John Lewis sales, barometer of the nation's spending

After unexpectedly low GDP figures published couple of day ago Britain should have realized that it is lacking behind some of the Europe’s leading economies. In the past few months media wrote about Britain being out of the recession based on various economic indicators. Having said that I believe that because of all those news people actually started thinking that it might be true; the news might have increased their confidence. After reading some of my previous blogs you can understand that I am not so optimistic about the future outcome of this recession and that we will still find ourselves in economic downturn next year.

This week’s news that caught my attention was again about media speculation on economic recovery based on Halloween. Some might remember this year’s Halloween more, some less, but John Lewis certainly will remember it really well as their sales jumped through the roof.

I have read articles from Reuters, Daily Mail, FT, and Retail Week and most of them wrote that sales at John Lewis are a “barometer of the nation’s spending”. The news is that John Lewis reported massive improvement in sales potentially caused by Halloween and Christmas spirit in consumers. The week of Halloween saw increase in sales by 7.8% whereas John Lewis upmarket Waitrose, supermarket chain, experienced 10.1% increase in weekly sales. The most surprising figure compared to last year is that demand for fireworks went up 8% and the week of 24^th October brought highest ever bedroom items and bed sales. However, the revenue is still lower than in 2007 but £56.4m revenue from department stores sounds good considering current economic health and worse ever performance in 2008. Overall department stores, Debenhams, Marks and Spenser, Next, have been performing better than expected. In the case of John Lewis, only 4 stores contributed to this increase in sale whereas in 2007 most of the stores contributed equally. The interesting fact is that all articles suggested that this increase in consumer spending is sign of economic healing. Are these articles right, do increased sales in major department stores indicated economic recovery or is it just Christmas “fever” starting to kick off? Walking down the Oxford Street is “mission impossible” nowadays because people started to shop around for Christmas presents and Oxford Street is place you do not want to be during the weekend.

The headline of the article from FT stated that “John Lewis’ sales raise hope for recovery”. The media was packed with this type of headlines two weeks ago and when falling GDP figures went public on Friday, media stopped, and couple of days after they started again. I believe that government is well aware of the influence this news has on people. With current financial situation government desperately needs media to encourage spending through ensuring people that we are just about out of the recession. I believe that this unexpectedly large increase in department stores sales is partially due to media influence and partially due to the time of the year; people started doing their Christmas shopping.

Both articles from FT were very short, with brief explanation of the figures showing the improvement in sales, but one thing surprised me. So far I have never seen FT being even a little bit biased. Both articles expressed their opinion about what this increases in sales means for nation’s recovery which is I find unusual for FT to do. However, the language used in both was clear. Interestingly FT articles were the only ones that did not comment on Waitrose increase in revenues. Usually my least favourite source, Reuters, was the most objective from all I have read on John Lewis news together with Daily Mail. The article from daily mail was very easy to read and language used was clear; little remarks such as “Waitrose said shoppers appeared to have a sweeter tooth than last year, with demand for toffee apples boosted by 90%” made this article interesting to read for me. Retain week was the only article that included opinion of someone from John Lewis, operational development director who said that Christmas ranges are “particularly well received”.

One strange thing about these articles was that couple of them have different figures for John Lewis weekly revenues, Waitrose revenues and percentage increases. The difference was not huge but it was still enough for me to notice. It raises the question of accuracy and people could get slightly different view depending on which article they read.

Trying to figure why was this story written and for who, I came to conclusion that story was written for general public with the intension to bring some positive attitude and probably increase confidence about economy. This answers to some extent the question why was the story written. Certainly Gordon Brown’s government needs it since falling GDP was not working in the favour of his party. The news might be interesting in potential investors as well. It is not world braking new and probably would not be read by people outside Britain. After reading carefully all five articles I can say that it is enough to read headline and first two sentences to get general idea because of the nature of the news. I must not forget to mention that John Lewis share price went up after this news was published.

Overall I believe that news like this one serve to increase nation’s confidence and whether it is working we will see in near future. For now it seems to me that it is working, what do you think?

Sources:

Financial Times

URL: http://www.ft.com/cms/s/0/9798508e-cacd-11de-97e0-00144feabdc0.html

Retail Week

URL: http://www.dailymail.co.uk/money/article-1225778/John-Lewis-sales-surge-continues.html

Financial Times

URL: http://www.ft.com/cms/s/0/f4f1d934-cb3c-11de-97e0-00144feabdc0.html

Mail Online

URL: http://www.dailymail.co.uk/money/article-1225778/John-Lewis-sales-surge-continues.html

Reuters

URL: http://www.reuters.com/article/cyclicalConsumerGoodsSector/idUSL666905520091106