nickshanagher

Just three days before Christmas the Times published a spread under the headline: "Domination on the edge of town: crisis aids the march of the supermarkets". This weekend, the Financial Times said: "End of space race. Tesco change marks turning point for UK food retailing". The truth will be somewhere between the two stories. In December, experts were telling the Times that the scramble for grocery space would run and run. One reason for this was because local authorities in deprived areas believed the supermarket brands would create jobs (a claim disputed by the Association of Convenience Stores based on its analysis of supermarkets' own figures). Leading City retail analyst Dave McCarthy warned for most of 2011 that the supermarkets had got their sums wrong. While opening new space made sense for each group separately, the collective volume of space would cut like-for-like sales in both value and volume terms. Think of it this way. You have a shop with...

The job of retail analysts is to advise investors on where to place their money and their views underpin much of the media coverage of the retail sector. In the wake of the latest Asda income tracker figures that show disposable incomes falling by 6 per cent in July, Dave McCarthy of Evolution Securities said that a tough era lies ahead for the UK food retailers, "for which the industry is not well prepared". In the UK, retailers have benefited from like-for-like sales growth which has driven the way that companies have funded their business models. Many stores are taking less cash than a year ago and facing real increases in costs, says Mr McCarthy. The result is a profits squeeze. The managers of Tesco, Sainsbury, Morrisons and Asda have benefited from two dynamics for a long time. In the past two decades, one has always been underperforming. As they are all doing the same, suppliers will find less need to pay to shift their sales around an "undifferentiated pack...

When disruption to the newspaper market caused by the closure of the News of the World was making headlines last week, a few managing directors were saying to me that we should all be worrying about the financial crisis gripping the Eurozone. They may have a point but they are wrong if they think that the closure of the NotW is not an important moment for local shops. Newspapers are a major footfall driver for independent shops. Whether it is customers that you deliver to or ones who come to your shop, you need to hold on to them. It is obvious why retaining customers is so important. But shopkeepers also need to note that most are likely to have less money to spend that they did a year ago. The Asda income tracker shows the average family has £9 a week less money to spend than it did a year ago.  What is causing this? Higher taxes and higher energy prices. How long will disposable incomes fall? For at least another year, most analysts say. "The outlook for the UK remains po...