Will retailers reap the benefits of the Jubilee?
As consumer confidence remains stagnant, retailers have embraced the upcoming Jubilee celebrations and Olympics in the hope that the celebratory spirit will loosen consumers' wallets. Will the Jubilee weekend and Olympics provide consumers with a reason to spend? Katie Smith reports.
Many UK retailers are pinning their hopes on the upcoming Jubilee and Olympics to get consumers spending again and pull the nation out of recession. Speaking earlier this month, Asda finance director Rob McWilliam says: "It's a great opportunity to get consumers spending with the Olympics, with the Jubilee, with the Euro 2012. If we can get behind that and get a positive footing then I believe we can kick start the economy."
Although in the short-term and the month ahead the Jubilee weekend will provide an increase in consumer confidence, in the long-term it is unlikely to make much of a difference argues Neil Saunders, managing director of retail consultancy Conlumino.
He says: "In the short-term, for those two days - gloom will be on hold. People do not wish to be gloomy generally and I think people will feel quite positive, I think they will splash out and I think they'll treat themselves."
However, in the long-term, this short-lived boost is unlikely to provide retailers with the full-year sales boosts they are seeking as consumers continue to tightly manage their budgets.
While sales may rise over the weekend, that money will simply be deferred from elsewhere, Saunders tells just-style. "We'll see sales in a subsequent month a little less than they otherwise would have been because the truth remains that actually consumers have got less money to spend," he says.
"No celebration, no matter how great or grand changes that dynamic."
There will be plenty of opportunities for clothing and footwear retailers to capitalise on the celebrations but success is likely to be down to the weather. An increase in sales of summer clothing will be almost inevitable if the weather is good.
Honor Westnedge, senior retail analyst at Verdict emphasises the important role weather has to play. "Should the good weather continue, sectors like clothing and footwear should benefit and see a central boost and this is mainly because we have a two-day bank holiday. Where people would usually be at work, these people may be out spending," she says.
Indeed, it may simply be that with more time on their hands, the increased ability to get to the shops might be a significant contributing factor, rather than any particularly nationalistic fervour. "I think more people are going to be out and about and will be receptive to buying things," says Saunders.
Clothing and footwear retailers will need to take advantage of the extra shopping days by offering good value for money products. "I think there are some really good opportunities there for clothing and footwear retailers, it's just about capitalising on them and making sure stores look good, inspiring and interesting and really engaging for consumers to shop."
Winners and losers
Analysts note that high-end clothing and footwear retailers will benefit most from the celebrations, suggesting that White Stuff and Joules are likely to be among the winners. "I think the high-street premium end will benefit quite a lot because I think it's very easy for them to capture the mood that's associated with the Jubilee," suggests Saunders.
However, Saunders says value-end retailers will do "reasonably well" as a result of the celebrations, whereas Westnedge argues discount clothing retailers are unlikely to see much of a pick-up, but may see sales spike on Monday and Tuesday.
Meanwhile, the middle-market retailers like BHS and Marks & Spencer could be "a little challenged" and "squeezed" because they are "trying to provide lots of different offers to so many different parts of the market," Saunders says.
Although the middle market has tried to capitalise on the Jubilee theme, Saunders is not quite sure it hits the button in terms of what consumers want to buy. "It's very difficult for them to promote themselves around the Jubilee theme because they do it a bit half heartedly," he says.
With regards to supermarkets, Saunders believes overall they will do well but there will be one or two that will struggle to benefit from the extra day's bank holiday. "Sainsbury's will continue its good run in terms of performance and growth and I think George from the Asda perspective will also capitalise on it," Saunders says.
Tesco will struggle, he says, because its clothing offer is "not that great at the moment".
However, Westnedge thinks Asda and Tesco will be the supermarket leaders because they "have done quite a lot of British themed clothing and accessories" and "have the largest clothing offer".
While the Jubilee is set to offer a short-lived boost to retailers' sales, it is only one weekend, which comes on the "back of several months of pretty dismal sales for non-food retailers," says Verdict senior retail analyst Sarah Peters.
"It is an opportunity to recoup some of these losses, but retailers still have an awful lot of ground to make up, and with consumers celebrating rather than shopping, some retailers will actually lose out."
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