R.F.Wilson writes from London: Another retail chain goes belly up in Britain that is supposedly going through a sluggish recovery, if you listen to people like George Osborne, a man who moonlights as Chancellor. (You can’t really treat him as a full-time finance minister, can you?)
The latest to fall is Blockbuster Video, a chain of rentals of DVDs and computer games, which has called in the administrators this week, even though it was pretty clear about a month or two ago that it was going under. Just as it was pretty clear that HMV, the music store chain that called in the administrators the day before Blockbuster did, was not really doing very well. The same was with Jessops, the photo equipment chain, that went down a day before HMV. (With that sort of rate there will be only be Ann Summers, coffee shops, McDonalds and an odd hairdresser left on the high street.)
Retail analysts, an odd breed, are telling anyone who will listen that it has all to do with the Internet pushing out retail outlets. What is the point, they say, of people going out to buy a camera, or rent a film or buy a CD when they can do that online, pay less and wouldn’t even need to go out? And, as this stupid theory goes, more and more retail names will be disappearing from the high street because of Internet shopping.
Well, I beg to differ. I think that the main reason why retail chains are failing is because we have a hidden recession hitting us hard, with people not having enough money to spend and lenders strangling consumer demand by charging customers extortionate rates of interest on their borrowings. That is the main reason why things are not going swimmingly on the high street. The government can produce as many stats as it wants but you don’t need to be an economist to realise that things are not going well and there’s not much money to spend.
And then there’s the quality of the overpriced goods that are on offer, most made in China or in some other exotic location like Vietnam or India, but priced as if they have come from Italy or France or Sweden. Not to mention that there are no decent films and albums coming out that warrant a trip to the shop and parting with a tenner or more. I mean, how long can you expect consumers to bring home DVDs and CDs, only to find that they are a waste of time? At least on the web you buy them cheaper, if you are into s..tty films and music and not make much effort.
And clothing is not really getting more exciting, is it? I have been to several department stores, flagships of retail trade, in London in the past couple of weeks and I was appalled by the low quality of garments and their prices. I noticed that it was mostly foreigners who were still buying. (Funny really to see Chinese tourists buying junk that was made in their communist Motherland and taking it back there.)
The whole point of retail trade is to respond to the changes in demand and act accordingly. Lots of people love to shop at stores, able to touch the fabric and try clothes on to see if they fit. Going out shopping is part of their social life. But if they constantly encounter limited stocks and appalling service, being advised to go to relevant websites, then they lose interest and stop. Not to mention that every week there are fewer of them who have spare money to spend.
So as long as the government pretends that the economy is recovering, allows lenders to strangle consumers, and retail outlets behave as if they don’t give a s..t, expect more retail chains to go down. I know of three that are barely breathing.