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Market Commentary

​​Weekly Retail & Leisure News - 22 September, 2014

​Vodafone and EE snap up Phones 4U assets, as Inflation drops further in August

Vodafone has agreed to acquire 140 Phones 4U retail stores as administrators have made 628 head office staff redundant. The remaining 400 employees at the Phones 4U head office will be kept on in order to support the administrator as it seeks to sell off additional stores.  EE has also agreed to buy 58 stores from Phones 4U after the retailer fell into administration after both network operators opted not to renew their supply contracts with Phones 4U earlier this month. Dixons Carphone has also stepped in to save 800 jobs out of the company's 5,596 after it reached an agreement to keep on the staff that worked in Phones 4U concessions in Currys & PC World stores. 

Official ONS figures released this week show that a fall in food and petrol prices helped inflation drop to 1.5% in August from 1.6% in July, as measured by CPI.  Fierce price wars between supermarkets helped push it down further but the drop is expected to bring only limited relief to households as wages continue to stall. Last week the Bank of England's governor, Mark Carney, predicted interest rates would probably start to rise before real wage growth returned some time next summer.

And finally, ASOS has reported a strong quarter with total retail sales increasing by 15% to £24m, driven by strong performances in the UK (+33%) and EU (+21%). With total retail sales just short of £1bn, ASOS is one of the global ecommerce market leaders, but as the online channel matures globally, it faces much tougher competition. This competition takes the form of not just the pureplays such as the Chinese giant, Alibaba (which has just secured its place as the world's largest-ever stock market flotation) and German player, Zalando, but also from international fashion retailers such as H&M and Inditex which are expanding their multichannel capabilities.  

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