Connect with us

Published

on

Retailers suffered a “lacklustre” January as bad weather and cost of living pressures discouraged shoppers from opening their wallets after Christmas, according to new research.

Total retail sales across the UK increased by only 1.2% year-on-year in January – down sharply from growth of 4.2% during the same period last year, figures from the British Retail Consortium (BRC) and KPMG said.

Separate figures from Barclaycard also found year-on-year consumer card spending grew by just 3.1% over the same month.

It blamed the recent cold weather – including from Storm Isha and Storm Jocelyn – for putting off shoppers from visiting high streets, and claimed Britons were instead “embracing nights in” by watching TV hits such as The Traitors.

The BRC said January sales discounting helped boost spending in the first two weeks of the post-Christmas period, but added the trend was “not sustain[ed] throughout the month”.

Chief executive Helen Dickinson said: “Larger purchases, such as furniture, household appliances, and electricals, remained weak as the higher cost of living continued into its third year.”

Clothing and footwear sales also performed poorly, although there was an upward trend for health and beauty products, she added.

Linda Ellett, KPMG’s UK head of consumer markets, leisure and retail, described the high street’s performance as “lacklustre” and said the “feel-good factor” from falling mortgage rates and easing inflation had yet to materialise at the tills.

She said: “It may be a new year, but the hangover of low consumer confidence remains.

“The extraordinary weather conditions across large parts of the country did little to encourage shoppers out on to the high street, whilst continued industrial action on the rail network was unhelpful for city centre locations.”

It comes after official figures showed a shock fall in retail sales during the key December shopping period, despite some positive reports by major high street outfits in the run-up to Christmas.

Shelter from the storms

Barclaycard said its below-inflation growth figures suggested “Brits stayed at home to shelter from the cold weather and save money after a busy festive period”.

It said spending on takeaways and fast food was up 5.5% year-on-year in January, with people spending £55 each on average, while household expenses on digital content and subscriptions increased by 11.4%.

Nearly half of 2,000 consumers polled on behalf of Barclaycard said they were using loyalty schemes or vouchers to get money off shopping, while 43% said they plan to cut down on non-essential spending due to rising bills.

But the poll also found 70% have confidence in their household finances – the highest level in its monthly survey since November 2021.

Please use Chrome browser for a more accessible video player

The rise and rise of retail crime

Karen Johnson, head of retail at Barclays, said: “Brits took on a more frugal approach in January, choosing to stay at home more often to save money and shelter from the winter weather.

“This meant that online retail performed strongly, as shoppers browsed the sales from the comfort of their sofas, while demand for digital content and takeaways remained robust, boosted by the release of popular new film and TV releases such as The Traitors and Fool Me Once.

“While this shift in behaviour resulted in subdued growth for hospitality and leisure, it’s encouraging that confidence is improving, with consumers remaining resilient and finding savvy ways to manage their finances.”

Read more from business:
McDonald’s sales dented as war boycotts bite
Campaign for tourist tax U-turn ‘not just about rich shoppers’
Unemployment rate may be much lower than estimated

Jack Meaning, chief UK economist at Barclays, added: “Increasing consumer confidence is a positive message for the UK outlook in 2024, as we see inflation continue to fall, real incomes rising and growing signs that interest rate cuts are coming.

“Spending looks to be on an upward trajectory”.

Looming election

The figures came as the BRC’s Ms Dickinson said she hoped the “next government” could improve the outlook for businesses.

Opinion polls suggest the Labour Party is on course to win the next general election, which many commentators expect will be held this autumn.

Please use Chrome browser for a more accessible video player

Currys boss slams government over retail costs

Ms Dickinson said: “With the spring budget in sight, and a general election looming, government cannot afford to ignore the needs of retailers and their customers.

“Employing three million people and supporting families and communities in every corner of the country, retail is the ‘everywhere economy’.

“By addressing the cumulative burdens, from business rates’ rises, to ill-conceived new recycling proposals to border control costs, the next government can unlock retail investment and boost local and national economic growth.”

