So, some half a million people will find themselves out of public sector employment over the next four years as a result of Chancellor George Osborne’s spending cuts, which were announced this week.
So, some half a million people will find themselves out of public sector employment over the next four years as a result of Chancellor George Osborne’s spending cuts, which were announced this week. Rising unemployment rates aren’t good for retail - we’ve already witnessed their impact on consumer confidence - but the alternative to public spending cuts was never going to do much for the sector either. It’s certainly the case that any rise in interest rates (a possible cause and effect of any alternative budget deficit strategy) would have a horrific effect on the economy.
Where the job losses will come will undoubtedly present major problems to some of the UK’s indies and multiples trading across the country. There is a high concentration of public sector workers in several towns and cities in the North of England, and in Scotland and Wales. Demand in these areas in the run-up to Osborne’s axe-swinging has already fallen well short of trading in the UK capital (see p2). While economists have been playing down the risk of a double-dip recession, there is certainly a major prospect of a double-dip in sales on the horizon for a lot of businesses.
Yet this isn’t suppressing the appetite of other retailers to enter the fashion sector. First HMV launched branded fashion departments and now Argos is joining the fray (see p3), with a major attack planned on Next Directory and Shop Direct. Its click-and-collect concept is a guilty pleasure for plenty of shoppers (and streets ahead of any fashion retailer in terms of its multichannel capabilities) but I still can’t quite imagine getting the same buzz from clutching a deli-style numbered ticket and watching a poly-wrapped shearling jacket trundle down a conveyer belt to the handover counter. That said, Argos is legendary and we need innovation for job creation and to keep shoppers spending.