Building
A Business In 2008
This
time of year always brings numerous surveys and economic forecasts about
what is in store for the coming twelve months. Now that the madness of
the sales has passed retailers in the KBB industry can take stock and
assess how their businesses are going to prosper during what is generally
termed to be ‘tough trading conditions’.
Doom and gloom headlines have been commonplace as the full effects of
the late 2007 credit crunch become apparent for the UK economy and the
world markets have a volatile start to 2008.
The British Retail Consortium (BRC) reported that like-for-like sales
across the sector rose by only 0.3 per cent in December 2007, almost three
times lower than the bleakest City forecasts.
Clothing, furniture and DIY chains all suffered from the spending slow-down
that continues to fuel fears of possible store closures and job losses
in the coming months. Sales of large electrical goods, DVD players, footwear
and women’s wear were all also softer in the run-up to Christmas.
Many of the UK’s largest retailers suffered falls in their market
value in the light of poor December trading. More than £250 million
was wiped from J Sainsbury’s market value after The Times revealed
that it had missed internal sales and profit targets in December. Kingfisher,
owner of the B&Q DIY chain, slipped 5 per cent, Next dropped 4.6 per
cent and Marks & Spencer fell nearly 4 per cent before it announced
its Christmas update in January.
Predictions for 2008 do not offer much respite. The CBI predicts that
growth in consumer spending will slow from 3.1pc to 1.9pc in 2008 and
KPMG’s Head of Retail forecast that consumer spending may grow by
just 1% in 2008, the lowest rate since 1992.
So how is the KBB retailer to maintain a profitable business amongst all
of this? There are glimmers of good news and retailers who have been in
business for many years will know that the KBB market is more robust than
most during a recession. The long term outlook for the KBB sector remains
strong especially when the Government targets for new homes is taken into
account, which will have a positive impact on the construction industry.
Indeed whilst commercial property is facing a tough time with commercial
capital values falling, the construction industry is fairing slightly
better with signs of growth predicted by some commentators for 2008.
The key to success for many retailers will be maintaining their position
in a market that will be increasingly competitive as retailers fight it
out to gain a share of the much reduced levels of consumer spending. Differentiating
a business from the competition is more important than ever during difficult
trading conditions.
Those businesses that remain focused on innovative, well designed, quality
products combined with excellent customer service will benefit. Consumer
protection will also become much more important as consumers will be looking
for extra reassurance in a market place that will be subject to more company
failures as those who fail to take the necessary steps will not survive.
Web: http://www.kbsa.co.uk