Catalogue conglomerates Argos have been forced to re-evaluate their marketing strategy as prices drop and consumer confidence nosedives. Are they simply the latest in a host of retailers having to up their game or is this a case of another one bites the dust?

The chain, owned by the Home Retail Group, are now earmarking their wow deals for preferential treatment,bulking up their value range and adopted the new company strap line “Helping you live for less” in an all out attempt to increase consumer spending.

Instead of their usual reduction notifications on re included product lines, a huge number of new items are to be reclassified as wow deals in their latest catalogue, out this weekend.

Figures from the British Retail Consortium (BRC) state that retail spending in London alone  has dropped by 0.7% on this time last year.

An Argos spokeswomen said, “As always, our catalogue prices will be competitive. Our aim would be to hold initial prices where relevant and to adjust other prices to the market where necessary during the life of the catalogue.”

Argos have seen their sales dip over the Christmas period. Like for like sales fell by 7.5 per cent during the third quarter. Although consumer electronics has seen a positive growth, other categories such as toys, jewellery, furniture and home wares had  much worse.

The company pride themselves on competitive pricing and value for money; their typical reductions have ranged from between 2 and 4 per cent during the past year. At the same time, the number of their Wow deals has increased from 179 - 300 in the past year. The number of Argos value items (their bargain basement range) has also increased from 150 - 230.

Should we worry that another British retail institution is heading for the scrappers yard?  Similar things have and are happening across the whole of the retail sector. Woolworths couldn’t handle it, Zavvi bit the dust, never mind Adams, and the Officers Club, all of whom went to that big high street in the sky.

It may have been a great time to bag a bargain but the January sales have given us all a skewed version of how much we can get for our cash and with Argos having to resort to tactile pricing in such an aggressive manner, we can bet promotions like their wow deals will mushroom over the whole of the retail sector, as we’re persuaded to reach into our pockets and pay up.

It’s pretty simple economics, there is only so far a company can drop their prices and still cover their costs. Let’s hope our beloved Argos doesn’t join its less successful retail peers who couldn’t quite keep up.

Everyone’s been bandying round the recession bomb for the last year. But the UK wasn’t actually officially in recession. Officially a recession is two successive quarters of negative growth and today the inevitable has happened, the first since 1991. The announcement finally pours cold water on Gordon Brown’s 1999 pledge in his Pre-Budget Report that ‘Britain will not return to the boom and bust of the past’. We’ve had the boom, now hold on tight, here comes the bust.

So what does this mean? Nothing really, we’re just now allowed to use the term recession in the sense it was intended. The same economic climate prevails now we just have a nice little semantic bow with which to tie it up. What is worrying though is that the UK economy contracted by a worse-than expected margin - 1.5%. This is despite the reduction of VAT, bank bailouts and the financial stimulus package.

Other nice little statistics to make you grab for the razor blades is that GDP has had the largest drop since the dark days of 1980. In 1980, Britain was still recovering from the winter of discontent when there were mass-strikes and PM James Callaghan almost bankrupted the country. The parallels between then and now are indeed worrying to say the least.

As they say misery loves company and the UK can join the US, Japan and Germany who are also in recession. This is unlikely to be an exclusive group and membership is sure to swell in the coming year.

As well as recession, fall in GDP, there is another little issue: the pound hit a new low of $1.35. For anyone who has been abroad in the last month, the pound’s weakness in comparison to other countries will be of no surprise.

But don’t get too down, this novelty humping dog should cheer you up.

We may still be financial buffoons in this ever depending recession but money matters have been shoved into the very top of the cool list. ISA’s shares, bonds stocks, whatever they’re called; all that financial jargon’s moved right up to the top of the hot topics list. There is one thing though, do we really understand what all this stuff actually means?

A recent survey, by credit reference agency Experian, found that 53 per cent of us are now more likely to talk about money with friends, family and even strangers. All this money talk is spreading too.

The best selling books? They’re all related to money.

From cook books that help you to “(Re)discover the Merits of Offal” to “Doing Designer Fashion on the Cheap” it’s all about scrimping and saving.

It’s taken over the web too. One of the fastest growing sectors of the internet at the moment are discount voucher sites. I’ve lost count of how many times I’ve gone to Pizza Express with my two for one voucher; sweaty and crumpled in my hand.

Saving money is going through its own personal renaissance.

The Financial Services Authority (FSA) are declaring war on our financial uncertainty in the shape of some money saving advice. This is the watchdog  the duty to, “promote public understanding of the financial system”.

