Minimum wage increase costs retailers
On the day official figures show unemployment up again, retailers are calling for a fundamental reassessment of the National Minimum Wage (NMW). They say the next inflation-busting increase will add over £1 billion to retailers' wage bills, threatening retail jobs.
Preliminary findings from the British Retail Consortium's (BRC) annual NMW survey of retailers, to be published in full this autumn, show last year's rise cost retailers £1 billion and this October's increase will add a further £1 billion. Since 1999 minimum wage increases have averaged 6.7 per cent,
"It's no surprise that a quarter of retailers say they are likely to cut staffing costs, which may include some jobs" BRC Director General Kevin Hawkins
dramatically higher than inflation and average earnings. Twenty five per cent of retailers surveyed now say they are likely to cut staffing costs.
In a letter to Paul Myners, the new Chair of the Low Pay Commission (LPC), the BRC's Director-General Kevin Hawkins says the term "review" in the Commission's new terms of reference gives them the freedom to carry out a wide-ranging evaluation of the long-term goals of the NMW and they should do just that.
BRC Director General Kevin Hawkins said: "Our new figures show last year's minimum wage rise cost retailers a billion pounds and this October's increase will need another billion pounds. "That kind of money can't be found year after year without detriment to business. "With other costs, including energy prices, rent, rates and service charges now also shooting up, it's no surprise that a quarter of retailers say they are likely to cut staffing costs, which may include some jobs.
"Retailers are seriously concerned that the forthcoming review will simply continue the status quo and lead to further increases in real terms. We are urging the LPC to go back to basics and define what the ultimate goal for the minimum wage is."
18 August 2006
Retail property market on the rise
The value of the retail property market could soar by £2bn if controversial car parking charges are introduced at out-of-town shopping centres.
Research by the property services group Donaldsons has concluded that an average centre with 3,000 parking spaces could generate between £4.5m and £6m in additional income every year by charging shoppers to park their cars.
This, it argued, would help add more than £2bn to the value of the retail property market, even if some shoppers decided to stay away as a result.
The Commission for Integrated Transport said last month that the lack of parking charges at shopping centres such as Bluewater in Kent and Meadowhall in Sheffield was contributing to the decline of the high street, as shoppers abandoned town and city centres.
The government body, which is chaired by Peter Hendy, a director at Transport for London, therefore recommended mandatory parking fees be introduced, starting from around £1 an hour. It called for shopping centres to spend some of the cash on improving bus services and access for cyclists and pedestrians.
Shopping centres responded angrily to the proposals, pointing out that people expected free car parking and that any change would be deeply unpopular.
20 August 2006
Costly average Brit
The average Brit walks around each day touting over €1,250 worth of clothes and accessories. This can include an mp3 player, a handbag, jewellery and a mobile phone. University-educated Britons of 35 and over clock in even higher with an average street value on their person of almost €1,470, consisting of brand name clothing, watches, PDA or laptop. These are the findings of Zurich insurance firm after questioning 1,472 Britons. With an average value of €1,340, women carry more valuables than men, who carry an average of €1,100. A sixteen-year-old already has belongings worth €1,230. Half of those questioned were amazed at the cumulative value of their clothes and accessories.
One in six Britons carries an mp3 player, while one in 12 carries a laptop. Eighty-four percent carries a mobile phone. Last year the number of muggings rose 8 percent. Insurer Zurich therefore offers a “personal coverage” of about €50 per year, which includes coverage of mobile phones and mp3 players. The owner does have to be to prove that he or she was threatened to give it up with force, writes the Dutch publication Intermediair.
17 August 2006
Rise in high street sales
Like-for-like sales on the high street rose by more than 2 per cent in July despite the sweltering heat, according to the British Retail Consortium-KPMG Retail Sales Monitor which is released tomorrow. However, the BRC will warn that the uplift does not necessarily signal a recovery as the comparable period last year suffered a 1.9 per cent slump due to the London bombings. Figures also to be released tomorrow by FootFall, the data company, will show that shopper numbers across the UK fell by 2.2 per cent in July when compared with the previous year. FootFall describes the figure as "disappointing". However, shopper numbers increased by 2.5 per cent compared with June, largely due to the World Cup ending. The figure represents the first month-on-month rise since April. Some shopping centres have resorted to gimmicks to attract customers; the Oracle Centre in Reading, has created a fake beach to lure shoppers.
7 August 2006
Rate Cuts have little effect for retailers
Yesterday's interest rate cuts will do little to solve the problems faced by medium sized businesses in the retail sector, according to accountants and business advisers PKF. The rate cut of a quarter of a point to 4.5 per cent was decided at the Bank of England's 100th rate-setting meeting held today and follows a continued lack of economic growth in the UK. The UK economy has experienced its worst growth performance for more than a decade and many blame the slowdown on the High Street for this.
