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Ash4781

Rising Interest Rates To Have A Profound Impact On Shoppers' Spending Habits

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http://www.telegraph.co.uk/money/main.jhtm...nweather108.xml

New figures from BDO Stoy Hayward predict 1,300 high street chains will fail in 2008, compared to 1,050 this year, an increase of 24 per cent. BDO also predicts consumer spending will grow by just 2.1 per cent next year, almost half the average annual growth of 3-4 per cent.

Ouch!

Also this week, the KPMG/SPSL Retail Think Tank is expected to warn that during the last quarter, retailers were hit by a triple whammy of weakening consumer demand, tighter margins and higher costs. Helen Dickinson, head of retail at KPMG, said that higher rents were also taking their toll.

http://news.independent.co.uk/business/new...icle2744846.ece

Retailers' in desperate trouble ?

If goods imported from China, and India start inflating in price and consumer demand falls sharply surely that will hurt.

Will retailers be tied into long rental leases of units at high price rents?

What about the debt some companies are carrying ? (e.g. Debenhams)

Edited by Ash4781

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I'm finding it hard to believe that there are 1300 chains of stores to begin with let alone fail.

Anyway, presumably more vital, adaptable businesses will trade in the vacated premises. A recession/depression might bring about the return of more interesting shopping instead of the "same everywhere you go" experience available now.

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Mistake in the article - 1,300 individual sites instead of whole chains, perhaps?

So shops close, people lose jobs (possibly second income for some families), they cut back on spending, leading to more job losses (and less overtime to be worked thus further loss of income), repossessions rise, money written off by banks, they reduce overheads, fewer houses bought and sold, jobs lost at estate agents (exacerbated by Tesco entrance to market), less money spent on high street.

Mmm, all sounds a bit like 1989/90.

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Guest Bart of Darkness
And is this turn of the cycle a surprise?

To some it will be a major source of astonishment (and puzzlement).

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Guest Bart of Darkness
Will anybody still buy cheap imports from china if they weren't cheap anymore.

If imports from China ceased to be cheap, then you would no longer be able to buy cheap imports from China as they wouldn't exist. Do you see?

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If imports from China ceased to be cheap, then you would no longer be able to buy cheap imports from China as they wouldn't exist. Do you see?

Yes but then because nobody bought them china would be screwed and have to make them cheap again. Or maybe some other asian country or african country takes china's place as cheap importer?

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Yes but then because nobody bought them china would be screwed and have to make them cheap again. Or maybe some other asian country or african country takes china's place as cheap importer?

If Western demand fell flat they would suffer.. but ultimately they would simply re-tool and produce for their own/local markets.

Surely though the point is that if all imports go up in price we will still buy them, we are not geared up for making TVs, stereos, fridge-freezers, furnature, cars etc... therefore people will still have to buy, just at higher prices.

Inflation would go through the roof.

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If Western demand fell flat they would suffer.. but ultimately they would simply re-tool and produce for their own/local markets.

Surely though the point is that if all imports go up in price we will still buy them, we are not geared up for making TVs, stereos, fridge-freezers, furnature, cars etc... therefore people will still have to buy, just at higher prices.

Inflation would go through the roof.

I'm kind of reminded that Nissan and Toyota were persuaded to setup factories here in the UK, in order to help correct the trade in balance with Japan.

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I'm kind of reminded that Nissan and Toyota were persuaded to setup factories here in the UK, in order to help correct the trade in balance with Japan.

We still have a few assembly plants here (for the moment), but I doubt all the "bits" are made here.. I don't remember the last time I saw a company making car seats or speedo dials.. I am prepared to be corrected though.

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If Western demand fell flat they would suffer.. but ultimately they would simply re-tool and produce for their own/local markets.

Chinese tend to save rather than spend; it would be hard to dump all that cheap tat on Chinese workers, particularly when they're earning $0.50 an hour. If the West goes into a recession then China will be in deep shit.

