“My parents’ generation had aspirations of owning their own house and buying stuff like the latest dishwasher and television set. Whereas today, it is less about materialism and more about sharing those experiences. People are more interested in going on holiday to far-flung places because it is harder to get on the property ladder.”
And with projected wage growth data appearing sluggish, Photiades believes most retailers will continue to struggle.
“Real wages are now declining, having been in growth since mid-2014. The spectre of inflation is rearing its head and putting pressure on disposable income.”
March CPI data published on Tuesday showed that prices for electricity and fuel had risen, meaning that those on the lower end of the spectrum will be left with even less disposable income for non-essential items.
He argued clothing and other types of retail goods would continue to be written off as unnecessary expenditures in the short-term, as “the less well-off get even less well-off faster”.
However, not all UK retail is doom and gloom, as he points to JD Sports, which just reported massive top line and profitability growth, and the athleisure sub-sector, embodied by online retailer Asos, which also remains “in vogue”, said Photiades.
While Di Palma recognises the market has over-reacted in its pessimism of the UK retail sector, she doesn’t see prospects for the sector improving any time soon.
“I think there are lots and lots of negatives already baked into the outlook for the general retailers. It remains to be seen whether it will be much worse than implied.
“Expecting to see negative like-for-like sales from most retailers, with some exceptions like Zara, is a very reasonable assumption in the UK for this year,” she concluded.