I’m not sure exactly how they’re going to do this. Would we all read consumer websites and official white papers on how to save money? Previous FSA campaigns have seen financial advice leaflets posted through letterboxes and left in post office branches waiting our quick once over.

With so many of us feeling the proverbial pinch, we may not like the idea of being told how to handle our finances but we may just have to go along with it.

Before too long we’ll all be psuedo financial advisers.

See, I knew I’d have some good news eventually. It’s not bring out your dead, it’s let’s have a party. Primark has looked at the recession and told it to swivel. This Christmas was another successful one for the low-cost clothes retailer with like for like sales up by 4%.

The continued success of Primark may be in part be in due to the opening six new stores in the UK as well as a sea change in British consumers’ atitudes. The increase in sales for Primark prove that the populace is becoming more price conscious and switching to budget shopping, look at Iceland’s expansion. This will be good news for Primark considering they have been linked to UK sweatshops where workers were underpaid, over worked and mistreated.

The Guardian

As the official obituary page of UK business, Invisible Hand is doing a round up of all the British shops that have gone into administration since the crunch started biting. (Hey that’s quite poetic © Peter Ross 2009)

In Administration

Zavvi

MFI

Adams

Olan Mills

Passion for Perfume (me neither)

Waterford Wedgewood

Land of Leather

Under Threat

Blooming Marvellous

Mosaic (owner of Karen Millen, Oasis and Principle)

Next

Debenhams

Cutting Staff

M&S - 1,000

Merrill Lynch - 1,900

It’s not all bad news, these lucky companies are doing OK

Doing Well

Tesco

Iceland

Sainsbury

New Look - sales rose 2.8% over Christmas

In today’s Guardian John Harris has poured water on Evan Davis’ claim that David Bowie caused the credit crunch. Arguably Davis’ article was a humorous attempt to look at the credit crunch in a novel way. In no ways did he actually believe that Bowie lit the touch paper that eventually resulted in the implosion of the global financial system.

First of all Bowie Bonds were released over a decade ago well before the recent financial troubles began. Secondly the concept of securitisation where investors receive a share of the repayments of a debt or in Bowie’s case royalties had been in use since the 70’s. In the 70’s banks sold on debts from credit cards and car loans to investors who would receive a share of the repayments over a certain period of time. Bowie Bonds were certainly an innovation but only of an existing concept. Investors paid Bowie up front for a share of his royalties over a ten year period. Thirdly and this is the most important, Bowie did not envison this scheme himself. Hell, he’s inventive, creative and is wildly inspirational but I doubt that his creative talents could be applied to the financial sector. Instead it was Bowie’s wily financier David Pullman who was behind the scheme.

In the ten years that followed the issue of the Bowie Bonds, traders used the concept of securitisation but applied it to mortgages. The trouble was there were selling on mortgages from people who had no ability to pay them back, what the market calls ‘junk status’. That’s what caused the credit crunch, billions of pounds of bad debt injected into the financial markets which fundamentally corrupted the global economy.

The Bowie Bond was influential but only in the music industry where other arts used securitisation to secure large one of payments in return for giving their investors access to their royalties, most notably James Brown and Iron Maiden. So next time you hear ‘Bring your Daughter to the Slaughter’ on an Iceland ad, there’s some investor in Wall Street who’s got paid a dollar.

My basic point: leave Bowie alone. Plus I get to stick one more Bowie video in, just for kicks. Little China Girl one of my favourites.

The Guardian

The bankers got us into this mess and now they face the aftermath of their reckless greed. Merrill Lynch, the financial management and advisory company have made the single biggest lay-off in the history of the Square Mile. The lay-offs represents 30% of their combined work force in London and a 7% reduction in staff numbers in the Investment Banking and Investment Management (IBIM) division across the globe.

They’re will be a lot of people hawking their Gieves and Hawkes suit, selling off their blackberries and looking for work elsewhere. But seriously, although it seems hard to feel sympathetic about financial workers losing their jobs, there will be a lot of people affected by the lay-offs who never benefited from their huge bonuses. Every financial institution is made up by support staff, administrators, IT people and many others. These are the people who will be hit hardest by losing their jobs as they never received huge salaries and mega bonuses.

London Paper

There is a slight glimmer of hope. Out of all this dire economic news Tesco are still going strong. In the midst of a crippling recession, that’s seen their high street contemporaries filing for bankruptcy, they’ve announced the creation of 10,000 new UK jobs today.

