Blog: Leonie BarrieSummer weather boosts UK sales

Leonie Barrie | 21 June 2010

Two of the UK's largest supermarkets last week unveiled a slowdown in first quarter sales growth. Tesco and J Sainsbury, the UK's number one and number three supermarkets respectively, blamed low food price inflation and higher fuel costs for stunting consumer spending.

Despite booking its "biggest ever week in clothing," like-for-like sales at Sainsbury's rose 1.1%, with growth just 0.3% when the return of VAT to 17.5% was factored in. The results mirror those posted by Tesco, which reported a 0.1% rise in like-for-like sales excluding fuel and adjusted for VAT.

Official figures, however, suggest UK clothing and footwear revenues have had a recent boost from the arrival of summer weather. Sales in May rose by 6.6% in value and 7.1% in volume - outstripping other retail sectors.

Home shopping specialist N Brown, meanwhile, has snapped up online lingerie, underwear and swimwear retailer Figleaves for GBP11.5m (US$16.9m) in a move that accelerates its shift from catalogue specialist to online retailer. N Brown, which is best known for its plus-size and value labels, says the deal will expand its brand portfolio to appeal to both a younger and a more upmarket audience.

The latest milestone for Spanish retail giant Inditex has been the opening of its first Zara store in India. But what does this mean for the Indian fashion and retail sector? Is it the beginning of a new era? Should we expect Zarafication of the market? And should other international brands and Indian fashion brands be worried?

As the economy begins to show signs of life and retailers prepare to rebuild inventory levels, they're also facing a rise in production costs. Prices for cotton have doubled in the last year. Lumber prices in May were 79% higher than last year. Concerns about rising costs of raw materials, labour and transportation continue to come up on earnings calls. What can be done about it?

Apparel exporters in Nicaragua and Honduras expect to woo large investments from foreign textiles manufacturers this year that should create over 30,000 jobs, helping offset huge trade losses during the height of the global recession. A string of US, Korean, Spanish and Venezuelan manufacturers have committed investments to Nicaragua, while the sector is also gaining traction in nearby Honduras as well. 


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