Region’s economy ‘surprisingly resilient’ to festive retail pressures
PUBLISHED: 06:00 13 January 2018 | UPDATED: 08:27 15 January 2018
ARCHANT EASTERN DAILY PRESS (01603) 772434
Despite a rocky Christmas for the UK’s high streets East Anglia escaped relatively unscathed, according to retail experts.
Estimates suggest spending over the festive period rose by around 1.6% in Norfolk, Suffolk and Cambridgeshire, compared with a national average of 1.4%.
But more store closures in the region in 2018 have not been ruled out – a prediction influenced by rising online sales, which jumped 11.3% in the Christmas period.
Pundits have speculated that increased spending on food and drink – powered by inflation, which hit 3.1% in November – led to lower budgets for gifts, while pressure to keep prices low between Black Friday and the Boxing Day sales wrought havoc on some retailers’ bottom lines.
Prof Joshua Bamfield, director of the Centre for Retail Research in Norwich, said Christmas had been a “game of several parts”, with non-food retailers losing out to grocers and discounters and major shopping destinations like Norwich and Ipswich attracting the majority of footfall.
“Although local shoppers spent more this year, sales in bricks and mortar stores fell by 2.3% over Christmas in this region because of the continued rapid growth of online sales,” he said.
“The failure of Multiyork of Thetford showed how unforgiving the market has become. We expect it to be joined by others over the next 18 months.”
Ratula Chakraborty, senior lecturer in business management at UEA, said the East Anglian economy was proving “surprisingly resilient” to the economic difficulties gripping the country.
“Specialist local retailers should continue to do well alongside most of the national store chains. The main challenge will be for retail parks around the city and towns in the region as consumers increasingly buy more home and household goods online. This could be a tough year for big-box superstores,” she said.
Norwich Business Improvement District executive director Stefan Gurney believed people had prioritised spending on “having a good Christmas with the family” rather than big presents, which had benefited supermarkets.
“I think there is a certain amount of trepidation in the marketplace at the moment from all the government upheaval and Brexit. No one knows what the implications might be on their household budgets and people are being more cautious with their money,” he said.
Tesco was the biggest winner of the Big Four grocers with shoppers spending an extra £1bn over the period than in 2016.
Meanwhile Morrisons notched up a bigger-than-expected rise – and was keen to stress it hadn’t put the price of a basket of Christmas essentials up since 2016 despite cost pressures.
The big casualties were in retail. Department stores Debenhams and House of Fraser were hit hard, despite heavy discounting to reinvigorate sales in the run-up to Christmas. The former announced it was accelerating plans for a reorganisation, while the latter has asked landlords for a rent cut.
Even John Lewis, which saw sales increase 3.1%, said profits would take a hit from competitive discounting.
Ms Chakraborty said fashionable clothes retailers and upmarket department stores had shaken off the malaise of their mid-market and general merchandise counterparts.
The future of retail?
While many businesses and commentators are looking back to re-examine the Christmas period’s losses and gains, the Centre for Retail Research (CRR) is looking ahead to the next 12 months.
The organisation predicts the number of UK high street stores could fall by 22% through the year, with the possible loss of 316,000 jobs.
Meanwhile it says the proportion of retail sales completed online could rise as high as 21% – one of the highest online retail shares in the world.
In the Retail in 2018 report the CRR says UK retailing is facing a “crisis”, which could see retailers either embrace the presence of online retailing and use it as a motivation for bricks and mortar traders to transform themselves, or avoid making such decisions, which could result in multiple brands disappearing or being “mortally wounded”, leaving some sectors to be dominated by online retailers.