This has come of the back of a 2.5 per cent increase in like for like sales over the Christmas period. A new discount range, aimed at Aldi and Lidl shoppers, is attributed to all the good fortune. Initially, the range was aimed at fruit and veg and was then rolled out to other ranges.

The range has turned a profit for Tesco but only just. Growth has been relatively slow when compared with the same time last year.  Finance director Andrew Higginson said the Christmas trading figures were the weakest “probably since the last recession”.

Still, things could be a lot worse. Their lucky to still be turning a profit at all when so many of their high street contemporaries are fending off the bailiffs.

The fact that Tesco are investing back into the market, not only creates more jobs when it seems there are so few about, but it also boosts consumer confidence at a time when it’s needed the most.

The budget range may be doing wonders for their sales this season but it’s online where Tesco’s really raking in the sales. Total sales from Tesco.com and tescodirect.com increased by more than 18 per cent to 273 million over the 7 week Christmas period.

Of that it was electrical and home entertainment goods in particular that were the top sellers. It goes to show how much people are now purchasing bigger items online. They’re, not only, conscientious about where they buy their goods from but are so much more price aware than before. Their choosing to invest in home entertainment systems rather than expensive nights out.

Tesco are in the best position to take advantage of the floundering market. They have 440,000 staff worldwide and they trade in 13 other countries. At the same time as feeling the pinch they can take advantage of the week pound by trading abroad. It’s as a shame poor old Woolies didn’t have any Hong Kong or Bangkok branches to keep the pick and mix afloat.

As well as being one this 20th century’s most influential recording artists, David Bowie, it seems is also influential in the world of economics. Now’s the time I should think of some great Bowie pun, but I can’t. It’s 3pm and I’m jet lagged.

Bowie is an early adopter and always seems to be involved at the forefront of the most important trends from glam rock, rock, pop, dance, ambient, electronic and looking like a middle aged woman:

So it seems Bowie came up with an ingenious ruse to get his hands on some ready cash in the mid 90’s. Arguably his most creatively bankrupt period. He should have been spending more time making great music rather than dodgy investments. Bowie sold his projected royalties in the form of Bowie Bonds. He sold the rights to his future royalties to shareholders up front instead of waiting for them to accrue over the course of the years. This gave him access to a large up front sum and it gave his investors a ready flow of cash from his royalties.

Everyone prospered that was until the banks cottoned on to this clever scheme and started selling on the mortgages they had loaned to their customers in a similar fashion. By buying up a mortgage an investor would receive the mortgage repayments over the course of the payment period. The scheme works perfectly if there is a return on the original investment. In Bowie’s case, the payment from royalties would continue indefinitely however the banks were selling on mortgages they had loaned to people who couldn’t afford the repayments. When the mortgages payers defaulted those who had bought up these bad loans lost billions and that little thing called the credit crunch began.

There’s a recession, a lack of liquidity in the market, people are losing their jobs and companies are going into administration. But we still have Bowie, and if doesn’t cheer you up, you must be dead inside.

Price Waterhouse Cooper have decided to treat people with Zavvi gift vouchers as creditors. As all creditors are equal in the eyes of the law, the gift vouchers must join the long queue of people trying to get their money back. If gift vouchers were bought after the 27th of November, there is more chance of getting a refund. Before this date, reimbursement is less likely.

To make a claim, you have to write to the joint administrators quoting their Gift Card / Gift Voucher number (s), enclosing original Gift Card / Gift Voucher (s) and quoting their full name and address for return correspondence. Please find the joint administrators address below:

zavvi Vouchers
c/o The Joint Administrators
Ernst & Young LLP
100 Barbirolli Square
Manchester
M2 3EY

Full details can be found on the Zavvi site.

Why Price Waterhouse Coopers has chosen to treat gift vouchers holders as creditors is a mystery. The administrators of Woolworths let customers with gift cards use them within the stores right up until the shelves were stripped.

Woolworths is the major reason for the problems at Zavvi. Entertainment UK was part of the Woolworths group and responsible for providing stock for Zavvi. When Woolworths got into problems Entertainment UK (EUK) were unable to provide new stock for Zavvi in the crucial run up to Christmas.

Zavvi was already in some financial difficulty but being unable to get the latest DVDs, CDs and games in the run up to Christmas meant they lost out on a large proportion of their yearly profits. Also, the problems at EUK forced Zavvi into a stock clearance sale. This is because the stock in the Zavvi stores was owned by EUK. When EUK as part of Woolworths went into administration Zavvi had to unload all the EUK stock, to pay EUK’s creditors.