Fashion retailers are likely to suffer the least and for the shortest period during the current recession according to Paul Smiddy, head of pan-European Retail Research at HSBC.
Speaking at the Drapers Fashion Summit 2008 this morning, Smiddy told delegates that he was forecasting a fall of 2.7% in consumer spending next year. He pointed to research from PricewaterhouseCoopers which showed that clothing accessories sales fell by 15% in the 1990 recession but urged retailers to, "Take solace that garments will suffer least and for a shorter period".
Smiddy said that despite increased cost pressures and the weak sterling against the dollar, which has put pressure on input prices, there were some bright spots on the horizon for fashion retailers.
He said the weak pound meant the UK was still attractive to tourists. He added that the current climate meant it was a good time to launch new formats and that there would be a reversal of strength between the relationship between landlords and retailers, meaning there were good property deals to be done.
However he did warn that the recent slashing of interest rates would not necessarily filter through to consumer spending. He said that the level of consumer debt and uncertainty surrounding the economy may tempt shoppers to save money.