Retailers set for positive growth despite snow setback
Despite the bad weather having a damaging effect on the trading performance of some Midlands retailers, others in the region have reported “the most significant improvement in like-for-like sales for three years”. That’s according to retail experts at PwC, who said that the outlook for the West Midlands retailers “remains positive”.
Sales and promotional activity from many of the region’s retailers drove footfall and “boosted seasonal demand”, said PwC.
Andy Lyon, partner and retail expert at PwC in the Midlands, said: “There is no doubt that the sheer volume of snow that fell in the Midlands during the peak shopping period prior to Christmas kept some shoppers at home and made it difficult for retailers to replenish shelves as quickly as they would have liked in order to satisfy consumer demand.
“While this situation has proved a setback for some retailers, the overall outlook for 2011 is better than in recent years for those that continue to manage cash carefully and take a considered approach to maintaining stocking levels in the year ahead.”
PwC research in the run up to Christmas indicated that fewer retailers were offering sales and promotions than at the same time in the previous two years. However, where price discounts were advertised, they were slightly up on last year.
Lyon said: “Retailers use sales and promotional activity tactically over the festive season to drive footfall and boost demand for seasonal lines. This year was no different, but some retailers may feel that such tactics were less effective than usual due to the weather conditions. As a result, they may feel that the time has come to increase prices in order to protect margins.”
As retailers plan ahead for 2011, the main focus is likely to be pricing strategies. Some high street retailers have already indicated that prices will need to rise in order to compensate for a higher cost environment and the increase in VAT. It remains unclear how much such price increases could influence consumer spending.
Lyon added that consumer spending was likely to remain subdued “for some time yet”. He said that retailers would need to “continue to manage their businesses cautiously in order to minimise costs, maximise profits and, crucially, avoid driving consumers away”.
