Outlook for '99: Give shops a break from the brickbats

The view from the business community and the City; Mark Souhami says retailers deserve praise for creating jobs

THE NEW YEAR opens with some form of economic downturn in prospect. With such an outlook, no one can pretend retailers face an easy run- up to the millennium. The combination of belt-tightening, greater competition and well-informed customers requires retailers to be efficient and innovative.

So what will 1999 bring? The Far East financial crisis has already contributed to price deflation, which has brought lower prices particularly in the electrical sector. This is likely to continue.

To keep pace with Far East rivals, European manufacturers will find ways to produce a wide range of high-quality goods at competitive prices. Retailers themselves are having to look to a far wider market to ensure they maintain their position relative to the competition.

It's no longer enough to keep an eye on traditional rivals. Now we need to match our prices, range and service against everyone from new entrants to mail-order suppliers, internet suppliers, and even the supposedly impartial industry watchdogs which are themselves going into retailing.

Such competition has recently seen Currys selling gas connections, and supermarkets selling designer jeans. All well and good; competition is vital. However, only those who think on their feet and constantly search for new ideas will excel in such a tough environment.

UK retailing is fiercely competitive, tremendously efficient by international standards, and celebrated for the choice, value and service it gives the British consumer, the employment it creates, and the prosperity it spreads.

Official figures show that last year retail was directly responsible for creating more than one in five of all new jobs - not substitute jobs, new ones. The further jobs created among our suppliers and through our enormous capital expenditure programmes are far higher. This trend is set to continue.

The industry's detractors claim we are providing only part-time jobs for housewives. Well, the Jonahs should realise that retailing is a 24- hour operation. The terms full-time and part-time no longer have any relevance. In a 24-hour market, we are all part-timers.

The vast majority of jobs we create are permanent jobs but, importantly, we also provide seasonal temporary employment - often the individual's first introduction to work. Every new job created is a new hope for someone. That is why the retail sector will continue to be among the principal supporters of the New Deal.

It is easy to gain cheap political brownie points by denigrating retailers, or indeed any company, as profiteers and rip-off artists, allegedly part of some great conspiracy to overcharge while operating purchasing cartels. It is far harder to sit down with retailers and work out how we can get a better deal for UK customers, in an environment where the costs of retailing in the UK are often far above those in the US or elsewhere in Europe.

International price studies - which ignore sales tax, major specification differences, property costs, distribution costs, and the compliance costs of different regulatory environments and different employment laws - are not comparisons. Studies that hinge on the international pricing difference of a kilogram of salmon are not useful.

The "business friendly" DTI would do well to remember this. It has too often stood aside when retailers have been subject to baseless attacks. Indeed some ministers have fuelled customer resentment. They would be better advised to seek out the truth rather than give credibility to false conclusions for populist advantage. As their Treasury colleagues will remind them, one percentage point loss of retail sales equates to some pounds 200m in VAT revenue forgone. One should think twice before knobbling the goose that lays the golden eggs.

Mark Souhami is deputy chairman of Dixons, and outgoing chairman of the British Retail Consortium.