Today’s figures from Primark sent a message to the markets that should already have known. This is THE toughest retail market anyone has ever seen. No one is immune. Even the very best are impacted materially, and Primark is and remains, among the very best. The Golden Quarter began badly, with warm weather kicking in for most of the weeks leading up to Black Friday. Black Friday itself has progressively encouraged consumers to delay non-essential spending – a massive own goal I have written about extensively.
By mid-November and Black Friday, retailers’ cash positions were already adrift of where they needed to be. The event itself has turned out to be disappointing – lots of noise but failing to deliver the delayed spending from earlier in the Quarter. The three weeks since are always a challenge. Having made a huge song and dance about your amazing offers for Black Friday, how on earth do you persuade consumers of your great value after the event, probably back at full price or maybe with yet another “special” promotion?
Anecdotal evidence tells me that Christmas hasn’t really kicked in yet. The trajectory of trade is as usual. Q4 will still represent the peak for the year. But it will be lower than needed – everyone will suffer. This doesn’t mean there will not be winners but they will be a minority.
We don’t want to blame Brexit for too much. But the inescapable truth is that it is definitely having an impact. Retail remains a highly volume sensitive. A shift in the behaviour of even just 5% of shoppers will have a massive impact in trading economics and ignoring this in the mix is delusional.
Christmas 2018 will come very late, and fail to deliver the respite many in the industry need. Most retailers will enter Q1 2019 with less fat than needed to see them through the weakest trading period of the year. This will inevitably trigger stressful conversations with critical stakeholders. It’s going to be a bumpy ride.
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