The Confederation of British Industry (CBI) has warned that fashion retailers will be among the hardest hit by the weakening pound, and the impact of the recession on unemployment will be more pronounced than in previous downturns.
Ian McCafferty, the CBI’s chief economic adviser, gave two reasons for the greater impact on unemployment. “Firms seem more uncertain about the economy and how long the recession will last,” he said. “Also, even well-run businesses are struggling to find credit, so are making cuts elsewhere,” he said.
Andy Clarke, chairman of the CBI distributive trades panel and retail director of Asda, added that fashion retailers would be the worst affected by the continued weakening of the pound against the dollar. “Fashion retailers in particular will see the affects on pricing,” he said.
The value market continued to see “significant growth” across all sectors, Clarke added. “There’s a clear divergence between the value and premium markets,” he said. “The premium market is still performing [well], but value continues to grow significantly ahead of any market.”
The CBI’s Distributive Trades Survey found that 63% of retailers saw year-on-year sales volumes fall in the first half of January, with clothing sales “particularly weak”. Only sales of footwear and leather goods grew compared with a year ago.
Just 16% of retailers said January sales volumes were up on the same time last year. This was a balance of minus 47%, representing a heavy fall in sales, although this was slightly slower than in December.
According to the survey, a balance of 52% of retailers expected sales to decline in February, the weakest forecast since the survey began in July 1983. The three-month moving average of sales volumes weakened to minus 49%, a record low.