Signs of recovery as John Lewis arrives
PUTTING the unfortunate experience of a broken escalator behind them, the staff at John Lewis must be extremely pleased with the successful launch of the new store in Exeter last week.
A part of Oxford Street touched Sidwell Street, and that can only be a good thing. So why in these times of economic recession do we see retailers like John Lewis continuing to open new stores?
Apart from the odd blip caused by events such as the Olympics and the diamond jubilee, retail sales have held up remarkably well. The latest figures showed that sales rose 3.4 per cent in September, with a cold snap sending shoppers out to buy coats, boots and footwear in particular. Back to school shopping also helped.
At John Lewis in particular, the week ending October 6 saw sales rise by 16.2 per cent to £69.4m from £60.17m in the same week last year and £59.46m during October 2010. Particularly impressive was the increase at johnlewis.com, which showed an increase of 45.8 per cent on the same period last year.
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But why? Part of the reason is the John Lewis brand, which is taking market share from other retailers.
Perhaps what we are also seeing is a recovery in household spending over the past year. Inflation has fallen, interest rates remain historically low and those fortunate to have a job have seen their after tax income rise very slightly over the past 12 months. The economy is mending very slowly, but those elusive green shoots are being fed and watered by extremely supportive action from central banks with their accommodating monetary policies.
Last week the Royal Institution of Chartered Surveyors also released a survey that showed while house prices still fell everywhere but in London, the rate of the fall is now slowing. In terms of sales prospects, these were back to levels last seen in May 2010.
Some of this optimism was put down to the Bank of England allowing more funding to the banks and in turn they were making more money available for mortgages. There was a rise in the number of buyer inquiries, unlike August when a fall was reported.
Although markets remain unconvinced that the UK will emerge from the current recession in a strong position, the fact they remain at relatively high levels is testament to this type of data and that action at long last seems to be working in Europe.
Greece is still in the euro and, even if it is only just, there seems a greater degree of confidence that the problems in Southern Europe are at least being dealt with. Those green shoots may be a while before they become established but they have not been totally destroyed, especially in Exeter.