<TABLE cellSpacing=0 cellPadding=0 width=452 border=0><TBODY><TR><TD vAlign=top width=452 colSpan=2>Can they do a better job?
Published September 6, 2008
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>UK consumers curbing spending on recession fears
Coffee shop profits are tumbling, pubs are closing and the restaurant trade is sluggish
By JANE MOIR
IN LONDON
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HARD-PRESSED British consumers are turning their backs on £3 (S$7.60) lattes, restaurant dining and the local pub, as the austere economic climate puts a clamp on life's little luxuries.
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</TD></TR><TR class=caption><TD>NOT STRONG ENOUGH
Researchers found that 61per cent of Starbucks outlets reported lower sales in the year to June as consumers cut back on 'luxuries'. The coffee giant has fought back through promotions such as free refills </TD></TR></TBODY></TABLE>A surge in cost-consciousness as the UK teeters on recession and more people fear for their jobs is taking its toll on retailers: coffee shop profits are tumbling, pubs are closing and the restaurant trade is sluggish.
In its recent results, Coffee Republic announced a £2.5 million pre-tax loss for the year to March 30 as revenue fell 40 per cent to £5.85 million. US chain Starbucks is also feeling the squeeze, reporting its first quarterly loss in more than 15 years.
Last month, researchers at the Confederation of British Industry (CBI) found that 61 per cent of Starbucks outlets reported lower sales in the year to June as consumers cut back on 'luxuries'. The coffee giant has fought back through promotions such as free refills, after warning in May that consumers were cutting back on their daily caffeine fix. The move reflects the pressure on retailers to respond to a stark slowdown.
According to CBI, 46 per cent of retailers reported lower sales in the first half of August compared with a year earlier. Sales were weak across all retail sectors except grocers, who reported modest growth. Consumers remain cautious as economic uncertainty prevails. According to a study released this week by Nationwide, overall consumer confidence is 44 per cent lower than this time a year ago. Fears of job losses appear to be paramount, with 47 per cent of respondents believing that there will not be many jobs available in six months.
'Consumers are holding back a bit, but we're quite surprised it has been deeper than anticipated,' says Jeffrey Young, managing director of retail analyst firm Allegra Strategies. 'It suggests the feeling of malaise or hardship out there is quite strong. I think there's a real fear of what's going to happen in the economy. People are being more cautious with their discretionary spending.' He said that the first casualty was the home improvements sector, with people spending very little on fixtures and decoration as the UK's housing market began to dive. This has now spread to foodstuffs, eating out and even coffee, as people attempt to curb daily costs.
Consumers have had to grapple with rapidly rising food costs. Figures recently released by the British Retail Consortium (BRC) show that the price of fresh food has increased 11.9 per cent over the past year. Overall shop prices were up 3.8 per cent in the year to August - the highest figure since the BRC started recording prices in 2006. Nor are the British splurging on a night out anymore. According to research firm Nielsen, the volume of alcohol sold in pubs, bars, restaurants and hotels was down 8 per cent in the year to August. At the same time, almost one in four pubs have been forced to close, as soaring operating costs contribute to an already declining industry.
</TD></TR></TBODY></TABLE>
Published September 6, 2008
</TD></TR><TR><TD vAlign=top width=452 colSpan=2>UK consumers curbing spending on recession fears
Coffee shop profits are tumbling, pubs are closing and the restaurant trade is sluggish
By JANE MOIR
IN LONDON
<TABLE class=storyLinks cellSpacing=4 cellPadding=1 width=136 align=right border=0><TBODY><TR class=font10><TD align=right width=20>
</TD><TD>Email this article</TD></TR><TR class=font10><TD align=right width=20>
</TD><TD>Print article </TD></TR><TR class=font10><TD align=right width=20>
</TD><TD>Feedback</TD></TR></TBODY></TABLE>HARD-PRESSED British consumers are turning their backs on £3 (S$7.60) lattes, restaurant dining and the local pub, as the austere economic climate puts a clamp on life's little luxuries.
<TABLE class=picBoxL cellSpacing=2 width=100 align=left><TBODY><TR><TD>
</TD></TR><TR class=caption><TD>NOT STRONG ENOUGHResearchers found that 61per cent of Starbucks outlets reported lower sales in the year to June as consumers cut back on 'luxuries'. The coffee giant has fought back through promotions such as free refills </TD></TR></TBODY></TABLE>A surge in cost-consciousness as the UK teeters on recession and more people fear for their jobs is taking its toll on retailers: coffee shop profits are tumbling, pubs are closing and the restaurant trade is sluggish.
In its recent results, Coffee Republic announced a £2.5 million pre-tax loss for the year to March 30 as revenue fell 40 per cent to £5.85 million. US chain Starbucks is also feeling the squeeze, reporting its first quarterly loss in more than 15 years.
Last month, researchers at the Confederation of British Industry (CBI) found that 61 per cent of Starbucks outlets reported lower sales in the year to June as consumers cut back on 'luxuries'. The coffee giant has fought back through promotions such as free refills, after warning in May that consumers were cutting back on their daily caffeine fix. The move reflects the pressure on retailers to respond to a stark slowdown.
According to CBI, 46 per cent of retailers reported lower sales in the first half of August compared with a year earlier. Sales were weak across all retail sectors except grocers, who reported modest growth. Consumers remain cautious as economic uncertainty prevails. According to a study released this week by Nationwide, overall consumer confidence is 44 per cent lower than this time a year ago. Fears of job losses appear to be paramount, with 47 per cent of respondents believing that there will not be many jobs available in six months.
'Consumers are holding back a bit, but we're quite surprised it has been deeper than anticipated,' says Jeffrey Young, managing director of retail analyst firm Allegra Strategies. 'It suggests the feeling of malaise or hardship out there is quite strong. I think there's a real fear of what's going to happen in the economy. People are being more cautious with their discretionary spending.' He said that the first casualty was the home improvements sector, with people spending very little on fixtures and decoration as the UK's housing market began to dive. This has now spread to foodstuffs, eating out and even coffee, as people attempt to curb daily costs.
Consumers have had to grapple with rapidly rising food costs. Figures recently released by the British Retail Consortium (BRC) show that the price of fresh food has increased 11.9 per cent over the past year. Overall shop prices were up 3.8 per cent in the year to August - the highest figure since the BRC started recording prices in 2006. Nor are the British splurging on a night out anymore. According to research firm Nielsen, the volume of alcohol sold in pubs, bars, restaurants and hotels was down 8 per cent in the year to August. At the same time, almost one in four pubs have been forced to close, as soaring operating costs contribute to an already declining industry.
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