Technological Factors on Marks and Spencers
Talk of a consumer downturn has resonated about the City and government in recent weeks. Now there is no doubt. Marks & Spencer, purveyor of 10% of the nation's clothing and specialist in foodie treats, is hurting. After two years of growth, the food and fashion giant has been stopped in its tracks by a grim combination of economic factors, ranging from bad mortgages in the US to rising petrol prices and the mountainous personal debts of British shoppers.
City experts had expected M&S, reinvigorated over the past three years by the newly knighted Sir Stuart Rose, to turn in decent sales over the vital Christmas trading weeks. In the event, those expectations were well wide of the mark. Like-for-like sales - the best measure of performance because it excludes gains made from new shopfloor space - were down 2.2% on last year and were some 3.5% lower than the previous three months.
That brought carnage to the M&S share price: it recorded its biggest one-day fall for 19 years, and £1.6bn was wiped off the value of the company. But the damage didn't end there. Shares in many other retailers and businesses dependent on confident consumers - from Sky TV to Thomson holiday group TUI - were hit by the realisation that, after months of concern, a downturn was on its way. Today, it has arrived.
Retailers are notorious for blaming everything but themselves when sales graphs turn down - wet weather, the World Cup and global warming are regularly wheeled out as excuses. But up and down the high street, retailers - from H Samuel and Woolworths to Debenhams, Currys and B&Q - are now under serious pressure.
At M&S, clothing prices were cut by 6% before Christmas. This generated 5% more transactions - the biggest increase in items sold for six years - but the value of total sales still went backwards.
Homeware and home improvement retailers face similar problems. Their sales always dip when home sales decline. It is house moves, new mortgages and remortgages that
City experts had expected M&S, reinvigorated over the past three years by the newly knighted Sir Stuart Rose, to turn in decent sales over the vital Christmas trading weeks. In the event, those expectations were well wide of the mark. Like-for-like sales - the best measure of performance because it excludes gains made from new shopfloor space - were down 2.2% on last year and were some 3.5% lower than the previous three months.
That brought carnage to the M&S share price: it recorded its biggest one-day fall for 19 years, and £1.6bn was wiped off the value of the company. But the damage didn't end there. Shares in many other retailers and businesses dependent on confident consumers - from Sky TV to Thomson holiday group TUI - were hit by the realisation that, after months of concern, a downturn was on its way. Today, it has arrived.
Retailers are notorious for blaming everything but themselves when sales graphs turn down - wet weather, the World Cup and global warming are regularly wheeled out as excuses. But up and down the high street, retailers - from H Samuel and Woolworths to Debenhams, Currys and B&Q - are now under serious pressure.
At M&S, clothing prices were cut by 6% before Christmas. This generated 5% more transactions - the biggest increase in items sold for six years - but the value of total sales still went backwards.
Homeware and home improvement retailers face similar problems. Their sales always dip when home sales decline. It is house moves, new mortgages and remortgages that