced by cafes, restaurants & nail bars.  I wonder how long this trend can continue before the effects become more damaging.

Retail sales up and unemployment up

New figures released today report that retail sales in November are up 0.3% on last year & Octobers sales data have been revised up to 0.7% growth.  Really great news for the retail sector who will have expected a really tough Christmas.  Increased sales means less need for discounting of Christmas stock, with the consequent increased margins helping the health of many retailers greatly.

Whilst this is great news I wonder quite what Decembers figures will hold.  Of course given the volume of sales that is usual in December any small rise or fall in percentage terms can be significant in £ terms.  The impact of the less than favourable weather on key Christmas shopping days does not so far bode well.

Retail impact of 'snow days'

The days just after November pay day are some of the busiest for retailers, with many in the current economic climate dependant on successful Christmas sales.  This week and weekend to come is as critical as any and so the snow, ice and consequent travel disruption will be quite damaging.  The damage could even prove fatal.  Only yesterday JJB for example saw 20% of it's value wiped off when it warned the city that it would break banking loan conditions, their announcement discusses how they are basically pinning their hopes on a strong Christmas, well so far so bad, their sales in December so far will be a fraction of what they were planning on - I wonder how long the company can limp on and if already they are breaking the terms of their loans whether bankruptcy is a question of when rather than if...

Of course depressed sales over Christmas are hugely problematic in terms of cash flow, also they mean that a lot of stock bought for anticipated Christmas sales go unsold and have to be heavily reduced to shift, often at below cost prices.  This is why Christmas 2009 was not as bad for retails as 2008 as they had largely estimated demand more accurately and so been left with less unsold stock.