Continue Reading

Business

Burberry checks out contenders to replace Murphy as chairman

Published

on

By

Burberry checks out contenders to replace Murphy as chairman

Burberry is kicking off a formal search for a new chairman nearly a year after installing the latest in a string of chief executives charged with reviving the luxury fashion brand.

Sky News understands that Burberry is working with headhunters on a hunt for Gerry Murphy’s successor.

Mr Murphy, who also chairs Tesco, is not expected to step down this year, although the precise timing has yet to be formally determined, according to insiders.

Last summer, Sky News reported that Burberry had commenced a search for a non-executive director capable of taking over from Mr Murphy in due course.

That mandate is now said to have evolved into a more straightforward hunt for a new chair, sources suggested.

Planning for his departure comes as Burberry and other luxury goods manufacturers grapple with the uncertainty of swingeing tariffs amid an escalating international trade war.

The company is now being run by Joshua Schulman, the former Jimmy Choo boss, who was drafted in last July to arrest its decline.

More from Money

Mr Schulman replaced Jonathan Akeroyd, who left in the wake of a string of profit warnings.

Shares in Burberry closed on Tuesday at 738.8p, giving it a market value of about £2.6bn.

The stock is down by more than a third over the last year.

A spokesperson for Burberry said: “In the normal course of business, we look at succession planning for board roles as they reach term.”

Continue Reading

Business

Food inflation highest in almost a year – more to come, industry warns

Published

on

By

Food inflation highest in almost a year - more to come, industry warns

Food inflation has hit its highest level in almost a year and could continue to go up, according to an industry body.

The British Retail Consortium (BRC) reported a 2.6% annual lift in food costs during April – the highest level since May last year and up from a 2.4% rate the previous month.

The body said there was a clear risk of further increases ahead due to rising costs, with the sector facing £7bn of tax increases this year due to the budget last October.

Money latest: Can we hide my wife’s redundancy from mortgage provider?

It warned that shoppers risked paying a higher price – but separate industry figures suggested any immediate blows were being cushioned by the effects of a continuing supermarket price war.

Kantar Worldpanel, which tracks trends and prices, said spending on promotions reached its highest level this year at almost 30% of total sales over the four weeks to 20 April.

It said that price cuts, mainly through loyalty cards, helped people to make the most of the Easter holiday with almost 20% of items sold at respective market leaders Tesco and Sainsbury’s on a price match.

More on Inflation

Its measure of wider grocery inflation rose to 3.8%, however.

Wider BRC data showed overall shop price inflation at -0.1% over the 12 months to April, with discounting largely responsible for weaker non-food goods.

But its chief executive, Helen Dickinson, said retailers were “unable to absorb” the surge in costs they were facing.

“The days of shop price deflation look numbered,” she said, as food inflation rose to its highest in 11 months, and non-food deflation eased significantly.

“Everyday essentials including bread, meat, and fish, all increased prices on the month. This comes in the same month retailers face a mountain of new employment costs in the form of higher employer National Insurance Contributions and increased NLW [national living wage],” she added.

Please use Chrome browser for a more accessible video player

Five hacks to beat rising bills

While retail sales growth has proved somewhat resilient this year, it is believed big rises to household bills in April – from things like inflation-busting water, energy and council tax bills – will bite and continue to keep a lid on major purchases.

Also pressing on both consumer and business sentiment is Donald Trump’s trade war – threatening further costs and hits to economic growth ahead.

Read more from Sky News:
UK-US trade talks ‘moving in positive way’, says White House
M&S tells agency workers to stay at home after cyberattack

A further BRC survey, also published on Tuesday, showed more than half of human resources directors expect to reduce hiring due to the government’s planned Employment Rights Bill.

The bill, which proposes protections for millions of workers including guaranteed minimum hours, greater hurdles for sacking new staff and increased sick pay, is currently being debated in parliament.

