A SMALL development occurred on Sauchiehall Street in Glasgow recently which gave an indication that footfall levels are recovering in the city centre.

Having been among the many outlets to close its doors earlier in the pandemic, high-street baker Greggs reactivated one of its bigger outlets on the famous thoroughfare.

In the rich retail history of Glasgow city centre, it is barely worth a footnote. But the fact that Greggs, a publicly quoted company, saw fit to bring the store back to life gives you a good indication of the extent to which people are out and about again, following the barren years of the pandemic. You can be sure the baker would not have gone to the expense of reopening a store if there were not enough people around to be tempted by its sausage rolls, steak bakes and sugar-ring doughnuts.

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Yet, while on the one hand it is positive that footfall has revived sufficiently for a retailer to bring back a store, it does not follow that brighter times lie ahead for every company that earns its living from the high street.

A glance around Glasgow most days does tell you that people have returned to the city centre in significant numbers, a pattern that is likely to be replicated in other urban locations around the UK now Covid restrictions are a thing of the past. But it does not automatically follow that consumers are spending money with confidence. Far from it, in fact.

With annual UK consumer prices index inflation rising to 10.1 per cent in September, and interest rates up to 3% following the latest hike by the Bank of England in its long-running bid to tame inflation, household finances remain under intense pressure.

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Throw in the spending cuts that are expected when Chancellor Jeremy Hunt unveils the UK Government’s medium-term fiscal plans on November 17, and a warning from the Bank of England that the UK is poised to enter the longest recession since records began, and the likelihood of people feeling confident enough to loosen the purse-strings recedes further still. It is one thing being able to afford to buy a vegan sausage roll in Greggs, but it is quite another when it comes to expenditure on items such as clothing, footwear and household goods.

Last week, the Scottish Retail Consortium (SRC) published figures that pointed to the continuing recovery of footfall in Scotland in October. Although still one-eighth lower than its pre-pandemic level, Scottish footfall saw its second-best monthly performance of the year to date, with the 12% decline versus October 2019 some 1.4 percentage points better than September.

On the other hand, the ability of retailers to keep prices down remains severely constrained, because of the welter of costs they face. For months now, firms have come under pressure from energy and commodity bills, ongoing supply-chain disruption, and the tightness of the labour market, and there is little sign of that easing.

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Those pressures were captured by the latest BRC-NielsenIQ shop price index, published just two days before the SRC footfall figures. It found prices on shop shelves reached a 17-year high in October, climbing to 6.6% from 5.7% in September. Food price inflation was especially marked, the index found, with the year-on-year increase climbing to 11.6% in October from 10.6% in September.

“Retailers are striving to support customers by expanding value ranges, fixing prices of some essential goods, and providing discounts for vulnerable groups,” said director of the SRC David Lonsdale. “However, the sheer weight of costs bearing down on the sector is proving difficult to absorb.”

Amid such challenging conditions, it is no surprise to see the cracks appearing at a number of retailers.

Take Joules, the upmarket clothing and homeware retailer. Famed for its wellies and country-style clothing, Joules saw its share price come under further pressure earlier this week when it warned trading had been weaker than anticipated in the 11 weeks to October 21. Milder weather meant sales of wellies, knitwear and outerwear had been lower than hoped, with the trading “underperformance” meaning that its working capital position had fallen below expectations.

The company has opened talks with founder – and product director – Tom Joules over a possible bridge financing proposal but warned there was no certainty a deal would be done. If that is the case, it is expected that Joules would not be able to repay a short-term revolving lending facility when it falls due on November 30.

The problems facing Joules are myriad. But the fact that its products are at the expensive end of the market will not be serving it well in the middle of a cost-of-living crisis, a point Joules itself alluded to this week when it highlighted the level of promotional activity in the market.

While the future remains uncertain for Joules, the die has been cast for Made.com. Following weeks of speculation about its future, the online furniture retailer announced yesterday that administrators had been appointed and immediately struck a deal to sell the company’s brand, domain names and intellectual property for £3.4 million. Next has not taken on any members of staff or stock, which means the future for around 500 people who work for Made.com is suddenly uncertain. It is a remarkable reversal of fortunes for a company that was valued at £800m when it floated on the stock market in June 2021.

“Having run an extensive process to secure the future of the business, we are deeply disappointed that we have reached this point and how it will affect all our stakeholders, including employees, customers, suppliers and shareholders,” said Susanne Given, chairman of the company. “We appreciate and deeply regret the frustration that MDL going into administration will have caused for everyone.”

The ultimate failure of Made.com comes after the company, which had thrived during lockdown as people spent more time at home, saw a “significant reduction” in demand in the first half of the year as challenges deepened across the global economy, leading it to launch a formal sale process.

No retailer will be immune from such challenges, of course, and there is every chance that more will fall by the wayside during the expected recession ahead.

But some may even thrive in the current conditions. Primark pledged on Tuesday that it would freeze prices until its autumn and winter collection is launched next year. The move is likely to have gone down well among households which will be worrying about how they can afford to provide clothing for their families as a difficult winter draws ever closer.