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Retail Review - UK - June 2010

  • Consumers were disappointed by the outcome of the election, but recognise that the tough budget was inevitable.
  • They have been increasingly concerned about their finances for the last 18 months, apart from a brief spell over Christmas.
  • The VAT increase, rising interest rates and spending cuts will make life very difficult for consumers, but the biggest impact will not be felt till 2011.
  • Consumers most want to spend money on holidays and fashion. So these are likely to feel pressure as consumers cut back but be the first to benefit when the recovery eventually comes.
  • Leisure and fashion have supplanted the home as the prime focus for spending.
  • This change happened around 2006/07 during the peak of the consumer boom. It is a fundamental shift in attitudes and has not been affected by the onset of recession.

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Table of contents

  1. Issues in the Market

      • Key themes
        • Abbreviations
        • Market in Brief

          • Retail recession
            • How will consumers react?
              • Internet vs shops
                • Retailer prospects
                • Future Opportunities

                  • Retailing in recession
                    • Impact of recession on smaller retailers
                      • Growth of online
                      • Market in Context

                        • Key points
                          • Background
                            • Figure 1: Index of consumer confidence, 2007-10
                            • Figure 2: UK savings ratio, 1991-2009
                            • Figure 3: Consumer spending growth, selected sectors, year-on-year, 2009
                          • Retail sales
                            • Figure 4: UK retail sales value growth, three-month moving average, 2007-10
                          • 2010
                            • Where next?
                              • Incomes being squeezed
                                • Figure 5: Inflation vs wages growth, 2008-10
                              • Inflation
                                  • Figure 6: Inflation: Key sectors including fuel, 2007-10
                                  • Figure 7: Inflation: Key sectors excluding fuel, 2007-10
                                • Employment
                                  • Figure 8: Redundancies in distribution, hotels and restaurants, 2007-10
                                • Administration and worse
                                  • Rents
                                    • The internet
                                      • Retailing in 2009
                                          • Figure 9: Retail sales: Key sectors’ value and volume growth, 2008 and 2009
                                      • Consumers in 2010

                                        • Key points
                                          • Consumers reacting to the financial crisis
                                            • Concerns
                                                • Figure 10: Concern over finances, February 2008-March 2010
                                              • The young – living in a different world
                                                  • Figure 11: Change in concern over finances, by age, February 2008-March 2009
                                                • Unemployment
                                                    • Figure 12: Change in concern over employment, by age, February 2008-March 2009
                                                  • The under-25s and recession
                                                    • Spending intentions
                                                        • Figure 13: Spending priorities, March 2010
                                                        • Figure 14: Spending priorities, by gender, March 2010
                                                        • Figure 15: Spending priorities, by age, March 2010
                                                      • Changes in spending intentions
                                                          • Figure 16: Change in consumers’ spending intentions, 2005-10
                                                        • The home out of fashion
                                                          • Figure 17: People wanting to spend on DIY and place in ranking, 2005-10
                                                      • Food and Drink Retailing

                                                        • Key points
                                                          • Sector performance
                                                            • Figure 18: Food retailers relative to all retail sales, 1999-2009
                                                            • Figure 19: Food retailers: Year-on-year sales growth, by month, 2008-10
                                                          • Market leaders
                                                            • Tesco
                                                              • Sainsbury’s
                                                                • Asda
                                                                  • Morrisons
                                                                    • Waitrose
                                                                      • Iceland
                                                                        • Hard discounters
                                                                          • The Co-operative Group
                                                                            • Loyalty cards
                                                                              • Online food retailing
                                                                                • Should a food retailer have a transactional site?
                                                                                  • Specialists
                                                                                    • Off-licences and the failure of First Quench
                                                                                      • Prospects
                                                                                          • Figure 20: Leading food retailers, 2009/10
                                                                                      • Clothing and Footwear Retailing

