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Market Commentary

​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​​Weekly Retail & Leisure News - 05​ September, 2017

Consumer confidence up, but macro headwinds remain

UK consumer confidence increased two points to minus 10 in August, according to GfK. The long running index factors in personal finances as well as views of the wider economy. While consumers’ views on their own personal finances remain positive, up three points on last month and one point higher than August 2016, their views on the wider economy were less optimistic. Despite a positive overall turn in consumer confidence, the macro retail picture remains challenging. Inflationary pressures are mounting, and many retailers are starting to feel the impact of currency hedges unwinding, and import costs increasing. Indeed, inflation worries for consumers are at their highest level in three and a half years, according to a monthly Lloyds Bank poll, which found that 65% of people felt negative about levels of inflation in July, up from 60% in June.

Despite these headwinds, pockets of resilience and strength remain. In particular, larger cities and regional out of town malls continue to attract retailers seeking to expand in prime locations. H&M Group has launched two brands into the UK market recently, Arket and Weekday, both of whom opened their first UK stores on London’s Regent Street. Polish fashion retailer Reserved will open its first UK store on London’s Oxford Street this week, and is reported to be planning a second London store. Elsewhere, luxury watchmaker and retailer Tag Heuer has opened its biggest UK store at Meadowhall in Sheffield, while Primark is the first new tenant to sign to anchor intu Trafford Centre’s Barton Square. House of Fraser is taking its first store in over ten years at the new Rushden Lakes development in Northamptonshire, and Oliver Bonas will open its first Welsh store, located on The Hayes in Cardiff.

Finally this week, retailers across the world continue to seek an edge through embracing innovative technology in order to improve customer convenience and experience. Walmart has teamed up with Google to enter the voice-shopping market - the voice activated technology provides retailers with a new way to communicate with its customers. Elsewhere, in an attempt to attract young, tech savvy consumers, KFC has introduced a new payment system. Launched in China, “Smile to Pay”, is a facial recognition system that allows customers to pay for food automatically. And in Russia, Burger King has launched its own virtual crypto-currency, The WhopperCoin, which is a virtual bitcoin-style currency that can be used for payment in its fast-food stores.

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