The BRC said one of the biggest concerns was that guaranteed minimum hours rules would hit part-time roles.

Continue Reading

Business

Inside the Vietnamese factory preparing for the worst since Trump’s tariff threat

Published

on

By

Inside the Vietnamese factory preparing for the worst since Trump's tariff threat

On the outskirts of Ho Chi Minh City, factory workers at Dony Garment have been working overtime for weeks.

Ever since Donald Trump announced a whopping 46% trade tariff on Vietnam, they’ve been preparing for the worst.

They’re rushing through orders to clients in three separate states in America.

Sewing machines buzz with the sound of frantic efforts to do whatever they can before Mr Trump’s big decision day. He may have put his “Liberation Day” tariffs on pause for 90 days, but no one in this factory is taking anything for granted.

Staff have been working overtime
Image:
Staff have been working overtime

Workers like Do Thi Anh are feeling the pressure.

“I have two children to raise. If the tariffs are too high, the US will buy fewer things. I’ll earn less money and I won’t be able to support my children either. Luckily here our boss has a good vision,” she tells me.

Do Thi Anh
Image:
Do Thi Anh

That vision was crafted back in 2021. When COVID struck, they started to look at diversifying their market.

Previously they used to export 40% of their garments to America. Now it’s closer to 20%.

The cheery-looking owner of the firm, Pham Quang Anh, tells me with a resilient smile: “We see it as dangerous to depend on one or two markets. So, we had to lose profit and spend on marketing for other markets.”

You asked, we listened, the Trump 100 podcast is continuing every weekday at 6am
Image:
You asked, we listened, the Trump 100 podcast is continuing every weekday at 6am

That foresight could pay off in the months to come. But others are in a far more vulnerable state.

Some of Mr Pham’s colleagues in the industry export all their garments to America. If the 46% tariff is enforced, it could destroy their businesses.

Read more from Sky News:
The world and America have changed irreversibly under Trump

Trump’s first 100 days in 100 words
How Trump’s immigration crackdown has changed lives

Doubts US will start making what Vietnam delivers

Down by the Saigon River, young couples watch on as sunset falls between the glimmering skyscrapers that stand as a testament to Vietnam’s miracle growth.

Cuong works in finance
Image:
Cuong works in finance

Cuong, an affluent-looking man who works in finance, questions the logic and likelihood that America will start making what Vietnam has spent years developing the labour, skills and supply chains to reliably deliver.

“The United States’ GDP is so high. It’s the largest in the world right now. What’s the point in trying to get jobs from developing countries like Vietnam and other Asian nations? It’s unnecessary,” he tells me.

But the Trump administration claims China is using Vietnam to illegally circumvent tariffs, putting “Made in Vietnam” labels on Chinese products.

There’s no easy way to assess that claim. But market watchers believe Vietnam does need to signal its willingness to crack down on so-called “trans-shipments” if it wants to cut a deal with Washington.

👉 Follow Trump100 on your podcast app 👈

Vietnam can’t afford to alienate China

The US may also demand a major cutback in Chinese manufacturing in Vietnam.

That will be a much harder deal to strike. Vietnam can’t afford to alienate its big brother.

Luke Treloar, head of strategy at KPMG in Vietnam
Image:
Luke Treloar, head of strategy at KPMG in Vietnam

Luke Treloar, head of strategy at KPMG in Vietnam, is however cautiously optimistic.

“If Vietnam goes into these trade talks saying we will be a reliable manufacturer of the core products you need and the core products America wants to sell, the outcome could be good,” he says.

But the key question is just how much influence China will have on Vietnamese negotiators.

Anything above 10-20% tariffs would be intensively challenging

This moment is a huge test of Vietnam’s resilience.

Anything like 46% tariffs would be ruinous. Analysts say 10-20% would be survivable. Anything above, intensely challenging.

But this looming threat is also an opportunity for Vietnam to negotiate and grow. Not, though, without some very testing concessions.

Continue Reading

Trending