Surely though the point is that if all imports go up in price we will still buy them, we are not geared up for making TVs, stereos, fridge-freezers, furnature, cars etc... therefore people will still have to buy, just at higher prices.

Except no-one really needs a 50" HDTV, or a new fridge-freezer to replace one that's only a few years old. We'd still have to buy from Asia when we decided to buy, but we could dramatically reduce the amount we import just by replacing things less often.

Edited by MarkG

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So shops close, people lose jobs (possibly second income for some families), they cut back on spending, leading to more job losses (and less overtime to be worked thus further loss of income), repossessions rise, money written off by banks, they reduce overheads, fewer houses bought and sold, jobs lost at estate agents (exacerbated by Tesco entrance to market), less money spent on high street.

Mmm, all sounds a bit like 1989/90.

Recession first, precipitated by rising costs and tighter margins leading to job losses etc., then HPC. As I have said previously on several occasions the horse is generally found to be in front of the cart.

But we have yet to see the true measure of a collapse in the market when it is evident that it is moribund i.e nothing for sale because there are no buyers. I suspect we shall reach that stage in possibly 2 - 3 years if the previous downward cycle that began 89/90 is to be replicated.

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Chinese tend to save rather than spend; it would be hard to dump all that cheap tat on Chinese workers, particularly when they're earning $0.50 an hour. If the West goes into a recession then China will be in deep shit.

Except no-one really needs a 50" HDTV, or a new fridge-freezer to replace one that's only a few years old. We'd still have to buy from Asia when we decided to buy, but we could dramatically reduce the amount we import just by replacing things less often.

That's the win-win - better quality locally/nationally made products but with consumers buying less volume of landfill in waiting. Actually, Keynes quite accurately predicted the current malaise of rampant trade-battles and said:

Ideas, knowledge, science, hospitality, travel—these are the things which should of their nature be international.But let goods be homespun whenever it is reasonably and conveniently possible and, above all, let finance be primarily national.

People get paid proper wages for making high quality durable stuff mostly for local markets with exports only there for extra variety and exotica. With less products being cheap tat landfill-in-waiting modular, upgradable designs would feature heavily (think a vintage Hasselblad camera with digital back). Cheapness would come from technological advances not from getting a far-off sweatshop to bang it together. The planet would benefit.

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http://www.telegraph.co.uk/money/main.jhtm...nweather108.xml

Ouch!

http://news.independent.co.uk/business/new...icle2744846.ece

Retailers' in desperate trouble ?

If goods imported from China, and India start inflating in price and consumer demand falls sharply surely that will hurt.

Will retailers be tied into long rental leases of units at high price rents?

What about the debt some companies are carrying ? (e.g. Debenhams)

I know its a rock and a hard place but this is what the BOE wanted to hear surely, Customers tightening their belts rather than spend spend spend.

The biggest impact will be on cheap imports as they now clutter the high street and internet.

Maybe we will go back to only buying when needed from our own manufactured goods. - Rather than buy 2 x TVs from china at £300 each buy 1 at £500 when needed from europe.

Edited by Jonnybegood

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We have to remember that any fall, as with house prices, is from a massively above average level. At the same time as hpi was growing far above average, so were retail sales, so a few years of falls will only bring them back down to where they would have been without Gordon's / BoE's incompetence.

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Will anybody still buy cheap imports from china if they weren't cheap anymore.

Chinese goods will still be a good deal cheaper than anything produced in Western Europe.

However once financial times get tight and the cheapest of tat is no longer as cheap as it was, there's bound to be a reduction in people buying absolutely trivial rubbish goods which will probably hit the Chinese a little bit.

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With regard to China being cheap, it's not anymore. They have branched out into places like Cambodia are investing even more money, because with 99% of supervisors being Chinese and therefore cheaper than western managers they can use Cambodian workers to undercut Chinese low skilled workers. Mayasia and Singapore have moved garment production out of country as well.

