The Current Economic Climate
* Our research clearly shows that retailers believe consumer spending will continue to be constricted throughout 2012. The fear of unemployment, particularly for those working in the public sector, will continue to depress consumer sentiment. Combined with inflation rates that will outstrip wage increases, and consumers continuing to pay down debt, it makes top-line growth difficult. (RW 2012) * While the figure continues to tick up, and unemployment among the young particularly impacts on the retailers who serve them, the threat of unemploy- ment depresses the spending of many more. (RW 2012) * Several forces at play are making life difficult for those who want to promote high streets; not least the continued growth of online sales, plus the total costs of high street property compared with footfall and sales densities. (RW 2012)
* Inflation has squeezed disposable incomes, particularly among the C2DE socioeconomic groups. (RW 2012) * 32% The percentage of British shoppers who feel they have no cash to spare, according to the BRC and Nielsen in August 2011 (RW 2012) * Coming at a time of squeezed income by heightened inflation in essentials such as food and petrol, one might have expected consumers to cut their cloth. Yet, a number of sources including the Office for National Statistics confirm consumer spending on clothing increased by more than the rate of inflation in 2011: Mintel estimates total clothing spend grew by 4.7%, well outpacing CPI for the clothing category. Despite the economic context, consumers therefore grew their clothing spend significantly in real terms in 2011, suggesting an underlying resilience in the market: clothes shoppers may be deterred by rain, but they are very unwilling to cut their purchases in response to a deterioration in their spending power. (Mintel 2012, clothing retailing). * Economy slowly recovering - falling headline inflation and recent falls in the number of people unemployed suggests the economy is showing signs of recovery since the start of 2012. (Mintel 2012, clothing retailing). * Double-dip recession
* The UK economy is officially back in recession. The erratic economic growth seen in 2011 - up 0.5% in the first quarter, down 0.1% in the second quarter, up 0.6% in the third quarter – ended down 0.4% in the final quarter of 2011. This year the downward trend has been more sustained. Firstly, contracting 0.3% in the first quarter and then by 0.5% between April and June. It is the same story for year-on-year GDP growth, which has fallen from 1.6% in the first quarter of 2011 to -0.5% in the second quarter of 2012. Attempts to stimulate economic growth have been largely thwarted, despite a sustained period of historically low interest rates and quantitative easing measures. The unresolved euro-zone debt crisis continues to impact on the UK economy, hitting both jobs and growth. * (Mintel 2012, clothing retailing).
3.1 The UK retail environment.
* after many years of erosion, neglect and mismanagement, something I felt was destined to disappear forever. (MP, 2011). * out-of-town retail has drained the traffic and retail offer from our town centres, (MP, 2011) * With town centre vacancy rates doubling over the last two years and total consumer spend away from our high streets now over 50%,(MP, 2011). * • The number of town centre stores fell by almost 15,000 between 2000 and 2009 with an estimated further 10,000 losses over the past couple of years;2 (MP, 2011).
* • Nearly one in six shops stands vacant;3 (MP, 2011).
* • Excluding Central London, high street footfall has fallen by around 10% in the last three years;4(MP, 2011).
* the overarching strategy for most retailers in 2012 is going to be presenting a great customer experience and its successful execution will depend on delivering a pitch perfect performance in all areas of the...
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