Retailers pessimistic as demand slows
Tuesday 5th August 2008, 12:01AM BST.
The state of Britain’s retail sector has deteriorated significantly and is set to get worse, a think tank said.
A group of industry figures, the KPMG/SPSL Retail Think Tank (RTT), which tracks the retail sector have produced a retail health index for the past two years and have found this quarter to be the worst since they started.
The RTT said the index has slipped three points from the second quarter to 95 and is set to fall at a faster rate over the next quarter to 91.
Helen Dickinson of KPMG said: “Quarter two saw increased negative impact of demand, margins and costs; all of which are expected to worsen in quarter three.
“The choices of retailers as to how they meet these challenges are beginning to seriously narrow and we cannot currently see any light at the end of the tunnel.”
The RTT blames the slowdown on a decline in demand, rather than in margins or costs.
The fear of unemployment will make as big an impact as actual unemployment on levels of demand as consumers cut back on spending.
Clothing retailers will be the worst affected, with food retailers the least hit, the group predicted.
However, food retailers who have, to date, been more successful in passing on increased costs, will find this increasingly difficult going forward, the RTT forecasts, prompting fears of further hikes to grocery bills.
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