Philip Long, head of corporate recovery at PKF, said: "Retail businesses are the biggest losers in the current economic climate with many of them finding it impossible to cope, ongoing high interest rates are making consumers think twice about spending and retailers are fast loosing confidence as weak retail figures continue into the summer”. "Without the benefit of size, strong brand names or large funds to fall back on, the future is particularly unstable for medium sized businesses on the High Street as even major brand names are reporting falling sales. The Bank of England is right to cut interest rates, however I'm not sure it is enough to maintain growth and consumer confidence."
PKF has recently dealt with the administration of long established businesses such as Liverpool-based men's fashion and sports retailer Wade Smith Limited and leading fine jewellery chain, Preston & Duckworth. Both blame the high street slowdown for their predicament. BRC, Director General, Kevin Hawkins said "The BRC welcomes the move by the MPC to reduce interest rates today, although it has been a long overdue decision. The cut in interest rates will take several months before it works through to consumer behaviour on the high street and needs to be reinforced by further reductions over the next few months if the economy continues to slow down."
5 August 2005
Telegraph poll shows sale downturn
Britain's retailers have seen a disturbing slowdown in sales, according to a poll of top chains carried out by The Telegraph and backed up by the monthly BRC figures. The grim outlook will send a stark warning to the Bank of England not to announce an increase in interest rates later this week.
The government is further taking legal action against the oldest retail chain on Britain's high street to recoup up to £10m of unpaid VAT. HM Customs & Excise is taking Dollond & Aitchison to the European Court of Justice. The case concerns the exploitation of the tax loophole that allows retailers can sell goods to UK citizens worth less than £18 from Jersey, which is outside the EU. Each week the optician sends out hundreds of thousands of disposable contact lenses priced free from VAT.
6 March 2005
Consumer Confidence Affects Retail Sales
Weaker consumer confidence means that UK retail spending is on a downward tend as the peak Christmas shopping season approaches. The BRC/KPMG sales monitor for October shows a year-on-year increase in UK retail sales of 0.5 per cent on a like-for-like basis, with total growth of 3 per cent.
However, the three-month trend show the growth rate down to 1.1 per cent in October from 1.5 per cent in September on a like-for-like basis, with total sales down to 3.7 per cent from 4.1 per cent.
The survey found that October started well, especially for clothing and footwear retailers, but trade slowed in the second half, picking up only slightly at the end of the month. Consumer confidence remains weak, with shoppers wary about making big-ticket purchases and becoming more cautious about splashing out on non-essentials.
Kevin Hawkins, director general, of the BRC, said: "There is no escaping that the High Street trading environment is tough in the run up to Christmas. Sales growth hit its lowest level for 2004 in October, reflecting the underlying trend of weakening consumer demand that we have seen over recent months. Consumer concerns over the economy, pensions and housing market have combined with interest rate rises to erase their confidence.
"Growth is fragile and more vulnerable to economic bad news than it has been for a couple of years. However, some of the more downbeat predictions we've seen in the press of late could be premature. October often sees the shopper pause for breath before Christmas trading really starts. It could still go either way "
Amanda Aldridge, head of retail at KPMG, said: "This is exactly what UK retail did not want to see - disappointing figures for our High Street retailers at the start of the run-up to the all important Christmas trading period. The fact that the slowdown is across the board suggests that maybe consumer confidence has finally started to falter and that this is the start of a worrying downward trend."
11 November 2004
Stricter Responsibilities For Tax Free Shopping
New guidance issued by Customs on tax free shopping requires UK retail outlets to take more responsibility for customer compliance. Visitors to the UK from outside the European Community can claim back VAT on goods they have purchased whilst in the UK.
The updated requirements stress the need for retailers to provide adequate descriptions of goods purchased on the VAT refund form - or risk rejection of the refund form by UK Customs officers.
Students and migrants are recognised as commonly abusing the refund scheme
by purchasing goods prior to leaving the country, claiming the VAT refund, and
then bringing the tax-free goods back into the UK within a short space of time.
Customs hopes to combat this with a new requirement permitting this group to
only buy goods under the scheme when they intend to remain outside the EC for
at least 12 months.
John Kennedy, indirect tax partner at Deloitte, said: "Retailers now need to operate adequate checks on customers wishing to use the scheme to ensure all aspects of the new guidance are complied with. This will include checking passports and visas.
"Retailers should review their current arrangements and inform staff of the new requirements, before they come into force on October 1. "The financial penalties for failing to comply will leave the retailer stuck with the VAT due, together with interest. In exceptional circumstances penalties could also apply. Retailers who have not followed the existing rules fully may find the new requirements painful."
