High-street retailers continue to struggle

Commenting on the continuing struggles of UK high-street retailers, Professor ManMohan Sodhi said:

“Reports that House of Fraser and Marks and Spencer are expected to drop dozens of stores in the coming months, while clothing retailer, Next, is seeking to insert a CVA clause into its property leases to lower its rent. At the same time, there were reports of a marked improvement in UK consumer sentiment in March ‘with prospects of wage rises’ exceeding inflation according to GfK.

“When ToysRUs went into administration, there was talk of inconveniently located stores versus the convenience of buying from Amazon. But the stores being considered for closure are much closure to home, especially M&S stores selling both food and apparel. This suggests, at least from these retailers’ viewpoint, a continued depression in sales.

“To square this contradiction, perhaps the significant uptick in consumer sentiment is translating into sales only for Amazon (and maybe other online retailers, if any). Or, the rise in consumer sentiment is illusory as wage rises, given the upcoming job losses for retail supply chain employees and lower commercial rents for landlords.”