April 16, 2008 | posted by Michael Baxter in High Steet, credit crunch |

Well, we have all got to eat. When the going gets tight, there are certain things we will have to keep spending on, and food is top of that list.

Cheap clothes should become popular too. Holidays won’t be so popular, expensive trainers could lose their grip, but, even so, retailers who unambiguously aim at people with higher disposable incomes might still do well.

That’s our quick guess as to what the next year or so could mean. And what does that translate to? Well it’s good news for supermarkets which sell food at low prices, you know the types of stores. The ones that say things like “every little helps.” It also means the likes of John Lewis may see their renaissance continue for a while.

But for others, things are set to get difficult.

In the last 24 hours, four pieces of news have broken to give weight to that idea.

First off was Tesco. Profits were up 11.8 per cent, hitting £2.846bn in 2007. Sales were up 11 per cent, and like for like sales were up 3.5 per cent in the year to February.

Abroad, sales were up 25.3 per cent, although the results from Tesco don’t seem to support the view that the Fresh and Easy experiment in the US has got off to a bad start. The retailer’s boss Terry Leahy talked about a natural “pause for breath” Stateside, after a period of rapid store openings.

But with the US economy in such a mess, 2008 is not the perfect year for Tesco’s assault. On the other hand, cheap convenient shopping may be just the recipe for success in a country hit by recession. But while Tesco does it again, elsewhere things were not so good. In fact things were supposed to be very different for Ethel Austin this year. It’s an official supplier of clothes for Liverpool – European City of Culture 2008, so while the likes of Paul McCartney descend upon the city making it the hub of attention all the way to, well, to the Wirral, it was supposed to strut up the retail scene like Steven Gerrard; instead the company has gone into administration.

Then there’s JJB Sports. Profits are down 72 per cent, 80 jobs are to go. Roger Lane-Smith, JJB chairman, said: “We are taking significant action to improve the performance of JJB’s retail stores. Whilst we have identified a number of stores for closure, which will itself strengthen our remaining store portfolio, we are also investing to improve the quality of our stores and product with further store refits, the introduction of new products from our own brands and the implementation of staff training and incentivisation programmes.

“Whilst we expect current difficult market conditions to continue to affect consumers in the short term, we believe the action we are taking represents a turning point for the Company, which will benefit performance over the medium-term.”

One of JJB’s big ideas is combining gyms and shops. It already has 49 of these centres, and has plans for more. Though whether that is a good move in the current climate remains to be seen. On other hand, no downturn lasts forever, and the business which plans for recovery during the downturn is a business that may well be going places.

Finally, there’s the latest lifestyle survey from Mintel. Mintel surveyed 2,000 people in February, and the findings: One in five said they plan to cut back on a summer holiday this year, 16 per cent have cancelled DIY and home improvements and one in ten have cancelled plans to buy clothes, jewellery or footwear; a new car; or household furniture and furnishings.

But the headline figure is this one: mortgage payments now take up 25 per cent of the average household’s take-home income. Surprisingly, and a little unbelievably, that is three times the level seen in 1991.