26 August 2004
sales boost and the impact of interest rate rises
The end of the Euro 2004 sales boost and the impact of interest rate rises took their toll on UK retail sales in July, according to the latest CBI figures. Following two months of strong growth, the CBI's latest monthly Distributive Trades Survey shows sales have slowed and are expected to continue to do so during August.
However the trade body stressed that it was too early to anticipate a sustained downturn. Forty-eight per cent of firms said sales were up on a year ago while 24 per cent said they were down. The balance of plus 24 per cent compares with 43 per cent in the June survey.
The underlying trend in sales growth - as measured by the three-monthly average - remained high in July at plus 39 per cent, compared with plus 41 per cent in June, which was the fastest rate of growth since October 2001.
John Longworth, chairman of the CBI's DTS Panel, said: "Today's results confirm that the strong growth in May and June was boosted by sales of items related to 'Euro 2004'. Unfortunately the end of the football competition has coincided with the increasing impact of interest rate rises on consumer spending and poor summer weather for most of July.
"The Bank of England's objective of gently slowing this sector of the economy appears to be working, but it must continue to be cautious. Business wants to see a gradual, well-signalled approach to monetary policy when the MPC meet this week." The Bank is widely expected to increase UK interest rates again when it meets this week.
4 August 2004
EU Expansion Good For Vietnam Manufacturers
With the EU's expansion of ten new members, a textile quota increase has brought about a golden opportunity to Vietnam-based retailers according to trade experts.
Given the quotas rise, the Ministry of Trade (MoT) will give priority to businesses who have run out of quotas to ship goods having been stockpiled, reports Mr. Le Van Dao, General Secretary of the Vietnam Garment and textile Association (Vitas).
The decision allowing Vietnam retail manufacturers to freely ship clothing and textile products into EU's new members pending the two sides' quota negotiation. It is expected that EU - bound retail goods can bring home USD1 billion, up USD400 million against 2003.
Yet, EU expansion also creates many challenges to domestic entrepreneurs, especially in terms of quotas. WTO members will enjoy retail quota removal in 8 months, calculate trade experts. Then, Vietnam is about to face a free and drastic competition if the country has not yet become WTO's member by that time. Therefore, domestic companies should map out market search plan in a bid to avoid likely bankruptcy.
Meanwhile, development level and demand in EU countries are not the same. Vietnam's manufacturers must improve products' quality and set up long term partner strategy. (Source: VNA)
14 May 2004
Global sourcing summit 2004
Decrease costs, improve margins and remain competitive
Wednesday May 12, 2004 - Le Meridien Piccadilly, London, W1
The Global Sourcing Summit 2004 is a one-day event specifically designed to
address the strategic and practical issues surrounding global buying and sourcing.
In a world of fierce High Street competition, stagnant prices and long-term
price deflation, where maintaining margins and levels of profitability remains
sacrosanct, the need to drive down material and operational costs by sourcing
strategically and effectively is paramount to the business.
Confirmed speakers already include:
Group Booking discounts available
To register:
Tel: +44 (0) 20 7505 6044
Fax: +44 (0) 20 7505 6001
Email: retailconferences@emap.com
April 1 2004
Hello High Street, Goodbye High Fashion
UK shoppers are spending more on the high street than ever before. With the coolest designers creating diffusion ranges for the likes of Topshop, Marks & Spencer and now New Look, consumers are choosing mainstream clothes over high fashion prices.
The British fashion industry, generally regarded as one of innovation and breeding ground for new talent, though coming in last place to New York, Milan and Paris for growth and development, is not so much run by designer brands as its US and European counterparts as it is by its competitive high street offer. Retailers such as Debenhams, Arcadia and M&S are showing us fashionable and affordable collections that have, in essence, never looked better.
Utilising their capability of fast fashion - translating catwalk designs to the high street in a very short period of time - retailers have been able to keep on top form in the market and reacting to consumer needs much faster than their designer contemporaries. Further more, with the ever-increasing improvement in quality, upmarket and image-conscious consumers are happy to buy their frocks on Oxford Street.
With a high street that exudes cool, hip and smart, retailers have recognized that the seasonal cycle of new designs is too slow to deal with the fast pace change in trends and fashions. What is called 'Quick Response' manufacturing means that the high street can respond to consumer demands in a very short time frame, encapsulating the current fads and needs and turning around fresh injections throughout the season.
More notably is that UK shoppers are increasingly moving away from the lifestyle packages offered by brands such as Armani and Gucci. Not wanting to be walking adverts for a certain brand, consumers are smarter and more selective, choosing instead to mix high fashion with high street product to be cool.
