New beginnings?

Signing off my last blog before the Christmas holiday I said that prospects for the New Year could be made or broken by the consumer and their continuing capacity to surprise. And surprise they did here in the UK with retailers reporting very strong trading which got even stronger with the start of their clearance Sales. Around the UK there have been incredible scenes of shoppers queuing for stores to open on the day after Christmas - scenes that hadn’t been experienced before. Reports from other countries also reinforces the strong holiday trading picture

So does this mean that we are set for a good New Year? In the UK, commentators have speculated whether this was a last push by consumers who were very aware that the VAT sales tax was to go up 2.5% on January 1st. There was surely something in that, but it can’t be the whole picture as the VAT rise was going to make most difference to the big ticket items such as electricals and retailers were reporting strong sales across many categories. Perhaps consumers just wanted to treat themselves after the toughest year  they could remember. And as has been said many times before, those still in employment are enjoying low interest rates and utility and fuel costs.

Ahead of the VAT rise though, there was a hugely significant move by many of the biggest retailers - they simply pledged that they would not increase many of their products on January 1st. The major food retailers made the first move and then Sir Philip Green’s Arcadia group followed. Could this be a new trend for the New Year? Retailers taking decisive action to not only keen consumers shopping, but doing it because they also know that the recovery is fragile and needs to be maintained.

Positive action by retailers - in the consumer front line as they are - could be a significant force for good. If the politicians aren’t able to provide the flexibility to help ordinary people then perhaps businesses can. In a similar way, the enormous disappointment felt after the Copenhagen climate change talks for example could help give a renewed boost to the initiatives of businesses such as retailers who can take a stance, initiate strategies and influence behavioural change at a time when governments clearly failed to steer their way through the political minefields.

2010 will have enormous challenges, but the trick for retailers who remain closest to their customers will be in being able to spot the opportunities that will undoubtedly arise. As retailers gather in New York next week for the annual NRF convention, it will be interesting to gauge their mood.