Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Property Special: UK growth gives reason for cautious optimism

The UK continues to be one of the most exciting and challenging retail markets globally.

As predicted in the last Drapers Property Special foreword in March, UK-based fashion retailers have seen continuing growth in sales. The good weather through spring and early summer has meanwhile allowed retailers to delay summer Sales, resulting in stronger profit growth for some.

Notwithstanding this broadly positive clothing outlook, consumer markets remain fragile. This underlying weakness can be seen most notably in the supermarket sector. The continued pressure on household incomes, due to wage growth at sub-inflation levels, is impacting grocery sales and profitability.

Price wars have broken out as discounters have gained ground. UK retail markets generally remain deflationary, so it is not just grocery markets under pressure. However, clothing is faring better than most. Fashion retailers are now beginning to benefit both from multichannel investment and the store network rationalisation seen over the last few years. There is still a lot of work to be done though. At the upper end of the market, competitive pressures from new international entrants are squeezing domestic players. The post-recession wave of entrants that descended on London is now beginning to spill out into provincial markets. Pressures are meanwhile growing in the middle market too. The success of retailers such as Primark and Asos, in conjunction with increasing discount clothing merchandising by grocers, is ratcheting up the competition.

The outcome of the Scottish referendum remains unknown and we are also moving into the run-up to the 2015 national elections. Despite these political uncertainties, exacerbated by the challenging economic prospects faced by our main EU trading partners, confidence in the UK economy is growing. For retail, much now depends on the pound’s strength going forward and the trajectory of interest rates. Market conditions look likely to remain benign for the time being, ushering in the possibility of strengthening consumer spend in the first half of 2015.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.