In the west we are becoming solely involved in consumption all the way through the chain, it will be interesting when China starts to take over more of the banking systems we profit from. I think they disliked SWIFT transferring details of accounts to the USA in regards to terrorism, but SWIFT are hoping to placate tham without angering the USA.

"SWIFT is the industry-owned co-operative supplying secure, standardised messaging services and interface software to nearly 8,100 financial institutions in 207 countries and territories."

It's a bit clumsy but I think China and others are moving up one step in the ladder, and each time they do someone get's pushed out sideways not upwards. So the last step would be to replace SWIFT and other systems but that will be a lot harder. Especially if people start putting punative Tarrifs on your goods, or refusing to trade outside the present system.

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At the same time as hpi was growing far above average, so were retail sales, so a few years of falls will only bring them back down to where they would have been without Gordon's / BoE's incompetence.

We've borrowed nearly a year's worth of GDP in the last decade; that's all future spending that's been brought forward by up to a decade. For a recession to clear out those debts we'd need to reduce spending by nearly a year's worth of GDP over the duration of the recession.

That'll be a pretty big hit to the economy.

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Chinese goods will still be a good deal cheaper than anything produced in Western Europe.

The other thing to consider is that there'll be a strong demand for tariffs to encourage local production if there's a recession in the West. Being cheaper won't help if foreign governments load your goods up with huge import duties to try to reduce unemployment in their countries.

It's easy to ship jobs abroad during a boom, it's much harder for governments to justify in a recession.

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We still have a few assembly plants here (for the moment), but I doubt all the "bits" are made here.. I don't remember the last time I saw a company making car seats or speedo dials.. I am prepared to be corrected though.

the reason we have plants here is because the EU is very protectionist,so the overseas companies wanted a gateway into europe WITHOUT the crippling regulation that comes from within the core of the EU.

Tony and the gang have seen to it that our trade advantage is being screwed over by rubber-stamping everything that comes from Brussels.

It's time to say sod the EU and trade directly with china/india/US etc under the agreed WTO rules....and tear up the EU rulebook.....it'll be better for britain!!!

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That's the win-win - better quality locally/nationally made products but with consumers buying less volume of landfill in waiting. Actually, Keynes quite accurately predicted the current malaise of rampant trade-battles and said:

People get paid proper wages for making high quality durable stuff mostly for local markets with exports only there for extra variety and exotica. With less products being cheap tat landfill-in-waiting modular, upgradable designs would feature heavily (think a vintage Hasselblad camera with digital back). Cheapness would come from technological advances not from getting a far-off sweatshop to bang it together. The planet would benefit.

keynes is talking b0ll0cks.

Technological superiority is what runs the world.

those with the best brains get the lions share,and the rest get the leftovers.

It's worked that way with every empire in knowledge...from the egyptians to latter day.

empires rise and fall because a new challenger ALWAYS rises up to defeat the alpha male....works the same way in a pack of wolves....the technology is akin to physical prowess in the animal kingdom.

the NEW WORLD ORDER is based on supposed socialism...ie the politics of a beehive.

......and therefore will follow the same rules.

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UK still a seat of manufacturing.

We still have a few assembly plants here (for the moment), but I doubt all the "bits" are made here.. I don't remember the last time I saw a company making car seats or speedo dials.. I am prepared to be corrected though. [libspero]

'Quality -- Just in Time':

http://www.kraussmaffei.co.uk/cref/ih.html

At Ikeda Hoover, all the threads run together in the final assembly area. Here the components produced in the metal processing shop, the foam facilities and the fabric workshops are built into complete car seats for just-in-time delivery to the Nissan production line. Currently the Ikeda Hoover plant is manufacturing the full range of seat options for Nissan's Primera, Almera and Micra models. The whole process, from the order being generated (point of order) to bolting the seat into a car on the Nissan assembly line (point of fix), takes only between 180 and 210 minutes. Ikeda Hoover employs 688 people and produces around 340 000 seat units per year.
Edited by Jeff Ross

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