RTT
Friday, 25th April 2008
The latest meeting of the KPMG/SPSL Retail Think Tank (RTT) – the group of leading industry figures which provides a non-partisan guide to retail sector health – revealed that the difficult trading conditions it had predicted for the first quarter of 2008 were not quite as bad as it had forecast, but warns that the next quarter looks bleaker. The panel was keen to point out that whilst the future health trend is downwards, the depth and duration of the decline is far from clear and we should guard against talking ourselves into a worse state than it would otherwise be.
The RTT meets quarterly to discuss and report back on the three key drivers of health – demand, margin and costs – in order to form a view of the outlook for the sector. Deliberations from the RTT’s latest meeting included:
Vicky Redwood of Capital Economics summarised the thoughts of the RTT: “The fact that demand did not deteriorate quite as fast as we had predicted in quarter 1, with overall spending propped up by strong food sales in January and February, means we should take the clear lesson that consumer spending is like a supertanker; hard to slow down or change course, but when it does….
“Overall, the tough start to the year looks set to become even more entrenched as we go forward into the second quarter. The RTT is predicting increasingly difficult conditions ahead with a significant further weakening of demand growth, margins under ever greater pressures and no respite in sight from increasing cost pressures. Demand is the most influential and this quarter’s strongest variable, so the RTT is keen to stress that although the situation is serious it’s certainly not yet critical and talking it down will help no-one, least of all retailers.”