The Hill & Knowlton offices were turned into a makeshift surgery this morning as leading figures from the retail industry gathered to discuss the implications of the new coalition government on retailers and their customers.
There was much talk of the imminent pain that will be felt across the country both by business and consumers as the new government seeks to make some quick dents in the nation’s substantial deficit. What was less clear is exactly what medicine will need to be prescribed to maintain consumer confidence and ensure the economy remains in a stable condition. Beth Rigby, Retail Correspondent from the FT, The Rt Hon Philip Dunne MP, Michael White, Assistant Editor of The Guardian and Richard Millar, CEO, Hill & Knowlton UK formed a lively panel debating the key issues facing retailers and consumers post election.
Beth Rigby outlined that whilst most retailers are braced for a hike in VAT, in the main they didn’t accept that this was a necessary step. She outlined that whilst the VAT cut had worked in encouraging consumer spending there is a very real fear amongst retailers that the subsequent rise will have the opposite effect.
She continued that there is currently a mixture of relief and anxiety amongst retailers – relief that there is a government in place ready to act but anxiety over the implications of those actions in the longer term.
Richard Millar agreed that maintaining consumer spending will be critical and advised retailers to come together and unite on this message.
Speaking in his newly appointed post Phillip Dunne pointed out that the new government has set two very clear actions which will affect retailers; establishment of an ombudsman and a reintroduction of a needs test into the planning regime to help communities preserve their existing high street.
A farmer himself, Mr Dunne said that he understood the muscle power of the supermarkets and insisted that an ombudsman would help to protect suppliers and farmers from abuses by large retailers. What Mr Dunne did not address was the impact an ombudsman could have on the wallets of the end consumer.
On a more optimistic note Richard Millar pointed out there are still sections of the retail industry who are doing particularly well and cited online fashion retailer ASOS as one such success story.
However, discussion of inflation and a possible rise in interest rates only added to the doom and gloom with Beth Rigby citing a recent report from Verdict who outlined a likely increase in clothing prices as a consequence.
Mr Dunne admitted that a devaluation of the Euro would lead to inflation in the immediate term – great news for exports but not so good for the cheap imports that retailers and consumers have benefitted from.
It was a sombre mood from the retailers in the room who were all generally ready for a tough time ahead. The general consensus was that whilst consumers know that they need to take the medicine it won’t be easy to swallow.
The typically outspoken Michael White summed up by pointing out that it will be consumers themselves rather than government who will feel the pressure and that once again it will be up to the retail industry to adapt. The feeling was that they will have to, or face some very tough consequences...Collective Conversation Feed