They include a controversial Pentagon official a dethroned corporate diva a rock star a top US
They include a controversial Pentagon official, a dethroned corporate diva, a rock star, a top US Treasury official and – some fondly hope – the former secretary of state, Colin Powell The outcome is anyone’s guess But one thing is certain. Whoever is chosen will have a hard act to follow.For the past 10 years, James Wolfensohn, a cello-playing former Wall Street investment banker and world-class schmoozer, has led the Bank in idiosyncratic and probably inimitable fashion. By turns domineering, generous, vain and inspirational, the Australian has given the institution its highest profile since Robert McNamara, a former US defense secretary, was president three decades ago, atoning for his role in the disaster of Vietnam.Wolfensohn’s management style has often been chaotic, frequently creating turmoil at the Bank’s headquarters a couple of blocks from the White House. Mr Hawkins, for example, claims increases in the national minimum wage will have added 27 per cent to salary bills by October 2006.
But ultimately, the health of the high street is dependent on us Retailers need shoppers. And when they stop spending, that is when the real problems start.. For a start, while consumer demand is slipping, costs continue to rise. The day after Boots’ announcement, the out-of-town discounter Matalan issued a far more reassuring update, suggesting some sectors and some locations will fare better than others.Overall, though, no one is arguing that things aren’t getting tougher for retailers.
With no help from the Bank, and given stiff competition and price deflation, the battle for your pound will be fierce. The losers are likely to be stores in the luxury sector; the winners, the supermarkets. After all, even if you don’t fancy a spending splurge, you will still have to do the weekly shop.There is also likely to be the odd fillip, all things being equal. Most retailers, for example, will now be hoping that, following a prudent February, the Easter shopping period will be buoyant Not everyone is suffering, either. “The outlook for housing may have improved, but it’s not much of a fresh drive. There’s also been a retail boom over the past few years – just how many videos do you actually need, how many iPods?”The MPC is concerned about deteriorating conditions on the high street. But despite this, many still believe it will err on the side of caution and leave rates on hold, with some arguing there will be no further movement this year.Which leaves little room for error by retailers.
Kevin Hawkins, director-general at the BRC, says: “I’m not saying for one moment that a quarter per cent off would see people rush back to the shops It’s not going to trigger a consumer boom. But it would make a significant impact on a depressed psychology. Consumer spending is evidently down, and interest rates have, of course, risen. But the housing market appears for the time being to have stabilised, consumer confidence is improving and unemployment remains at record lows – all key influences on spending.So why aren’t we hitting the shops? David Page, an economist at the investment bank Investec, says there is little fresh impetus to encourage spending, especially against a background of high personal debt. The more talk there is of another interest-rate rise, the more cautious the consumer is going to be.
That really is critical.”The reality, however, is that the economic picture is not so clear-cut. “The figures we’re seeing now are what we’re going to see probably throughout the whole of 2005. There will be some that will manage to turn it around, but it’s going to be the toughest year for probably six or seven years.”The BRC is sufficiently concerned to be calling for a rate cut when the Bank of England’s Monetary Policy Committee (MPC) meets this week. February ought to herald a return to normality – so this year’s dismal performance does not bode well for the rest of 2005.”It’s going to be a pretty flat year,” says Tim Denison, director of knowledge management at SPSL, which measures footfall in shops. And the worse the Christmas, the bigger and longer the sales – and the bigger the hit to margin.