Credit crunch threatens retailers

Cardiff retailers are feeling the credit crunch as figures out today show shoppers have cut back on spending again.

Consumers who were tempted by the January sales stayed away in February, with sales rising by only 1.5 per cent compared to the same period last year, according to the British Retail Consortium figures. The current inflation rate is 2.2 per cent.

This confirmed January’s better-than-expected 2.6 per cent sales were short-lived, with Mother’s Day and St David’s Day only providing a brief respite.

Cardiff’s arcades in particular are being battered by the economic weather, with sales plummeting for some retailers.

Ally Perks, manager of Shared Earth in the Royal Arcade, Cardiff, said: “Sales dropped by about 50 per cent all the way through January and most of February compared to last year. It picked up for Mother’s Day but it’s dropped again now.”

She also pointed out most of the shops in the arcade do not open until 9.30am or 10am because it’s not worth it.

“I don’t usually make a sale until about 11am,” she said.

Clothing has declined for the fifth consecutive month, despite continued discounts and promotions.

Kathryn Price, manager of Phase Eight in the Capitol Shopping Centre, Queen Street, said: “There has been a considerable drop in sales compared to January and last February. I just think it’s the economic climate at the moment. People aren’t spending like they used to. January and February are hard months anyway without the credit crunch, so you just have to ride the storm.”

Helen Fidoe, assistant manager at Jones Bootmaker in St David’s Centre, said: “According to our figures sales are slower this year and on the whole, February was down compared to January. It’s just because of the credit crunch, which they weren’t talking about last year.”

Furniture stores have also been hit hard, with sales falling back sharply after the January clearances largely due to fears over the housing market.

Martin Ford, manager of Trade Furniture on Trade Street, Cardiff, said: “I would say we have seen a sales slump. The upshot is smaller retailers are having to work a lot harder.

“A lot of it is a consequence of negative media hype: people believe they will have a hard time, so they will. Furniture is a significant purchase, which can be put off so people do put it off.”

He said: “Our performance generally has been the same but we would expect it to increase by 10 to 15 per cent. Our margins are down because we have to be more competitive.”

Stephen Robertson, BRC director general, said: “Belt-tightening began in earnest in February when the Christmas and New Year credit card bills came home to roost.”

Mr Robertson is now calling for urgent action from chancellor Alistair Darling in tomorrow’s budget.

(Published: Tuesday 11 March 2008, Cardiff Evening News)