All the ingredients needed for a nightmare 2008 are aligned to make this a year to forget for most retailers. The portents are bad: history shows that however weak consumer's appetites were over the December period, they will be considerably weaker still as 2008 unfolds, particularly the first half.
Year-on-year retail spending at Christmas is rarely lower and the 2007 festive season was no exception. Depending on which source one uses the value of spending only grew year-on-year for December by 2.3% (BRC) or 1.4% (ONS). Spending growth at this level has failed to keep the wolf from the doors of many retailers. Given that people pull out many of the stops for Christmas it is safe to conclude that something of a hiatus will follow.
With so many people on fixed rate mortgages, rising interest rates in 2007 failed to impact fully on consumer's spending. This will only percolate through as 2008 unfolds, even if rates are now starting to come down.
I expect the value of retail spend in 2008 to be just below 2%. This figure needs to be viewed alongside some other key metrics. First, floorspace. I expect selling space (net of closures) to grow by nearly 1.5%. Second, I think costs across the industry will increase by around 4%. In combination, these numbers will mean everyone has to run much faster just to stand still, and driving sales will be critical.
In spite of this unpromising background, some retailers will prosper. Those that do will all have one thing in common: a fundamental understanding of demand and the skills to turn that into sales growth.
More Information - wholesale silver jewellery
