Blog: Leonie BarrieRetailers weather February storms

Leonie Barrie | 8 March 2010

Despite fears that heavy snowstorms on the east coast of the United States would hurt February retail sales, the latest results released last week suggest apparel shoppers refused to be put off by wintry weather. In fact, estimates say the nation's retailers saw their strongest monthly same-store sales in over two years.

Easy year-on-year comparisons no doubt helped lift the numbers, but retailers are taking comfort from the fact consumers are starting to make some of the purchases they put off during the recession - even though they still remain focused on deals. Another positive is that pricing continues to remain strong, with retailers avoiding extreme discounting to drive traffic to their stores.

The focus is now shifting to March and April for signs of a sustained turnaround in consumer demand. By then, spring lines will be fully in-store, and an earlier Easter is likely to give an extra boost to March revenues.

For retailers in the EU, a cloud is still hanging over the sourcing of leather-upper shoes from China and Vietnam after a European court dismissed Chinese claims that anti-dumping duties on footwear imports from these countries was unfair. Beijing filed a complaint with the World Trade Organization (WTO) last month, after the EU extended anti-dumping tariffs by another 15 months. If the two sides now fail to reach an agreement, the WTO complaints body will rule on the case.

Marks and Spencer, meanwhile, is aiming to become the "world's most sustainable retailer" by 2015, with the addition of 80 more commitments under its Plan A "eco-plan". It wants to see at least half of its clothing lines with at least one sustainable or ethical quality, and  has promised to "bring clarity" to the living-wage debate for workers in Bangladesh, Sri Lanka and India. The boss of the UK retailer separately told a conference in London that investing in sustainability will grow the business.

The UK's biggest supermarket retailer, Tesco, has also committed to improving overseas factory workers' wages - and says it wants to make its Florence & Fred (F&F) line the world's biggest fashion brand within five years. As well as the UK, the range is now expanding into Thailand, South Korea and Malaysia, and the company believes that increasing productivity at its sourcing factories should lead to higher wages and better value for customers.

Swingeing increases in freight costs are also forcing retailers to evaluate ever-more creative ways of driving down expenses. Speaking at a sourcing round table last week, a group of influential retailers highlighted the exponentially rising price of shipping, which in some cases has soared up to 200%. Forming tighter relationships with overseas factories in tandem with freight forwarders is key, they said, adding that there comes a point at which driving source costs down could impact quality.


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