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SnapShop Monthly Summary - June 2014

 

Posted At: 19 June 2014 11:48 AM
Related Categories: Administrations, Retail

 

SnapShop recorded one administration in June – Lakeland Leather. Following sales being affected by low demand over the mild winter, Lakeland appointed McTear, Williams and Wood as administrator. It is understood a deal may be in place to rescue the stores, but four have already closed.

In contrast, four retailers have secured or opened their debut UK stores signalling their confidence in the UK market – Dutch value retailer Hema, US fashion retailer American Eagle, women’s fashion brand Stradivarius, and Spanish casual dining concept La Sala.

The growing confidence in the UK economy is backed up by GfK’s Consumer Confidence Barometer, which revealed that UK consumer confidence in May rose to its highest level since 2005, climbing three points to zero. GfK said the main driver of the increase was people’s assessment of the general economic climate.

In contrast to this, the UK economic recovery was dealt a blow after figures showed retail insolvencies have hit an unexpected five-year high in 2013, when almost 1,300 retailers were declared insolvent – a 12% year-on-year increase – as rapid expansion of the supermarket convenience store format drove the UK’s corner shops and traditional small retailers to the brink, according to accountancy firm Wilkins Kennedy.

Shop prices also deflated 1.4% year-on-year
, the same rate as recorded in April, making May the thirteenth consecutive month of deflation according to May’s British Retail Consortium (BRC) Nielson Shop Price Index. Prices have been kept low as food retailers compete in the price war and non-food retailers keep value-for-money at the forefront.

Figures, however, from Kantar Worldpanel for the 12 weeks to 25 May 2014 reveal a slowdown in grocery market growth to 1.7% - the lowest level for at least 11 years – as supermarkets' heavy use of price cuts and promotions fail to encourage consumers to buy and spend more. According to latest figures from Nielsen for the four weeks ending 24 May, consumers spent 0.9% less money and bought 2.1% less volume at the UK's leading supermarkets than the same period a year ago.

Cost and convenience have driven a marked shift in grocery shopping across the globe
, with consumers significantly more likely to make frequent, smaller grocery shopping trips, as opposed to one large weekly shop, according to new research from leading customer science company dunnhumby.

Figures from the British Retail Consortium's Online Retail Sales Monitor show that online sales of non-food products grew by 17% during May when they accounted for 18.7% of all UK retail sales. The fast growth came against a background of more subdued high street spending, the accompanying BRC KPMG Retail Sales Monitor showed. Total UK retail sales grew by 2% in May, compared to the previous year, while like-for-like sales were up by only 0.5%. Not surprisingly, footfall in May was 0.2% down on a year ago, marginally down on the 0.1% year-on-year fall seen in April, and below the three-month average of a 0.6% increase.

Looking to the future of the UK high street, leading retailers and businesses are to give their support to 29 towns in the latest stage of high street rescue efforts, that will see extra teams parachuted in and provide strategic management through the Healthy High Streets campaign led by Business in the Community and DCLG. The project aims to reduce vacancy rates by 20%, boost footfall by 10% and create 3,000 new jobs. A hundred towns are to be supported by the campaign over the coming three years.

The government has announced that pre-pack administration arrangements will be subject to greater scrutiny
, having accepted recommendations made by regulation expert Teresa Graham, who was commissioned to carry out a review of pre-packs by business secretary Vince Cable last summer. The business minister Jenny Willott said today the government would introduce a range of voluntary measures, with a view to legislating at a later date “if necessary”. Last year 2,365 businesses in the UK went into administration. Of these around 600 were subject to a pre-pack deal.

Additionally, the government has issued a response to concerns raised over the health of the UK retail sector, saying it has:

• Launched a discussion paper encouraging business ratepayers to give their views on how business rates can be improved, and it is also “considering the frequency of [rates] revaluations”

• As of March 2014, the 27 Portas pilots have spent 54% of their grant funding, with a further 29% of funding committed to spend. It added: “Many pilots are still delivering their work programmes, the government would rather that the pilots spent the money in the most effective way, than rush spending to meet an arbitrary deadline.”

• In response to BIS’ lack of industry strategy for the retail sector: “Retail is a large and diverse sector with businesses of all sizes in fierce competition. Government therefore must avoid interventions that could have adverse consequences.”

Whether these proposed changes turn the fortunes of our ailing high streets around remains to be seen, but you can keep up with all the news regarding the future of retail here on SnapShop.
 

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The opinions expressed herein are the personal opinion of the author and are not intended as statements of fact and do not represent the view of SnapShop or Pragma in any way.

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