Consciousness of Sheep
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In January, it became clear that UK high street retailers had recorded below-inflation sales growth. As Tim Wallace in the Telegraph lamented:
“Retailers suffered the weakest Christmas shopping growth for five years as higher prices hit family spending.
“December’s retail sales rose by 1.4pc by volume compared with the same month of 2016, the slowest growth since 2012.
“To get that modest rise in goods, shoppers had to spend an extra 4.4pc, the Office for National Statistics said, underlining the substantial impact of rising prices.”
Early reports, however, suggested that food retailers – including the big supermarket chains – had enjoyed modest growth. However, even this now seems to have been optimistic. As Wallace notes:
“Food sales also fell, with volumes down 1.1pc on the month and 0.6pc on the year, indicating a fundamental weakening in shopper confidence.”
The response of the supermarkets has been dramatic. Tesco led the charge by announcing 1,700 job losses; followed in short order by Sainsbury’s announcement of “thousands” of redundancies. Now Morrisons – which had been thought to have done well over the Christmas period – has laid off 1,500 staff. In all three cases, the cuts are to middle management posts; with the work being pushed down to less well-paid staff. In short, this is primarily a cost-cutting exercise of precisely the kind that companies undertake when recession strikes.
Falling food sales are particularly troubling because it is the one area where online retail has failed to make significant inroads (people will order deliveries from the supermarkets’ own websites, but few are ordering a weekly shop on Amazon). As such, the greatly overused narrative that falling high street sales can be explained by rising online sales cannot be deployed.
Falling supermarket sales point to one obvious conclusion: against the backdrop of a booming stock exchange, the real economy is being slaughtered. Collectively our spending power has fallen to the point where we are either already in or about to topple into the next recession.
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