                                                                                        • Key points
                                                                                          • Sector performance
                                                                                            • Clothing
                                                                                              • Figure 21: Clothing retailers as percentage all retail sales, 2000-09
                                                                                              • Figure 22: Clothing retailers: Year-on-year growth, by month, 2008-10
                                                                                            • Footwear
                                                                                              • Figure 23: Footwear retailers as percentage all retail sales, 2000-09
                                                                                              • Figure 24: Footwear retailers: Year-on-year growth, by month, 2008-10
                                                                                            • Young vs old
                                                                                              • Figure 25: Performance of fashion retailers, by age and socio-economic group of customer base, Christmas 2009
                                                                                            • Market leaders
                                                                                              • Marks & Spencer
                                                                                                • Next
                                                                                                  • Arcadia
                                                                                                    • Primark
                                                                                                      • Value retailers
                                                                                                        • A year of administrations – but few failures
                                                                                                          • Older consumers
                                                                                                            • Footwear
                                                                                                              • Herd instinct
                                                                                                                • Prospects
                                                                                                                  • Leading players
                                                                                                                    • Figure 26: Leading clothing retailers, 2009/10
                                                                                                                    • Figure 27: Leading footwear retailers, 2008/09
                                                                                                                • Health and Beauty Retailing

                                                                                                                  • Key points
                                                                                                                    • Sector performance
                                                                                                                      • Figure 28: Health and beauty retailers as percentage all retail sales, 2000-09
                                                                                                                      • Figure 29: Health and beauty retailers: Year-on-year growth, by month, 2008-10
                                                                                                                    • Market leaders
                                                                                                                      • Boots
                                                                                                                        • The Body Shop
                                                                                                                          • Superdrug
                                                                                                                            • Lloyds Chemists
                                                                                                                              • Prospects
                                                                                                                                • Leading players
                                                                                                                                  • Figure 30: Leading health and beauty retailers, 2008/09
                                                                                                                              • Furniture and Carpet Retailing

                                                                                                                                • Key points
                                                                                                                                  • Sector performance
                                                                                                                                    • Figure 31: Furniture retailers as percentage all retail sales, 2000-09
                                                                                                                                    • Figure 32: Carpet retailers as percentage all retail sales, 2000-09
                                                                                                                                    • Figure 33: Furniture retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                    • Figure 34: Carpet retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                  • Market leaders
                                                                                                                                    • IKEA
                                                                                                                                      • DFS
                                                                                                                                        • Habitat
                                                                                                                                          • Administrations and turnarounds
                                                                                                                                            • Prospects
                                                                                                                                              • Leading players
                                                                                                                                                • Figure 35: Leading furniture retailers, 2008/09 and 2009/10
                                                                                                                                            • DIY Retailers

                                                                                                                                              • Key points
                                                                                                                                                • Sector performance
                                                                                                                                                  • Figure 36: DIY retailers as percentage all retail sales, 2000-09
                                                                                                                                                  • Figure 37: DIY retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                • Market leaders
                                                                                                                                                  • B&Q
                                                                                                                                                    • Homebase
                                                                                                                                                      • Wickes
                                                                                                                                                        • Focus
                                                                                                                                                          • Topps Tiles
                                                                                                                                                            • Robert Dyas
                                                                                                                                                              • Strategic Retail
                                                                                                                                                                • Prospects
                                                                                                                                                                  • Leading players
                                                                                                                                                                    • Figure 38: Leading DIY retailers, 2009/10
                                                                                                                                                                • Electricals Retailing

                                                                                                                                                                  • Key points
                                                                                                                                                                    • Sector performance
                                                                                                                                                                      • 1. Electricals
                                                                                                                                                                        • Figure 39: Electricals specialists as percentage all retail sales, 2000-09
                                                                                                                                                                        • Figure 40: Electricals specialists: Year-on-year growth, by month, 2008-10
                                                                                                                                                                      • 2. Music and video
                                                                                                                                                                          • Figure 41: Music and video retailers as percentage all retail sales, 2000-09
                                                                                                                                                                          • Figure 42: Music and video retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                        • 3. Computer and telecoms retailers
                                                                                                                                                                          • Figure 43: Computer and telecommunications retailers as percentage all retail sales, 2000-09
                                                                                                                                                                          • Figure 44: PC and telecommunications retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                        • Convergence
                                                                                                                                                                          • Market leaders
                                                                                                                                                                            • DSGi
                                                                                                                                                                              • Best Buy
                                                                                                                                                                                • Game
                                                                                                                                                                                  • HMV
                                                                                                                                                                                    • Zavvi
                                                                                                                                                                                      • Internet players
                                                                                                                                                                                        • Prospects
                                                                                                                                                                                          • Leading players
                                                                                                                                                                                            • Figure 45: Leading DIY retailers, 2008/09
                                                                                                                                                                                        • Mixed Goods Retailers

