The ghosts of high streets past come out to play
Perhaps it’s the darker nights, or that Hallowe’en is approaching, but a strange mood hangs in the autumn air. That’s the view of one major retailer who told me this week that the British consumer is behaving strangely, in ways he’s never seen before. Despite signs that the economy is going backwards, UK households are still spending. Usually one tracks the other but that isn’t happening at the minute.
Consumers are still taking holidays, eating out, and buying clothes and food. Credit card debts keep rising. And despite an assumption that the UK is in long-term, irreversible decline, the high street has just had its best September in five years. Unemployment is incredibly low, wages are ticking up again, and petrol still cheap. There are reasons to be upbeat.
However, there are also signs that the consumer is clearly nervous. One large chain measures the mood of its customers by the colours they’re wearing. Right now, people are favouring blacks, blues and greys, suggesting a sombre air. They are hyper-sensitive to the weather too.
No wonder. Inflation is biting, the pound is being squeezed. Brexit is stoking uncertainty, and an interest rate rise is expected soon. Meanwhile many firms are hesitant about investing and still not handing out pay rises.
In short, the picture is incredibly mixed, creating a nightmare for any retailer trying to predict behaviour and trends. Against this confusing backdrop, several of the UK’S longstanding big names are slowly getting their mojo back.
Tesco still has lots to do but its recovery is taking shape. Morrisons is confounding all expectations with the strongest revival of all the supermarkets, while the pairing of boss Steve Rowe and new chairman Archie Norman threaten to trigger Marks & Spencer’s long-awaited comeback.
We keep being told that the likes of Amazon and Zara are laying waste to those sticking with old-fashioned bricks and mortar. Soon all our shopping will be done online and stores will be nothing more than a place to pick up orders in record time. There is no doubt the high street is under fierce assault but the traditional names are slowly demonstrating that there is still a place for them too.
‘Consumers are still taking holidays, eating out, and buying clothes’
Chancellor’s a little late to the party
One wonders where Philip Hammond has been for the last few years. In a rousing speech at the Tory party conference, the Chancellor called on business to stand up for free markets.
It wasn’t a plea for party political support, he insisted – businesses should express their support for the current economic system amid the renewed spectre of renationalisation and large-scale state intervention.
His call to arms was all very exciting but who’s he trying to kid? It’s not that he’s wrong – business leaders should be speaking out on these issues. As our biggest employers, they have a responsibility to be vocal on matters that could affect the livelihoods of employees and over which they have the power to influence.
However, the large majority learnt a painful lesson from the financial crisis. There is little to be gained from being vocal on wider issues. Rather than stimulating proper debate, such courage tends to invite abuse. Companies quickly become targets, whipping boys for social discontent. The risks far outweigh the gains.
Hammond knows this. He saw what happened to Stefano Pessina, the billionaire behind Boots, when he expressed reservations about Ed Miliband’s economic proposals in the run-up to the 2015 general election. The backlash was genuinely shocking.
As it happens, many figures we contacted were brave enough to take up Hammond’s challenge, so hats off to them, perhaps reassured that support for markets isn’t the same as support for one party. Most bosses though are terrified of expressing a view for fear of being accused of playing politics.
What is particularly galling is that this is a government that has done very little for corporations since coming to power. Engagement with business has been almost non-existent and some of its own negative rhetoric has helped to lend credibility to Left-wing interventionist threats.
Hammond’s cry was an unconvincing and desperate ploy from a government panicking over a resurgent opposition.