More unsettling tidings from the high street. Marks & Spencer intends to cut its staff redundancy benefits by up to 25%, as well as bring forward the date of its next trading update. As messages go, the one concerning advance cuts in redundancy benefits is “loud and clear”, said Julia Finch in The Guardian. It’s also a lesson in “how to demoralise your workforce”. The trading update change will also “strike fear into the hearts of investors that Sir Stuart Rose expects to deliver another shocker”, said the Daily Mail’s Lucy Farndon. The squeeze on incomes has hit the middle market hard as far as clothing is concerned, while on the food front M&S is “also being walloped for its premium positioning”.
Food shoppers trade down
M&S food sales are down a “very bad” near-8% on last year, reckons Pali International retail analyst Nick Bubb, and have dropped by 2.1% in the four weeks to 9 August, according to research consultant Neilsen. And Marks’ market share has fallen again, along with Sainsbury’s and Tesco’s – whose performance is “underwhelming and unimpressive”, says Dresdner Kleinwort.
As increasingly cost-conscious shoppers trade down, the winners are Asda and Iceland, and the German-owned discounters Aldi and Lidl. Indeed, in the four weeks to mid-August Neilsen figures show Lidl lifting turnover by 8.4% while Aldi sales grew almost 14%. According to the FT’s Richard Braithwaite, the climb in Aldi’s share of the UK grocery market to 3% is “a clear sign that the long-resisted lure of the discount supermarket” is now starting to rope in British consumers. Over 15 years after they arrived in Britain, predictions that the Germans could “change the face of British retailing” could be proved right, said Richard Fletcher in The Daily Telegraph.