The mood we’re in

Around the world, retailers are getting understandably nervous. We’re now well and truly into the count-down towards the critical Christmas season for many countries. After the year we have been having, a good or bad season could literally make or break a number of retailers. The mood in recent weeks seems to have shifted from one of cautious optimism about the prospects for 2010 to renewed pessimism. Economists had predicted that the UK would officially move out of recession last month only for that prediction to be confounded leaving the “experts’” reputations in tatters again. The US did officially move out of recession with stronger than predicted growth. Sir Martin Sorrell, CEO of the WPP Group and an acknowledged sage on the subject of economic cycles declared last week that the reality was that the world’s key markets would in fact experience different shape recoveries.

His prediction for the emerging “BRIC” economies was that they would see a “V” shape recovery and from feedback from retailers in India following October’s important holiday season, it would seem that Sir Martin is right. Retailers reported that with tighter year-on-year inventory management coupled with stronger consumer confidence, the season was a good one. And business has continued to be strong since apparently.

But for most of western Europe or the US, there aren’t many retailers who would predict such a satisfying outcome for Christmas 2009. Trade may have stabilised of late, but it remains tough to persuade shoppers to come out spending. There was an article recently in the UK’s business magazine “Marketing” which went under the brilliantly descriptive headline of “Moody Britain”. Using the results of new consumer research it gave a fascinating insight into the breakdown in trust between the UK’s consumers and many of its established brands and institutions - and not just the politicians and banks although they received a great deal of the criticism. It seems that consumers are cross, angry, frustrated and still very insecure after the last 18 months. Hardly surprising of course but as has been said many times before, this does open up opportunities too for those that can connect with their customers. It was fascinating therefore to see the coverage gained last week by Tesco which is continuing to prepare for the launch of Tesco Bank. Designed to fill the vast void left by the collapse of confidence in the UK banks, Tesco’s move looks well timed. Helped even more with its announcement that it was to create 1,000 new jobs for its new Bank’s headoffice. From the press coverage, here was something to cheer “Moody Britain”.