Yahoo Finance The Notebook: Emma-Lou Montgomery on retail’s not so cheery Christmas
Where the City’s movers and shakers get a few things off their chests. Today, Emma-Lou Montgomery, financial commentator at Fidelity International, takes the Notebook pen.
Tis the season: retailers put a spending bounce-back on their wish lists
Every year, starting with Black Friday and Cyber Monday, we get the usual ‘will they, won’t they?’ when it comes to shoppers’ Christmas spending habits. And this year, more than any, the challenge for retailers will be convincing consumers to part with money they possibly can’t afford to spend, when accusations of shrinkflation and even profiteering have become increasingly rife as the cost of living crisis has rumbled on.
While “It’s Christmaaaaaaaas” (thank you Noddy Holder) may have been assaulting shoppers’ ears since the minute the Halloween fright masks were taken off the shop shelves, it doesn’t appear the retailers’ festive tricks are delivering quite the treat they’d hoped for.
According to the Confederation of British Industry (CBI), UK retail sales volumes fell for the seventh consecutive month in October; down by a not insubstantial 11 per cent. Retailers don’t seem too convinced of their own festive charms either, with the CBI revealing that they also expect the decline in sales volume to reduce further, to just six per cent in December.
According to the CBI survey, retailers had been feeling a little more confident in November, but time will tell whether that was a case of hope over experience. Because as they know all too well, if they don’t get those tills ringing, it won’t mean a thing.
Worryingly too for the online retail sector, internet sales volumes fell rapidly in the year to November (-39 per cent from an even worse -78 per cent in October) and are expected to fall at a broadly similar pace again next month (-42 per cent). The question is whether there’s another shift in consumer buying underway. While the high street may have been in danger of being side-lined by online retailers a few years ago, with consumers now able to get out and shop with ease, possibly tired of waiting in for deliveries from online retailers and also heavily influenced by pricing, the appeal of online shopping could now waiver.
Festive FTSE boost?
With the end of 2023 approaching, investors will be looking for signs of a ‘Santa Rally’ in hope for a festive boost in market spirits. The market phenomenon predicts a surge in market returns in December and Fidelity’s analysis of three-decades of market data reveals that the FTSE 100 has stepped into Christmas on a high 24 times since 1993. The magic of Christmas has delivered even in challenging times and while market superstitions should be viewed with a hint of scepticism, it seems to be the gift that keeps on giving!
Puppy power
Despite the biting cost of living crisis, doom and gloom in the retail sector isn’t universal and pet lovers are continuing to pamper their pets. A fact not lost on legendary fund manager Terry Smith, who once quipped that pet owners “would stop feeding their children before they stop feeding their pets’”. And no doubt, much to the delight of shops-to-vets group Pets at Home, which has seen robust consumer revenue growth ahead of expectations at 8.6 per cent in its first half.
New year, new you?
The ‘new year, new you’ trend (that seems to be rolling round faster every year) is when many of us take stock and set out new goals. Instead of hauling out those familiar New Year’s resolutions – getting a new hobby or drinking more water – how about focusing on financial wellbeing?
There are so many benefits for every single one of us and even more so perhaps for women. Fidelity International’s Women & Money research found a third (32 per cent) of women feel their financial situation over the past five years has impacted their mental wellbeing. Now is the time to start thinking about the resolutions that can ensure your long-term financial confidence.
Quote of the week:
Don’t stop dreaming just because you had a nightmare
Jill Scott MBE
I was lucky enough to meet Jill at a recent Fidelity International event and love that this quote is applicable from the football pitch to our finances.
A book recommendation:
End Times: Elites, Counter-Elites and the Path of Political Disintegration by Peter Turchin
Whether you buy Turchin’s theory that history moves in 50-year cycles or not, it’s hard not to feel this book title goes quite some way to summing-up the current state of play, at least. Certainly, if the past few years are anything to go by. His argument is that when you have extreme wealth inequality and “elite over-production” – basically not enough high-status jobs for all the people who expect one – you get an imbalanced society that eventually descends into violence and disorder. It promises to be a sobering and thought-provoking read and will definitely be on my Christmas list.
