Understanding the external environment

Jane BevisDirector of Business Environment

British Retail Consortium

BRC Retail Members

We represent:

• Over 80% of the retail industry.

• 30,000 smaller and medium sized retailers.

• Over 70 major retail members, with over 190 facias

• A broad church of large to small; out of town to high street; food and non-food; stores and online/direct.

BRC Continues to Expand – latest new members

Current Retail Climate in the UK• Systematic global economic slowdown

• Credit crunch has spread to all sectors of the real economy

• Credit contraction causing disruption in retailers’ supply chains

• Retail sales fall in 2008 and 2009

• Consumer confidence at near record lows

• Sterling’s depreciation affecting retailers’ costs and inflation

• Government-driven costs rising

Retail Stocks

BRC-KPMG Retail Sales Monitor:Total sales growth

2009 TotalMar 0.6%Feb 0.1%

2008 Total

2007 Total

3- month weighted average

Food: 6.3%

Non-Food: -2.1%

All: 1.2%

BRC-KPMG Retail Sales Monitor:Like-for-Like sales growth

2009 LFLMar -1.2%Feb -1.8%

2007 LFL

2008 LFL

3- month weighted average

Food: 4.7%

Non-Food: -4.3%

All: -0.7%

BRC-KPMG Retail Sales Monitor and Consumer confidence

Consumer Confidence

Source: Nationwide, GfK NOP

House price and mortgage approvals

Unemployment Rate

Falling value of the pound

Credit Conditions

2

Has your business experienced a contraction in credit facilities offered by your bank?

If yes, has this impaired the ability to operate the business on a day-to-day basis?

Credit Conditions

3

If you have experienced a contraction in credit facilities, what has the impact been?

Trade Credit Insurance

4

Have you experienced disruptions in your supply chain as a direct result of trade credit insurance being reduced or withdrawn from your suppliers?

If you have experienced problems in your supply chain, can you estimate what proportion has been affected?

Retailers are facing increasing regulation and costs

• Increased protectionism threats from the EU

• Environmental/Green legislation - Climate change and waste

• Consumer protection/health legislation

• Property taxes

BRC-Nielsen Shop Price Index

Challenges faced by the High Street• Long-term growth rates predicted to fall

• Unfavourable exchange rates

• Chinese cost increases

• Consumers become increasingly price sensitive

• Increased popularity of shopping online

• Spending forecasts suggest wide variations between sectors

• Out of town shopping continues at the expense of High Street

Retail Stocks