In today’s InternetRetailing newsletter we’re reporting on how retail groups see today’s mini-budget from Chancellor Kwazi Kwarteng. There’s a warm reception for tax-cutting measures including the reintroduction of VAT-free shopping for tourists and reductions in National Insurance, income tax and corporation tax. But there are questions about action on business rates, which many multichannel retailers have long called for. However, since the piece was published the pound has since fallen to its lowest rate against the dollar since 1985. If that continues, shoppers’ purchasing power and the price of imports are likely to be adversely affected.
Today’s government statement comes at a time when shoppers lack confidence and are cutting back on spending, according to Made.com. It is reviewing its strategic options – including a possible sale of the business – as a result of headwinds including a fall in spending – when it had already stocked up in order to deliver quicker on demand during the pandemic, and of the rising cost of its supply chain. Its freight costs, it says, reached £45.3m in the second half of 2021 from £8.2m a year earlier.
JD Sports has been affected by brand shortages as well as the withdrawal of government stimuli, especially in the US, which have both dented profits. However, it also this week reported rising sales in the first half-year since 2019 in which all of its stores have been free of Covid-19 restrictions.
Other retailers, however, appear to be prospering despite the economic background. The Works today set out how it plans to develop its online and in-store sales channels as it aims to become a “go-to destination for reading, learning, creativity and play” as it reported full-year sales growth and a return to profit. Fast in-store sales growth offset a significant decline in online sales – although these remain well ahead of pre-Covid-19 levels.
The discount books to arts and crafts retailer is now investing as it looks to reach time-poor customers online, while also improving the location and in-store experience of its shops.
And social influencer driven retailer In the Style says its pureplay status means that it is well-placed to respond quickly to changing customer demand in a challenging economy. It also says it’s making “solid progress” in its strategy to grow sales more profitably.
In today’s guest comment, Jessica Grisolia of Scandit considers how UK retailers can use technology to help shoppers during a cost of living crisis
