NEWS IN REVIEW JUNE / JULY 2017
ON THE UP
Confidence drops alongside spending
NEWS IN REVIEW JUNE / JULY 2017
ON THE UP
Despite continued challenging economic conditions , some retailers were able to post positive financial figures in the fluctuating retail climate . Department store chain
John Lewis reported increased year-onyear sales last week , with overall sales being up by 1.1 %. Womenswear and menswear sales rose by 7 % and 6.3 % respectively , along with beauty , wellbeing and leisure which benefitted from price matching with a competitor ’ s promotional event . Home sales fell by 2.2 %, however the company noted that there had been an uptake of customers placing deposits for future orders .
Supermarket chain Iceland has announced an increase in profits , with overall earnings for the company rising by 6.3 % to £ 160m for the year to March 24th . Like-for-like sales in this period rose by 4.4 % to £ 2.8bn , leading founder and chief executive of the chain Malcolm Walker to note that Iceland is now one of the country ’ s fastest growing retailers . He attributed much of this success to the company ’ s move to " change perceptions of Iceland and frozen food by underlining the many advantages freezing can offer .”
Amazon continues to expand its operations . In the 2017 BrandZ top 100
most valuable global brands ranking , Amazon grew 41 % to retain its place at the top . Innovations such as its Amazon Echo and Alexa helped the brand to also cement its place as the fastest growing performer in the rankings . The increased attention to improving the benefits to consumers subscribing its Amazon Prime service has also aided in growing the brands reputation for rethinking all forms of retail .
Amazon also launched a new service for its Prime members called Prime Wardrobe , wherein customers will be able to order clothes from top brands such as Calvin Klein , Hugo Boss and Adidas on a try-before-you-buy basis . According to Amazon , customers will then be charged for any items they keep and will also receive higher discounts if they buy a larger number of items . The service will operate in a similar manner to several other services such as Stitch Fix , TrunkClub and Rent the Runway .
According to a German newspaper , Automobilwoche , Amazon is hiring staff as a precursor to becoming an online car dealership in Europe . The company is one of the largest global online retailers and has announced plans to use Britain as the pilot European market for the move , a year after opening a car review service in the US . The company is already actively giving loans to its marketplace traders ; and , may be able to offer loans on new cars to its Prime members in the future .
Supermarket chain Whole Foods Market was also purchased by Amazon , with the organic retail giant being bought for $ 42 per share in an all-cash transaction valued at approximately $ 13.7 billion , including Whole Foods Market ’ s net debt . This resulted in the share price of online supermarket Ocado rising , due to much speculation suggesting that it might be the next target for an Amazon takeover . Listed UK supermarkets also saw a heavy fall in share prices directly after the announcement but have since begun to recover .
Upmarket luxury beauty brand Liz Earle saw a growth in sales in the past few months . The brand , which is owned by Walgreens Boots Alliance , saw its total sales rise by 6 % compared to the 8 months to August 31st in 2015 . Stocked by John Lewis , Boots and Fenwick , the Liz Earle brand was founded in 1995 and makes a range of premium skincare products .
Confidence drops alongside spending
In the 12 days after the general election , consumer confidence significantly dropped as the uncertainty of a hung parliament caused concern for British households . A
poll undertaken by YouGov suggested that fears the political situation would culminate in further damage to house prices after the Brexit vote had already resulted in rises in inflation and poor wage growth . Head of YouGov , Stephen Harmston , noted that “ Consumer confidence has been generally ticking downward since last autumn but the events of the past month have placed it under greater pressure .”
According to GfK ’ s continued Consumer Confidence Index , confidence dropped by another 10 points in June . Following mixed performances from several retailers in the recent months , the results will provide them with more cause for concern as we approach the summer . Head of market dynamics at GfK , Joe Staton said : “ This month ’ s survey covers the period before and after the UK general election and reveals a sharp drop in confidence among consumers across all measures .”
British consumers reduced their spending for the first time in four years , prior to the election results last week . Adjusting for inflation , monthly spending fell by 0.8 % on the same period last year , marking the first fall in said spending since September 2013 according to card payment company VISA . Sales in this time fell by 1.9 %, as Britain ' s economy continues to show signs that it is stagnating and is expected to take another hit after Prime Minister Theresa May failed to win a parliamentary majority in last week ' s election .
10 July 2017