Will retailers win gold during the Olympics?

Many retailers have extended their trading hours during the Olympics, in the hope of benefitting from the rush of tourists flocking to enjoy the events in London. At least, this is what many retailers hope for - considering the wash-out of the last few months, weak consumption levels and growing concerns surrounding the eurozone crisis, a boost would be most definitely welcomed.

Figures as revealed by the Centre for Retail Research do seem to support this optimistic view, estimating an increase in total spending due to the Olympics and the Diamond Jubilee to total £1,069 million which is definitely good news. However, a few good weeks doesn’t give UK retailers the all-clear. The net effect is pretty unclear as well as many would-be tourists would no doubt be staying away from travelling to London this summer because of the all this Olympics kerfuffle. It won’t only be London that’s affected either – it’s believed that other UK areas could see a downturn in their visitors as people choose to stay away from the UK altogether. So to weigh up the increase in spending relative to the costs (i.e. the opportunity cost of missing tourists who have avoided the games and the wages of the retail staff working extra hours) is rather more complex than it would seem at first glance. The Olympics’ impact on the UK economy remains to be seen...

China growth slowdown negatively affects luxury market sales

China's tremendous growth in the last decade has been the hot topic as the rest of the world has looked on in wonderment (and fear). Their phenomenal levels of growth (and the fastest reduction in poverty the world has ever seen) has led to an emerging middle-class which saw a substantial increase in demand for luxury goods. Burberry had the foresight of this potential market expansion while Aquascutum didn't, to their detriment as they went bust in April. However, Burberry and other luxury fashionhouses are facing problems as a large portion of their market share belongs in Asia and China's slowdown threatens their profit-making abilities.

It is interesting to note that China is very big on corporate gift buying. 'Guanxi' (social connections) are an integral part of Chinese society and have been so for many centuries. Businessmen and women often buy potential clients or partners ridiculously expensive luxury goods, like Rolex watches, as an 'investment'. The Chinese value recriprocity and corporate gift buying often speeds up bureaucratic processes, helping to cut through the huge levels of red tape. The slowdown in growth is likely to negatively impact luxury goods sales (due to tighter budgeting regarding corporate gift buying), although as guanxi is such an established tradition, I doubt this will vanish. Instead, it's more likely businessmen and women will substitute to 'less expensive' luxury goods.

China (unlike the US and Europe) has more ammunition to bolster growth. Chinese authorities are taking both monetary and fiscal action and their proactive approach puts China in a better position than the weak US and the sovereign debt-ridden Europe. This does not mean that Burberry and other luxury brands should become complacent, though. Issues that China faces are also of a more deeprooted structural nature, e.g. the real-estate bubble, exacerbated by the problem of persistent land-grabbing by local officials. These are more pressing than the current growth slow-down as they ultimately dictate China's ability for future growth. Thus, the root causes need to be addressed before the effects (ie the slower growth) can be fully tackled.

Marks and Spencers: a fashion no-no?

Poor Marks and Spencers. This week has seen M&S's low fashion sales in every newspaper worth mentioning. This has led many to comment on how best to boost the flagging department store, with criticisms directed towards the disparate collections - with Limited Collection not trendy and fashion-forward enough to attract the younger fashionistas; with Autograph's sophisticated pieces rather overpriced; with Per Una - well, just a ruffly, frumpy mess - a campaign with Twiggy and Myleene Klass is simply not going to cut it anymore.

The news that Kate Bostock has left as head of general merchanidse to the ever-growing online retailer, ASOS, has led many to speculate on the future of M&S. John Dixon, head of M&S' food business, is all set to replace her. While Dixon did wonders for M&S' food sales, with their evocative (bordering on pornographic) food adverts and Dine for £10 offers, M&S hopes Dixon can wave his magic wand and make M&S fashion flourish again. However, success in the food sector does not automatically translate to success in the fashion sector and one should avoid being complacent. Dixon has a tough job ahead of him. He needs to strengthen the individual collections M&S offers whilst maintaining a M&S thread in each and every one, with a focus on affordable basic and quality pieces. Personally, I think M&S should forgo trying to be "too" trendy - they're never going to compete with brands like 'Topshop' and 'Zara' in attracting the Beautiful Young Things and should focus their attentions on the more mature woman who appreciates well-cut, classic and affordable clothing. Clarifying the target market is vital and they would benefit from being specific, rather than attempting to cast their nets too far upstream.

I hope M&S take heed of the concerns flying around at the moment as it would be a shame to lose a company that has become so synonymous with the British way of life.

I'm at work (thus most definitely shouldn't be blogging) but I found out I got a 2:1 today so am in a state of mild euphoria! The guys at the office were lovely and surprised me with cake and champagne to celebrate so I am already merry yet sleepy after one glass of champagne. Ridiculous - I might as well be 50. Anyway, am savouring the moment and am thinking of treating myself very soon with a lovely investment tote bag. I am currently weighing up the potential contenders as below but I think I will most likely opt for this:

A classic tan leather Ralph Lauren tote - timeless and large enough to fit in all my bits and bobs. Now, just have to wait for the next paycheck!!