…and another one!

January 7, 2009

BBC reports

The womenswear company Viyella, which was founded in 1784, has become the latest long-established British company to call in the administrators.

The company has annual sales of about £30m and operates 40 stores, 64 concessions and four clearance outlets.

Of course like other retailers mentioned in this blog, only Woolworths has actually closed, the others are “only” in administration, but more often then not this can lead to at a minimum closure of lots of stores.

Even retailers not in administration are feeling the pinch and closing stores. BBC also reports on Marks and Spencers who are closing stores and cutting jobs.

Marks and Spencer plans to close 25 of its small Simply Food stores and another two of its regular stores.

The closures will mean the loss of 780 jobs. The retailer is also planning to cut 450 head office jobs.

The retail sector which weathered the last few recessions has been hit very hard by this one. The difference this time, is that margins are tight so it doesn’t take a large drop in sales for it to have a major impact on the profitability of the retailers.


Further fall in M&S share price

July 7, 2008

BBC reports on falling confidence in M&S.

Shares in Marks and Spencer have fallen a further 4% after analysts predicted its profits could decrease by more than a third this year.

The decline, to 218 pence, means the retailer’s shares have lost 35% of their value since last Monday.

A falling share price is indicative of a loss in confidence by the city in a company. It also means that the value of the company has fallen too.

This means that the company may have trouble securing finance for expansion as they will not be able to borrow against the value of the company.

Are Brits becoming ‘shopping tarts’?

July 4, 2008

Are you the kind of shopper that supermarkets love, the type who always shops at the same supermarket on a regular basis?

Tesco, Morrisons, etc… love you, as you are often more loyal to them then your employer or even your family!

Well the BBC reports that in these times of economic turmoil, the days of the loyal supermarket shopper may be coming to an end as we become more price sensitive.

Many supermarket-goers are wedded to their brand of shop. But as people begin to draw in the purse strings, some are starting to see benefits in being a more promiscuous consumer.

Evidence suggests once loyal shoppers, who in the past have been faithfully wedded to a single supermarket brand, are starting to experiment with younger, cheaper models.

However will these changing habits last? According to the article, no.

…as shoppers have more money again they will revert to old habits.

These surveys are a great demonstration of how changes in income effect the demand for groceries. As incomes fall (due to increased costs), the demand for luxury goods (ie Waitrose or Marks and Spencers) will fall (shift to the left); whilst the demand for basic (cheap) goods (ie lidl or aldi) will rise (shift to the right).

We can also use demand and supply analysis to explain the recent rise in food prices, by shifts in the supply curve.

More links on supermarkets.