The 2013/02/06 at 08:12
Stéphanie Salti, in London
2012 ended on a glum note when the electrical goods retailer Comet went into administration. Already, analysts specialising in the retailing sector were placing their beds on more bad news for the start of the New Year. Following a reprieve over Christmas – from which not everyone benefited –, bankruptcy announcements followed one after another over the month of January. To set the tone, the photography equipment chain Jessops opened the going-bust ball, followed a few days later by the well-known CD and DVD retail chain HMV, now in the care of Deloitte auditors.
The entertainment goods chain, whose debt has since been taken over by the restructuring expert Hilco, is nevertheless expected to survive with a much smaller network of stores. With some 528 stores throughout the United Kingdom, DVD and video game rental chain Blockbuster has added its name to the list of British retailing victims. Experts explain this series of bankruptcies by outdated economic models incapable of adapting to the Internet revolution. Weak margins, added to a particularly mediocre economic climate, have only precipitated certain players into the abyss. More generally, the results of British chains have blown hot and cold: online brands such as Asos or else department stores that have developed multichannel strategies, including John Lewis, have succeeded in keeping their end up.
The same can be said for discount chains: the clothing chain Primark, thanks to both successful European expansion and an economic model based on speedy transformation of the latest fashion trends, has achieved sales up by 25 % for the semester closing on 5 January. The disappearance of Jessops and Comet has also given a nudge to Dixons, boosted in particular by tablet sales and the conversion of its model towards online sales.
In a sector that is generally having a rough time, the retail sales figures published by the Office for National Statistics (ONS) in mid-January, are hardly surprising: the volume of retail sales fell by 0.1 % in December compared to the previous month, and by 0.3 % over one year. The results are disappointing, to say the least. "The expected Christmas revival did not happen, and major high street firms are now going to the wall," comments John Longworth, Director General of the British Chambers of Commerce (BCC). "Given the stagnation we are seeing it is little surprise that the retail sector remains in a relatively parlous state." The BCC has reiterated its appeal to the government under David Cameron to support a revving-up of retailing activity on the British market, while also focusing on export.
The publication of other less favourable economic indicators may nevertheless subject the sector to other adjustments in coming months. Great Britain finished the year with a GDP down by 0.3 %, giving rise to fears of a triple recession if negative growth is confirmed for the third semester of 2013. Commentators have attempted to minimise the impact of this negative growth on retail sales by indicating the resistance of online players. Consumers, on the other hand, remain far more prudent: according to a survey carried out by Conlumino, a British research agency specialised in retailing, over one-half of consumers surveyed (53.6 %) expect the economic climate to deteriorate in the next six months. Only 8.6 % back a recovery.
This wariness is likely to provoke a preventative cutting-down on expenses in the first quarter of 2013 for 62 % of British consumers. Entertainment products – books, films and music – are expected to bear the bulk of the effect of tightening purse strings, according to the survey. "After some indulgence in entertainment products over Christmas, there is a feeling among consumers that they can probably sacrifice spending in this area over the next few months," predicts Neil Saunders, Founder and Managing Director of Conlumino. A sign that the long chain of bankruptcies is set to continue this year.