Article posted March 17th 2017
Gary Warnaby, IPM Director and Professor of Retailing and Marketing at Manchester Met University, spoke to the Retail Gazette this week regarding the contrasting recent performances of fashion vs grocery shopping, with the latter doing well as fashion sales falter.
In a feature entitled ‘Grocery vs Fashion: Why is fashion being left in grocery’s dust?’ Gary commented on possible reasons for the disparity.
“One possible reason for the disparity in performance between food and fashion retailing comes down to the nature of the product,” Gary said. “Food is an essential expenditure and fashion is a discretionary purchase; whilst one can postpone the purchase of a new top almost indefinitely subject to the size of one’s wardrobe, one has to eat.”
The issue of Brexit was also discussed in the article. Some commentators are suggesting that Britain’s impending exit from the EU may actually be good news for grocery retailers due to inflation calming the long-running price wars, and possibly even contributing to growth in the sector over the last few months. Going forward, Gary believes inherent factors in both sectors mean that inflationary changes could work differently for both, with grocery again the likely winners.
“Linked to Brexit, another factor is commodity prices, often traded in dollars, so the devaluation of the pound will have inflationary effects,” he said.
“One could argue that 'macro' factors such as the devaluation of the pound affects all retailers equally. The question is how retailers deal with this, especially in terms of being able to pass on increased costs to customers and maintain margins? However, fashion retailers are perhaps less able to do this, in that customers can always buy elsewhere, and moreover, the dangers of the race to the bottom in terms of production costs are well-known.”
“Many food items are arguably less price sensitive, and there is more scope for growing commodities in the UK to minimise this effect (which can't be done with cotton). Also growing in the UK, means that the supermarkets can leverage their power over supplier more effectively in order to maintain margins.”
To read the full Retail Gazette article, visit https://www.retailgazette.co.uk/blog/2017/03/grocery-vs-fashion-why-is-grocery-doing-so-well
To read more about IPM’s High Street 2020 project, which is looking into factors that influence performance in retail centres, click here