At the time of writing it emerged that the Bank of England had just voted to keep interest rates at 5%; a disappointment for retailers, who were hoping for a further cut to boost flagging consumer confidence.
The Bank’s argument for retaining the 5% rate is that it must do so to meet the inflation target of 2% set by the Treasury. This week, Drapers is backing retailers’ calls for the Treasury to adjust its targets to enable a further interest rate cut to get shoppers back on the street and willing to spend – and spend on full-price product too.
Those shoppers who are still spending are either so affluent the credit crunch barely affects them (hence the robustness of the premium sector), or are serious bargain hunters, hence the continuing rise of Primark and branded discount outlets (see News Analysis, p18).
Viyella chairman Robert Kimpton (see page 5) led the call to the Treasury this week and has urged other retailers to get on board. He warned that if current conditions prevail more and more retailers would go out of business, while those that remained would be chasing market share, not profit. And it is happening already.
Some market watchers say the government will have to take action if it is to have any hope of winning the next general election, which will take place in 2010 at the latest. But a bit of pressure from the industry could help force the government’s hand. Therefore Drapers is inviting all retailers wishing to make their case to the Treasury to write to us at the usual address or email us at firstname.lastname@example.org, and we will pass your letters on.
So, take action or pray for more sunshine? It’s up to you.
Lauretta Roberts Editor