Blog: Are we on the road to recovery?
Dean Best | 15 June 2009
Some might say the sun has gone to their heads but, last week, there were a number of influential voices who dared to discuss the 'r' word – recovery.
Despite UK retail sales falling 0.8% on a like-for-like basis in May, some industry watchers were prepared to offer some optimism that the numbers could suggest that better times lay, if not around the corner, then just a few blocks away.
While admitting there was “a long way to go” before a fully-fledged recovery, IGD chief executive Joanne Denney-Finch betrayed a note of optimism. “Some sources are beginning to report signs of economic stabilisation: the stock market is strengthening, the pound is up and confidence seems to be improving.”
Two days later, Tesco boss Sir Terry Leahy echoed those tones, when he said UK consumer confidence was “slowly seeping back”. Leahy acknowledged that the situation remained “fluid” and spoke of the “dark cloud” of unemployment – but he urged the industry to “think about recovery now”.
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For some, the downturn has proved a boon for their business. In the UK, retailers like Aldi, Poundland and Iceland have all benefited from the cash-strapped consumer's frantic search for value. It could be said, therefore, that any recovery could stall their growth.
Not so, Aldi and Poundland argued last week. Addressing the British Retail Consortium's annual conference, Paul Foley, head of Aldi's operations in the UK and Ireland, insisted shoppers will still be swayed by value even when the economy recovers. “Nobody likes to feel like they paid more for an item than they should have. That principle will survive,” Foley argued. Poundland boss Jim McCarthy insisted the changes in consumer behaviour seen during the recession “will remain sticky”.
Meanwhile, Iceland, the frozen food retailer, issued a set of buoyant annual results last week. Its sales have flourished during the downturn and chief executive Malcolm Walker signalled the retailer's confidence in the future with plans to open 20 new stores and convert 51 former Woolworths outlets in the year ahead. But with the revival of frozen food sales coming as the state of the economy has worsened, it is reasonable to ask whether a chill will return to the sector once the recovery emerges.
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