False Dawn or Cautious Optimism?
 Despite continuing cautionary observations that retail has failed to lay the spectre of recession, according to Huw Thomas, COO of retail systems experts PMC, it appears that confidence is returning to retail.
Thomas states: "Most senior IT people I talk to tell me that confidence is returning to retail. Where’s the evidence for those statements? Boardrooms are approving CAPEX budgets and consumers are returning – if not in droves then at least in good numbers. We have waited a long time for this dawn but finally it’s here. Of course, getting to this point was bloody and many retail businesses failed but those that took the right action early are now looking to a brighter future."
During the last few months many retailers are adopting the ‘back-to-business’ mantra. This does not mean that everything in the garden is rosy. Far from it. Doubtless this will be a slow recovery that’s why the phrase ‘cautious optimism’ is most appropriate.
Thomas continues: "There are several reasons driving this recovery - consumer confidence and retailer attitude are two key ones. With interest rates at current levels many consumers are now better off. Utility bills are coming down and reduced mortgage payments allow many to pay off their credit card debts. Although it’s unlikely that consumers will go on a mad spending spree the confidence to spend is definitely there. Retailer attitudes also help. There is nothing more likely to bring consumers back to the retail market than buoyancy. If the retail experience feels good then there’s a direct effect on consumer spending. And now that retailers see a new dawn perhaps consumers see the same light."
"That’s why retailers need to drive the strength of this return with approaches that encourage consumers. However, temper the note of cautious optimism with serious advice – do not give away the profit for turnover. I say that because Christmas is around the corner and the last action retailers should take is go into ‘sale mode’ too early. No one should discount savagely to drive volume through Christmas and then fail because of massive returns in January."
This is the year when retailers must keep faith with the new dawn, however hazy it appears right now. Those that remain in super-cautious mode will get caught out. Sales may be flat but at least the sales are there. Less than 12 months ago sales many predicted sales to be non-existent. It’s also important to remember that those who implemented cost optimisation are now best positioned. When the situation went ugly those retailers that reacted early made the right decisions. Now everyone is pleasantly surprised that it’s not as bad as they thought.
Thomas closes: "One positive outcome of the recession has been a much-needed injection of realism from landlords. It’s difficult to predict that such generosity would have been forthcoming without the unhealthy big gaps on the high streets and malls
And the future for retail? Keep faith and keep sensible, and we should all look forward to a slightly merrier Christmas than we expected earlier this year."
For further information please contact enquiries@paulmasonconsulting.co.uk |
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