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The Chancellor has welcomed a “major moment in the British recovery” as real wages outstripped prices in the three months to October. Real wages grew by 1.4% while prices increased by 1.3%. This improvement is to be welcomed and the timing is perfect, just as retail reaches the critical moment of the year. But how meaningful and sustainable is it?

The reality is that this has more to do with falling inflation than rising incomes. While wages are without doubt moving in the right direction, progress is slow and tiny. On the other side of the equation, inflation is falling, particularly in retail. This in turn reflects intense competition and relatively soft demand. And the latter suggests that a whisker more spending power is unlikely to translate into stronger retail demand.

The retail recovery of 2014 has been real but built on short term, unsustainable factors. Consumers have dipped into savings, have enjoyed a fillip to disposable incomes from PPI payouts and are now enjoying some help from falling petrol prices. To really celebrate, Mr Osborne needs a lasting recovery built on organic strengthening rather than fortuitous one off external events.

Today’s profit warning from Tesco (its fourth this year) is estimated to translate to a UK profit margin of 1.5%. More detail of exactly what is behind the margin reset is promised in January, and it will take much longer still to see how its new competitive stance fares in the marketplace. This is just the latest in the progressive redrawing of the economic battleground of UK grocery retailing.

There are several huge questions prompted by this. Does this number reflect in full the scale of war chest needed to finance what Dave Lewis sees as the required lowering of prices to regain control of Tesco’s competitive agenda? If so, is it enough? And does 1.5% represent the new normal margin in UK food retailing?  What will the knock on effect of all of this for the other players?

This is all much nearer the beginning than the end of the story of seismic change in UK grocery retailing. And by the way, given their massive share of non-foods, it would be a huge mistake to think that what is happening is confined to grocery.

Now Black Friday is behind us, those retailers who embraced it in a big way need to persuade their customers to buy at full price again. The more you teach your customers to buy into promotions the less they like buying at full price. We have seen this in action over many years: Debenhams and Gap use very frequent price promotions and find it difficult to generate sales in the periods in between.

With just over three weeks to Christmas, the temptation for the industry to go on sale will increase. Black Friday this year will leave many retailers needing to repair their margins, after record sales brought forward purchases that would otherwise have been made in the coming weeks. In fashion, this need was already intense after the unseasonably warm weather in September and October left retailers with huge volumes of unsold stock.

I expect discounting pre-Christmas to hit record levels this year with an inevitable hit to the bottom line. For retailers employing discounting as a central element of their model, lower prices are built into the economic model. For the rest, there is almost invariably a heavy price to pay and we will be seeing the true fall out in the Spring 2015 results season.

The end of this working week will be crowned by Black Friday. This is the first Friday after Thanksgiving Day and the latest brilliant idea from US retailers to get shoppers to spend more. In the last few years it has been adopted here too. In the US it has marked the kick off the “holiday season” (their politically correct, non-denominational term for Christmas) sales with promotions and special offers.

Its adoption over here was initially driven by online retailers. Whether it makes any sense at all is a different matter. The headline question is will it make consumers spend more overall? I very much doubt it. And if I am right, Black Friday will probably be a net loser for UK retail. If it nets out as merely transferring sales from days before and after, these sales are likely to carry lower margins for two key reasons. First, because of promotional offers and special discounts. And second, the logistical costs of squeezing maybe two normal November day’s sales into one.

It’s a great occasion to get loads of media coverage and manufacture a shopping frenzy but when push comes to shove, the spending pot will not get any bigger.

M&S at Westfield London has added a fourth floor and 22,000 feet, to now trade from 124,000 square feet. There are a number of new additions (a nail bar in the beauty area for example) but the pivotal element of M&S always has been womenswear and here, the thinking has moved on slightly, continuing with greater sub-brand delineation and a more departmentalised feel. Having been very low key in the past, the business features much better visual merchandising these days and the offer looks much better focused. Nevertheless, there is still something missing and it is hard to see precisely which market segment(s) M&S is addressing.

I think the most notable improvement is in menswear. The offer looks much cleaner, with clarity and like womenswear, has a more edited feel. However, there are still far too many options in suits, shirts and trousers. There is a sea of choice and with no effective differentiation or explanation at the point of sale.

Home looks better and benefits from significantly more space (from 5500 to 15,000 square feet) but still manages to feel fragmented and lack authority.

M&S has certainly improved in some notable areas in the past 18 months. Clothing product quality has certainly made strides. My worry is that the new sourcing arrangements will provide a short term boost to margins but undo the progress made on quality, with collateral damage to the brand.