                                                                                                                                                                                          • Key points
                                                                                                                                                                                            • Sector performance
                                                                                                                                                                                                • Figure 46: Mixed goods retailers as percentage all retail sales, 2000-09
                                                                                                                                                                                              • Short-term performance
                                                                                                                                                                                                • Figure 47: Mixed goods retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                                              • Market leaders – Mixed goods/discounters
                                                                                                                                                                                                • Argos
                                                                                                                                                                                                  • Poundland
                                                                                                                                                                                                    • Discounters
                                                                                                                                                                                                      • Department stores
                                                                                                                                                                                                        • John Lewis
                                                                                                                                                                                                          • House of Fraser
                                                                                                                                                                                                            • Debenhams
                                                                                                                                                                                                              • Harrods
                                                                                                                                                                                                                • Liberty
                                                                                                                                                                                                                  • Beales
                                                                                                                                                                                                                    • Prospects
                                                                                                                                                                                                                      • Leading players
                                                                                                                                                                                                                        • Figure 48: Leading mixed goods retailers, 2009/10
                                                                                                                                                                                                                    • Miscellaneous Specialists

                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                        • Sector performance
                                                                                                                                                                                                                          • Figure 49: Miscellaneous retailers as percentage all retail sales, 2000-09
                                                                                                                                                                                                                          • Figure 50: Books and newspaper retailers as percentage all retail sales, 2000-09
                                                                                                                                                                                                                          • Figure 51: Miscellaneous specialists retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                                                                          • Figure 52: Books and newspaper retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                                                                        • Market leaders
                                                                                                                                                                                                                          • Booksellers and newsagents
                                                                                                                                                                                                                            • Jewellers
                                                                                                                                                                                                                              • Toys and games
                                                                                                                                                                                                                                • Garden centres
                                                                                                                                                                                                                                  • Other
                                                                                                                                                                                                                                    • Prospects
                                                                                                                                                                                                                                      • Leading players
                                                                                                                                                                                                                                        • Figure 53: Leading DIY retailers, 2009/10
                                                                                                                                                                                                                                    • Home Shopping

                                                                                                                                                                                                                                      • Key points
                                                                                                                                                                                                                                        • Sector performance
                                                                                                                                                                                                                                          • Figure 54: Non-store retailers as percentage all retail sales, 2000-09
                                                                                                                                                                                                                                          • Figure 55: Non-store retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                                                                                          • Figure 56: Non-store retailers, large vs. small retailers: Year-on-year growth, by month, 2008-10
                                                                                                                                                                                                                                        • Online retailing
                                                                                                                                                                                                                                          • Figure 57: Online retailing, by type of retailer, 2009
                                                                                                                                                                                                                                        • Market leaders
                                                                                                                                                                                                                                          • Prospects
                                                                                                                                                                                                                                            • Leading players
                                                                                                                                                                                                                                              • Figure 58: Leading DIY retailers, 2008/09 and 2009/10
                                                                                                                                                                                                                                          • Appendix

                                                                                                                                                                                                                                              • Figure 59: What consumers would like to spend money on, by detailed demographics, March 2010
                                                                                                                                                                                                                                              • Figure 61: What consumers would like to spend money on, by detailed demographics, March 2010 (continued)
                                                                                                                                                                                                                                              • Figure 62: What consumers would like to spend money on, by detailed demographics, March 2010 (continued)

