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.

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.

The invisible Hand blog is rapidly becoming an obituary for failed UK companies. Part of me feels guilty for chronicling the demise of the British economy, as I think it is acts as a self fulfilling prophecy. The more people are bombarded with negative news, the less confidence they will have in the economy.

Economics is largely is based on psychology. Of course economists have come up with a vast amount of theories to explain how economies work but most have failed. Throughout the 20th century the UK has followed, Keynesianism, New classical economics, New Keynesian economics, Post-Keynesian economics amongst others. Each one working for a while but then failing in some way. There has been recession, crashes, mass unemployment, inflation, deflation, stagflation amongst others. Regardless of the policy a particular government these economic disasters still took place. It’s impossible to create a general rule for how the economy works: it is too large and dependent on too many factors. The simplest way to understand economics is basic human psychology which is why negative coverage may be very damaging indeed.

Today furniture chain Land of Leather has gone into administration, putting the jobs of its 850 staff into jeopardy. Land of Leather has been hit hard by the downturn in housing market. With less people moving house, the demand for new furniture has decreased. The downturn in the housing market has already claimed the scalps of MFI, The Pier, ScS Upholstery, Ilva and Floors 2 Go. Last week Sofa warehouse announced its attention to call in administrators.

Land of Leather has been in difficulty for some time. Athough the company is debt free, because of the lack of liquidity in the market, they were unable to secure funding to cover the losses it made in January  Like Woolworths, Land of Leather refused a buy out package last year in November. The plan was rejected because it was deemed ‘insufficient value to shareholders’.

Ironically, in August Woolworths rejected an offer by Baugar, the company behind Iceland that now owns 50 former Woolworths stores. In both cases, the major concern was for the shareholders’ return on their investments. By putting their own interests above that of the companies, these shareholders effectively doomed these companies to failure. It is a great example of cutting off your nose to spite your face.

As the company is debt free, there is some hope it may find a buyer. Here’s hoping, just so I can put some good news up here for once.

Guardian

Woolworths has been a staple on the British high street for almost 100 years even though it started life as an American import. The first UK branch was opened in Liverpool in 1909. The main problem with Woolworths in recent years is that it lacked a specific brand identity: as a cut-price retailer it was undercut by the supermarkets and £1 shops and as a seller of CDs, DVDs, home wares and toys it was out performed by specialist retailers like HMV, Waterstones or Toy R Us. It became a jack of all trades and a master of none. The only reason people went to Woolworths was to nick pick n’ mix and buy really small cans of coke.

Typically Woolworths made 80% of its yearly profits in the run up to Christmas, now with the British economy in the doldrums, the high street is suffering. With Woolworths’ business model in such a precarious state, all it has taken is one bad year for it to go to the wall.

Woolworths might still prevail now it is in the hands of administrators. The BBC is interested in acquiring  Its DVD  and CD distribution business while Hilco a specialist restricting firm are looking at options for taking over the day to day management of the branches.

The failure of Woolworths may precipitate a price war as the administrators, desperate to claw back some money, sell off Woolworths’ stock in massively discounted sales.  This would force other retailers to reduce their prices which may affect their own profitability during the festive period. Instead of being an isolated event, the failure of Woolworths might have a domino effect on the British economy affecting jobs and businesses alike.