Retailers on course for ‘mixed’ 2010
Wednesday, January 27, 2010 at 4:00PM 
Research firm Mintel has predicted a ‘year of two halves’ for firms operating in the retail sector. Their predictions suggest the first half of 2010 will be mixed for most retail businesses, with a clear shift taking place around the time of the general election.
Richard Perks, Director of Mintel, believes unemployment will continue to increase but that a rise in interest rates was not likely before the general election. Following the post-election tough budget, however, it is likely interest rates will begin to rise and stabilise.
Retailers have already reported a mixed start to 2010. Many companies are struggling to absorb the return to 17.5% VAT rate and have experienced difficulties in the first half of January. Others have avoided passing on the increase in order to appeal to cash-strapped shoppers.
Mintel’s predictions concerning the first half of 2010 have been echoed by other commentators. The Centre for Economics and Business Research (CEBR) recently warned that retailers may face reduced profits in first months of 2010 as sales fall due to inflation and the rising VAT costs.
It looks like the retail industry is in for a difficult 6 months. But Mintel’s research should increase confidence slightly as firms can look forward to improved economic conditions following the general election, and into the second half of 2010.
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