Thursday, 28 July 2011

Where to start!.....The High Street.....

I decided that I wanted to write about the high street and how I believe we will see many major retailers go to the wall over the next 9 months.

However the more I have thought about this the more complicated it becomes. Its the economy in general that needs to be discussed. Yes we have had a recession and yes we have all been impacted by it. However the recovery seems to be slow and painful and has left many economists wondering if we are heading towards a double dip. Especially with the recent GDP figures for the last quarter being more a little lacklustre. The UK's growth is dramatically behind most other countries in Europe.

Over the last few months we have seen the likes of Habitat, Jane Norman, Focus DIY go to the wall. These are major companies that all have their own individual problems. However the one thing that finally sent them to the wall is cash flow.

Retailers are being pushed in every direction which is drastically shrinking profits....If you look at the supply chain, raw material costs have increased dramatically, production costs have shot up, transportation costs have risen....then add the VAT increase onto this and the fact that many major retailers are discounting have to wonder where their profits are coming from?

The companies that have posted better than expected results are companies who have gone through massive restructuring e.g. they have already closed down stores, minimised their workforce, changed their supply strategies. These are short term gains when compared to the rising costs of retail.

Over the next 9 month to at least March 2012 we will see so many major retailiers go to the wall. In the period of January to June we have seen 21 companies go the 2010 we saw a total of 26.

Maybe I am being over pessimistic but I just cant help it. For me the writing is on the wall. However the only hope for the high street is that maybe a few more independents may be able to pinch a prime spot and a more vibrant high street maybe born from the pain.

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