Out to create Blue skies

Attitude, opportunity and value are crucial in these tough times, says Asda CEO Andy Clarke, who argues the large retail levy is not sensible for Northern Ireland

Shops boarded up, strikes, riot police, demonstrators, confidence plunging, debt rising, the worst economic squeeze in decades. No, it’s not Greece — it’s the UK. As a nation, we face perhaps the greatest economic challenge of my lifetime.

It will test our mettle, but it’s in times like these that countries and individuals discover what they can really achieve, how far they can go, what they are really made of. This is as important at a regional level as it is nationally.

My most testing moment came when I left school — at the age of 16 with one O level.

My prospects weren’t great and although I was brought up with a good attitude to work, I had no real direction.

My first job was cleaning tables and sweeping floors. Then I got a job at Fine Fare stacking shelves and met a man who inspired me to succeed.

His name was Dennis Lever. He believed in me and he helped me develop the skills needed to become a retailer.

Now I'm the chief executive of Asda, but the route I took to get here taught me two lessons. The first is that anything is possible. And the second is that sometimes we all need help to realise our potential.

So that's what I keep in mind as I look at the chaos on the high street where a raft of big-name retailers are in trouble or closing down: Thorntons, Carpetright, Habitat, T J Hughes, Jane Norman.

Our Asda Income Tracker clearly demonstrates the challenges in Northern Ireland on disposable income. We see this in our stores, with cash and debit transactions on the increase as customers buy now, pay now, rather than buy now pay later.

But we should remind ourselves this isn’t Greece. We’re not hamstrung by the eurozone and we don’t need bailing out. We shouldn’t underestimate that there are still opportunities out there, for individuals, for UK firms of all sizes, and for our country as a whole.

Our economy may be stuttering, but we’re still in better shape than most of our neighbours. Like the old war-time poster said: Keep Calm and Carry On. Unlike the dark days of the 1970s, the traffic lights still work, the buses are running and the bins are being emptied — even if it is once a fortnight for some of us.

But what about retailers, while we're waiting for better times?

At Asda our monthly income tracker uses official data to provide an unbiased, accurate view of how the average family is coping, once they’ve paid for essentials such as utilities and rent.

In May we saw the biggest fall in family spending power in four years. We found the average UK household had £165 a week of discretionary income, a drop of 8% in 12 months, creating a £14 a week hole in people’s pockets. The latest figures are looking a little better, with the Asda Income Tracker showing UK families had £167 in weekly disposable income available to them — but this is still £9 a week down year-on- year.

In Northern Ireland, however, the news is bleaker still. The region continues to suffer from the lowest household spending power — dropping by 14.8% since last year to just £80 per week — less than half of the UK average.

This won’t be a surprise to the average NI family and it is changing the way they shop. Shoppers are budgeting hard and cutting back. If they don’t need it, they’re not buying it.

Which sets shopkeepers like me a challenge that I relish. Offer consumers genuine value and they still have money to spend.

That challenge is made all the more difficult when politicians take the wrong decisions. Currently the Northern Ireland Executive is consulting on introducing a new tax on large retailers that would raise around £7 million a year.

In my view, it’s the wrong time and the wrong tax. This is the time to pull together and encourage businesses to invest in Northern Ireland and create jobs, not to send a signal that investment is unwelcome. Northern Ireland is already a more expensive market to operate in, and adding to that cost burden when families in Northern Ireland have the lowest level of discretionary income in the UK would be the wrong decision.

Our research also shows only 45% feel their job is secure and almost 60% believe their pay will be frozen this year. Meanwhile, only one person in 20 thinks they’ll get a pay rise this year, down from one in 10 last year.

Which brings me to the other way in which businesses such as Asda can help. By providing fulfilling jobs paying a fair wage and where the only limit on your progress is talent and ambition.

In tough times it’s easy to see investing in your people as an additional ‘cost’ to the business. I’ve never seen it like that.

Recently I was at an event in the North of England that was arranged to help local people who were looking for work. The drive, passion and commitment of the 400 people I met that day was so impressive.

One third of all our new recruits are aged 18 to 24. We are one of only a few retailers in the UK to offer the same rate of pay to under 18s. We do this as a matter of principle. As we know, these are tough times. But we can and will emerge from them stronger than ever.

News

Out to create Blue skies

12/08/11

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