                                                                                                                                                                                                                                          Companies Covered

                                                                                                                                                                                                                                          • Aldi Stores Ltd (UK & Ireland)
                                                                                                                                                                                                                                          • Alexon Group
                                                                                                                                                                                                                                          • Alliance Boots
                                                                                                                                                                                                                                          • Arnold Laver Ltd
                                                                                                                                                                                                                                          • Asda Group Ltd
                                                                                                                                                                                                                                          • ASOS (UK retail sales)
                                                                                                                                                                                                                                          • Bank of England
                                                                                                                                                                                                                                          • Baugur
                                                                                                                                                                                                                                          • Blacks Outdoor Retail Ltd
                                                                                                                                                                                                                                          • C Brewer & Sons Ltd
                                                                                                                                                                                                                                          • Carpetright UK
                                                                                                                                                                                                                                          • Co-operative Group
                                                                                                                                                                                                                                          • Comet Group Ltd
                                                                                                                                                                                                                                          • Competition Commission
                                                                                                                                                                                                                                          • Costcutter Supermarkets Group
                                                                                                                                                                                                                                          • Currys
                                                                                                                                                                                                                                          • Debenhams Total (GTV)
                                                                                                                                                                                                                                          • Dorothy Perkins old
                                                                                                                                                                                                                                          • DSG UK & Ireland Electricals
                                                                                                                                                                                                                                          • Faith Footwear Ltd
                                                                                                                                                                                                                                          • Habitat
                                                                                                                                                                                                                                          • HMV Retail Ltd
                                                                                                                                                                                                                                          • Homebase Ltd
                                                                                                                                                                                                                                          • House of Fraser Plc
                                                                                                                                                                                                                                          • Iceland Foods Ltd
                                                                                                                                                                                                                                          • IKEA
                                                                                                                                                                                                                                          • J. Sainsbury
                                                                                                                                                                                                                                          • JD Sports Fashion plc
                                                                                                                                                                                                                                          • JH Leeke & Son Ltd
                                                                                                                                                                                                                                          • John Lewis Plc (department store)
                                                                                                                                                                                                                                          • Karen Millen
                                                                                                                                                                                                                                          • Kleeneze plc
                                                                                                                                                                                                                                          • Land of Leather Ltd
                                                                                                                                                                                                                                          • Lidl (UK)
                                                                                                                                                                                                                                          • Marks & Spencer
                                                                                                                                                                                                                                          • Matalan Ltd
                                                                                                                                                                                                                                          • Monsoon Accessorize Ltd - UK
                                                                                                                                                                                                                                          • Musgrave UK - consolidated sales
                                                                                                                                                                                                                                          • Nationwide Building Society
                                                                                                                                                                                                                                          • Netto Foodstores Ltd
                                                                                                                                                                                                                                          • Northern Rock plc
                                                                                                                                                                                                                                          • Office for National Statistics
                                                                                                                                                                                                                                          • Office Holdings Ltd
                                                                                                                                                                                                                                          • Office of Fair Trading
                                                                                                                                                                                                                                          • Optical Express - UK
                                                                                                                                                                                                                                          • PC World (DSG UK Computing)
                                                                                                                                                                                                                                          • Primark Stores Ltd
                                                                                                                                                                                                                                          • River Island Clothing Co Ltd
                                                                                                                                                                                                                                          • Robert Dyas Holdings
                                                                                                                                                                                                                                          • Schuh Ltd
                                                                                                                                                                                                                                          • Shop Direct Group
                                                                                                                                                                                                                                          • Somerfield
                                                                                                                                                                                                                                          • Specsavers Group
                                                                                                                                                                                                                                          • Superdrug Stores Plc
                                                                                                                                                                                                                                          • Ted Baker
                                                                                                                                                                                                                                          • Tesco Plc
                                                                                                                                                                                                                                          • The Body Shop - Retail Sales
                                                                                                                                                                                                                                          • The Carphone Warehouse Ltd
                                                                                                                                                                                                                                          • The Jessops Group Ltd
                                                                                                                                                                                                                                          • The Perfume Shop Ltd
                                                                                                                                                                                                                                          • The Shoe Studio Group Ltd
                                                                                                                                                                                                                                          • The Wine Society
                                                                                                                                                                                                                                          • Vision Express (UK) Ltd
                                                                                                                                                                                                                                          • Waitrose
                                                                                                                                                                                                                                          • WH Smith PLC
                                                                                                                                                                                                                                          • Wm Morrison Supermarkets
                                                                                                                                                                                                                                          • Wyevale Garden Centres

                                                                                                                                                                                                                                          Retail Review - UK - June 2010

                                                                                                                                                                                                                                          £1,695.00 (Excl.Tax)