Last year’s two big success stories on the High Street were John Lewis and Marks and Spencer. And while all around others were moaning, the big two kept announcing surging sales.
Well, not any longer.
Recently, we told how sales at John Lewis fell 4.4 per cent over the last year. Now the figures from Marks are out, and they are even worse.
During the last three months, underlying sales at Marks were down 5.3 per cent.
It is a little odd, because according to recent data from the Office for National Statistics, retail sales in May had their highest percentage increase since 1986. Can you see why not everyone believes the ONS data?
But this was not any announcement of a fall in sales. This was a Marks and Spencer announcement of a fall in sales. And that means, time for a purge.
Well, maybe not a purge, but the retailer’s director of food is going.
Like-for-like food sales were down 4.5 per cent and general merchandise sales were down 6.2 per cent.
You can understand why the food business is struggling. No one can deny the quality of M&S food, but it’s expensive, and right now, people want cheap.
Sir Stuart Rose said: “Pressures on consumer spending and increased competitor pricing and promotional activity, coupled with changes in consumer buying patterns, have resulted in a significantly weaker performance.”
The M&S announcement illustrates perfectly why many think the current inflationary pressures are a one-off. With wage inflation staying muted, and shoppers clearly determined to find bargains, in some ways the signs point to deflation.
It is just that, as the Bank of International Settlements pointed out yesterday, it is all very well saying oil and food inflation is an external factor, but the real cause of high oil is high demand, everywhere.
So, on one hand, interest rates need to go up worldwide, but on the other hand, they need to go down in the UK to drive up waning domestic demand.
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