Retail in 2007 – the outlook and the demand
Ratner has some fears for 2007, feeling that it’s not just cyclical but structural issues that exist. So it’s not just a question of costs and margins and unless companies like John Lewis and M&S deal with the situation, there could be massive disparity between what Ratner calls ‘the good, the bad and the ugly’. Only operators like John Lewis and M&S seem well equipped to deal with the situation, but it may be tough for others.
Ratner identifies a ‘good, bad and ugly’ situation whereby the ‘bad’ fall away, but the ‘good’ and ‘ugly’ survive. A category called the ‘living dead’ also exists – companies that have been in terminal decline since the 1950s, yet have continued to throw money at trying to solve the situation. However, no major collapses are expected in 2007. A company like HMV is very well run, but the area is damaged by the internet and downloading that goes on. It will make less money than last year and will probably go on throwing money up but profits will go down.
However, Akers sees things improving a lot, and that the housing market plays a key part, saying, “With the continued buoyancy of the housing market, consumer confidence remains high, and retail sales will benefit.”
Thomas believes that the key question is why someone would choose to go to a particular retailer. As always it’s a case of making your retail offering desirable enough for customers to walk through the doors as opposed to those of your competitors. Retailers need to have a reason why a customer should choose their product and if they can’t find any reasons, they’re in the realms of the living dead.
“I think the housing market plays an enormous part in consumer confidence.”
Richard Akers