8 March 2004
Clothing and Footwear Boosting Inflation
The Office for National Statistics said the biggest influence on a rise in inflation for July came from clothing and footwear sales. Inflation edged up from 2.8per cent to 2.9 per cent when a fall had been expected.
The ONS attributed the rise in clothing prices to fewer reductions on Sale stock because of good weather.
21 August 2003
Silk Industries in Sale Talks
Fabric manufacturer Silk Industries has confirmed it is in talks that may or may not lead to an offer for the company.
The announcement followed a 23 per cent jump in its share price last Thursday. The company used to own designer brand Paul Costelloe, but sold it to concentrate on the silk business in 2000.
29 July 2003
Euro Shopping
Joining
the Euro would be beneficial for British consumers. Getting rid of the pound
would increase price transparency and encourage competition amongst companies,
as was confirmed by the Treasury on Monday.
Price studies in the EU have demonstrated that British consumers pay more for their products than their European counterparts. On average, Britons pay more than 20 per cent on such goods as alcohol, tobacco, clothes, meals in restaurants and stays at hotels.
Businesses could also benefit from embracing the Euro. Without the pound, there would be no need to convert currencies when companies compare prices, making it simpler to take advantage of the differences. Whilst there would be a possible shift of resources from inefficient producers to the most efficient companies, market efficiency and competition would be improved.
With a wider range of goods of better quality being available to the British consumer, and at lower prices, becoming Euro-minded is a long-term benefit. While short-term price rises due to the cost of changeover are likely to occur, British businesses, especially smaller businesses, would complete the task successfully. The rest of Europe has managed to embrace the new currency and it is only a matter of time before Britain faces the same task.
11 June 2003
Sales growth in UK
Retail sales in the UK grew by 1.3 per cent on a like-for-like basis, and by
3.9 per cent on a total basis, compared with a year earlier.
The three-month trend rates of growth decreased from 2.7 per cent in January
to 2.5 per cent in February for like-for-like sales, from 5.4 per cent to 5.1
per cent for total sales. This data is according to the BRC-KPMG Sales Monitor.
March 13, 2003
Peace shirts booming business
Peace paraphernalia has become a booming global industry as the anti-war movement gathers pace. Millions of peace shirts, from the slinky rainbow vests by the Italian designers Dolce & Gabbana to baggy, mass-produced sweatshirts, have been sold to protesters worldwide.
Printing firms across Britain and America have reported huge increases in sales and are struggling to meet the demand for anti-war apparel. In London, a tiny firm of printers founded by radical punks in the seventies has become a market leader.
Fifth Column, which started out making T-shirts for the Clash, is now making thousands of anti-war tops from its base in Camden, North London. Its director, Spike Naughton said: "We would not like to think we are profiting from possible war in Iraq, but we have seen a big increase in business."
Designers have also jumped on the bandwagon: Dolce & Gabbana appropriated the rainbow "Pace" flags hanging from Italian balconies and turned them into stylish vests, and Katharine Hamnett, the British designer, launched an anti-war top at London Fashion Week.
March 7, 2003
Slow economy little impact on women shoppers
An American survey on fashion shopping trends predicts that despite the weak state of the current economy, 75 percent of American women plan to spend just as much on fashion this year as they did last year buit 58 percent are planning to change their shopping habits. More than half plan to shop only at sales or with store savings coupons, or to keep wearing their existing wardrobes, while filling in with new purchases. One out of four women claimed they are being more practical about price and garment care. 41 percent of those queried claim that in spite of the economy, they won't change their fashion shopping habits at all and 25 percent of the women polled planned to cut back on fashion purchases completely.
What's ahead for the holidays? About half of the respondents said that the slow economy would affect their gift shopping list. While 51 percent said they'd spend as much as they usually do, 46 percent planned to cut down on the number or cost of the gifts they buy. Only eight percent said they wouldn't exchange gifts at all.
Most of the women queried showed a conservative side: asked what they would purchase if they could spend only USD 100 on fashion, 73 percent chose practical items like basic shirts and sweaters. A scant 4 percent would blow it all on the latest trendy accessory like a super-long muffler, and only 3 percent chose sexy lingerie. Asked what would motivate them to buy a new outfit, even on a limited budget, a decisive 66 percent of the women said that they would spend for a special event like a wedding or a big date. And a new job or even a job interview would trigger a trip to the mall for 25 percent of the respondents.
The national sample of 516 adult women took part in this survey on women's shopping habits executed by an independent market research firm, Taylor Nelson Sofres Intersearch-Express Omnibus, for the Woolite Fashion Forum(TM) from September 25-29, 2002.
November 19, 2002