High noon on the high street
When Woolworths went into administration just before Christmas 2008 it marked the end of nearly 100 years of trading for the pick-'n'-mix retailer and the beginning of a very tough time for high street retailers. In the week that Woolworths and MFI collapsed, electrical retail conglomerate DSG, the owner of Currys and PC World, plunged £30m into the red.
There is a simple explanation. With banks refusing credit and unremittingly bleak media coverage of the economic situation, the message has finally hit home: we are in a recession and we are tightening our collective belt as a result. The last quarter of 2008 was the second, consecutive quarter of reduced household spending, the first time this has happened in ten years.
Arguably, it’s only badly run businesses or those saddled with debt that have gone under so far. In 2009, corporate restructuring specialistists predict, good businesses will start to founder. Particularly at risk are the businesses owned by Baugur, who own House of Fraser, Whsitles and Mosaic. Among its investors were the three Icelandic banks that collapsed this year. There has even been talk that Alliance Boots could have difficulty repaying debt if the downturn is prolonged.
It’s not all bad news, however, with Mothercare announcing a rise in profits and supermarkets catering to consumers who are abandoning nights out in favour of food at home. Primark is still doing a roaring trade and the Arcadia Group, who own TopShop and Miss Selfridge, can depend on young customers without mortgages to keep shopping. Indeed, if it’s difficult to imagine how the high street will look in a year’s time it’s possible to predict who might be running it. Arcadia’s owner, Sir Philip Green, is ready to snap up troubled retailers, taking this opportunity to become the undisputed king of not just the high street but the entire shopping industry.
