More retailers hit the wall

Following my last journal entry, three more high profile retailers have entered administration. Furniture store Habitat, Homeform (the owners of Moben Kitchens, Sharps Bedrooms and Dolphin Bathrooms) and fashion house Jane Norman have all fallen during the past week, with all citing poor sales and weak consumer demand as the culprit.

All three worked in challenging and competitive markets, and one could conceivably argue that the malaise on the High Street is simply weeding out some of the weaker retailers, whose long term prospects were not that great, whilst the stronger retailers just get stronger.

However, one only needs to look at recent sales figures from Argos / Homebase, and announcements today by Carpetright and Thorntons  - who are both closing stores -  to see that the poor sales and weak growth is spread right across a wide range of retailers - even giant Tesco's UK like-for-like sales were flat for the first quarter of 2011.

The prospects for the remainder of 2011 remain bleak - hard pressed consumers, hit by rising fuel, energy and food prices and poor job security - are putting major purchases on hold, and judging by recent trends, also paring back on the little luxuries and concentrating on the essentials. Until confidence improves, one has to wonder how many more retailers will soon follow this week's casualties

Dark Clouds gathering once again?

I have been gently warning clients over the past year or so that we may well see a return to recession, both in the UK and US. Whilst both economies have managed, thus far, to avoid the so-called "Double Dip", growth seen in the first quarter of 2011 has been anaemic at best.  But it was growth none the less and had given comfort to investors that the worst was behind us.

However, recent data from both sides of the pond have suggested that we may yet be sucked back into the recessionary abyss.

US unemployment had been showing healthy signs of improvement over the first few months of 2011, but May's print fell far short of expectation, and the unemployment rate, which had been falling, nudged back up to 9.1%.

Closer to home, this morning's British Retail Consortium data for May showed UK retail sales falling 2.1% from the same month a year ago. This is clearly worrying data, and shows the fragile position the UK economy is in. Consumers, battered from inflation, weak wage growth or fears of redundancy, are simply not prepared to splash out on the big ticket items. We expect retail sales to remain poor through the rest of 2011, and one wonders how many of the straggling retailers will follow Focus DIY and Oddbins and fall by the wayside.