Monday, December 22, 2008

Not So Prosperous a New Year

Whilst us consumers have been enjoying reductions in prices on the run up to Christmas it is a sign according to Nick Hood, a partner at Begbies Traynor, that 10 or more national or regional chains will follow Woolies and MFI to the wall. PricewaterhouseCoopers where showing that 82% of stores were discounting their products on the weekend before Christmas over the last 2 days.

This discounting to move the Christmas stock at what is normally the profit making time for retailers may lead to many struggling to restock in the new year. pay their VAT bills, and survive through to October 2009 when the Christmas selling season kicks off again. January may well be a very gloomy time on the High Streets as traditionally chains have more cash and less stock so creditors are very likely if they don't expect things to improve to force some into administration to at least get some return on their debt, rather than have the issue that Woolworths have of raising as much capital as possible out of their stock before all their stores close on 7 January.

Mr Hood did not name the chains in question but between 10 and 15 he highlights as being in real danger of not surviving very much longer. Sadly having been around in retail in the early 90s and shutting down several stores of the lowest tier of the business I worked in then. I know that often these decisions are taken in retail with very short notice to the shop floor worker. It may well be that they turn up one day and are told that they are to start backing away any remaining stock and may be lucky to get their notice paid up.

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