Primark will become Britain’s “sharpest and most feared” retailer replacing Tesco

…according to Verdict Research. They also reported that value for money will be the prime focus of any retailer which wants to survive the global downturn as clothing volumes fall.

Verdict senior analyst Daniel Lucht said: “As Tesco’s halo has slipped somewhat in the recession, Ireland’s Primark is set to take up the torch of sharpest and most feared retailer from the British Isles.”

Verdict said that clothing retailers have reacted to the recession with understated fashion ranges, cut backs on inventory and a reliance on sales.

They added that plunging consumer confidence and spending levels sparked by unemployment fears and the credit crunch will lead to “a strong and deep value focus” among retailers over the next five years.

Verdict predicted that European value players such as H&M, Primark and Kiabi will be best placed to prosper.

I was conference with some well respected retailers and successful Venture Capital players. The recurrent theme was that this downturn/recession is here for some time and we wont see ‘normal trading’ returning for another 2-3 years, if at all. In fact BDO Stoy Hayward are predicting the demise of 5,000 retailers next year. An increase on this year!

The other point that all were agreeing on was that value retailing is the only way to go and that doesn’t necessarily mean cheapest but best value for money. So along with H & M and Primark being singled out Zara was highly thought of. Their products are not as cheap as Primark but for the quality and styling they represent good value for money.

It’s been very difficult  predicting anything over the last 18 months but the general thoughts are that Christmas may well be OK, although sales will start (continue?) early putting margins under pressure. Then sales are expected to seriously drop in the New Year as the VAT increase hits. Will retailers pass it on or will they be forced by consumer demand to absorb it?

If you are still trading, congratulations for making it so far. Keep ensuring your stocks are tight, overheads at a minimum (with no detriment to service) and, above all, ensure your products are VALUE FOR MONEY.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

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