Words About Things

Retailers are concerned about the possibility of a frugal Christmas despite signs of stabalisation on the high street. Some companies reported rises in sales in September after four months of reduced spending. There is still concern however that some stores will be forced to close for good if they do not do well over the holiday period.

The golden quarter has the ability to make or break. The first quarter of next year will see further distress in the retail sector. I think there will be a few [retailers] coming down with the Christmas decorations.

Retail specialist Robin Knight

A recent survey of consumers found that most intended to spend 15% less than last year on Christmas presents. They expect to spend around £267 on presents and £28 on decorations. Food and drink remains a priority however with an average spend of £182.

One of the most well know names on the high street Marks & Spencer have reported an improvement in sales with the three months to September 2009 only seeing a 0.5 percent drop like-for-like sales from last year. Christmas is a very important time for M&S and a good Christmas would help them to end 2009 on a positive note. Last year they used unprecedented sales to try and lure in hesitant shoppers towards the end of November. They are hoping that their Christmas hampers and other gifts will boost this year’s earnings.

The recession may technically be over but there are a lot of people still struggling to make ends meet (or make ends meat as I used to think the saying went). The rise in unemployment has lead to an increase of people trading as a man-with-a-van according to classifieds website VivaStreet.co.uk.

For those overseas who may not have heard of the MWAV the premise is very simple: you pay the man to help you to transport stuff in his trusty white van. It’s like van rental but without the need to do any driving yourself. All you really need to set yourself up as a MWAV is a van, preferably a white one with ‘clean me’ written in the dirt on the back. Those of us who know people who own a van are lucky enough to be able to get this service for free or in exchange for some beer or egg custard tarts.

A man with a van can sometimes be better value than normal van hire depending on your needs. A word of warning however: it is not acceptable to hire a man with a van to go and fetch you some fish & chips, apparently.

The inflation rate is at an all time low of 0.5% and Mervin King of the Bank of England today announced that it would remain at this level for the time being. The aim is to reach an inflation rate of 2% and avoid falling into deflation. Whilst the low inflation rate gives us increased spending power (and retail spend is increasing) it places severe limitations on businesses and contributes to increases in unemployment rates.

Surprisingly it is still possible to get interest rates of around 5% despite on saving and investment accounts. Michelle Slade of Moneyfacts says that this is a calculated move by the banks to increase funds in order to be able to lend more.

“Continuing volatility in the money markets is seeing providers increasingly having to use their savings books towards funding their lending activities. Most fixed rates investments don’t allow early access, as this guarantees the length of time the funds are available to the provider.”

The housing market has begun to improve and the banks want to be in a position of being able to provide mortgages. To do this they must entice customers in with higher savings rates. Making consumers switch current account or switch savings account is tricky as trust in banks is at an all time low. The only way to tempt customers to move is to offer to increase their saving which suddenly seem more important than they did a few years ago.