Patchwork Pig

Snap, Crackle and Pop

I’m sure it won’t come as a surprise to know that the high street is on its knees, largely blamed on competition from online retailers and people no longer venturing out to make purchases. What did come as a surprise this week is the profit warning from ASOS, the UK’s largest online clothing retailer. It’s safe to say that this news rocked the city and has immediately moved the spotlight onto retail in general. It has been assumed for many years that the demise of the bricks and motar outfits is largely down to online retailers and lazy shoppers “comfort shopping”. Assuming that is the case for just a second, why are we now seeing online majors, announcing profit warnings?

The burning question for retailers both large and small is – where is cash being spent?  Well I asked this exact question on Twitter last night and the response I got was….. “What Cash”.  A rather blunt response but certainly food for thought. The last time we heard this kind of comments been banded around was back in 2008 and we all know what happened then. The picture around towns and shopping centres over the last few weeks seems to be backing up the suggestion that spending is well down against previous years and that boxing day sales could turning out to be a somewhat damp squib.

There are a few big retailers currently on life support and the next few weeks will be critical for their survival. A leaked document this week gave quite damning picture of the dire situation at Debenhams where trading has been terrible with the worst November on record for retail as a whole.

There are certainly some signs that we could be heading for another recession, the last one came from nowhere and even caught the best of economists off guard. Once the decline is consumer spending starts to pick up pace then problems really start – the first domino falls over, just like 2008.

There are a few major retailers (JD Sports, Domino Pizza, Zara) that perform strongly year on year, all eyes will be on these over the coming months for any signs of plateau or worse weakness.

On a lighter note we will be chewing the fat over some Vintage clothing tomorrow so watch this space!

Until next time…