Market Monitor Consumer Durables United Kingdom 2018

Monitor de Mercado

  • United Kingdom
  • Bienes de consumo duraderos

04 abr 2018

As a result of more difficult trading conditions retailers profit margins have deteriorated in H2 of 2017, and further decline is expected in 2018.

  • A challenging outlook for 2018
  • Payments take 45-60 days on average
  • Payment delays and insolvencies expected to increase further

 

While consumer spending has been the engine of UK economic growth over the last couple of years, supported by higher employment and low inflation, the 2018 outlook for the British non-food retail sector is challenging. This is due to lower consumer confidence, decreasing household consumption (estimated to increase just 1%), higher consumer prices and higher unemployment, coupled with deteriorated real wages.

The decline already started at the end of 2017 as, according to the BRC-KPMG retail sales monitor, in the period September-November 2017 (which includes Black Friday) non-food retail sales decreased 3.7% on a like-for-like basis, while November 2017-January 2018 sales declined 0.6%. Online sales, meanwhile accounting for approximately 15% of retail spending, grew at the expense of brick-and-mortar retailers during this period. However, with 7% online retail growth, was much lower than in previous years - a sign that even this previously fast-growing segment has been affected by the slowdown. Additionally, in January 2018 (traditionally a key part of the year for big ticket retailers) sales of furniture and household appliances were disappointing.

As a result of more difficult trading conditions, it comes as no surprise that profit margins have deteriorated in H2 of 2017, and further decline is expected in 2018, mainly for brick-and-mortar retailers. In order to preserve margins many of the larger established traditional retailers are trying to offset the deterioration in their offline business by expanding their online channels.

Payments in the consumer durables retail industry take 45-60 days on average. We have recorded a significant increase in non-payment notifications in H2 of 2017. We expect this deteriorating trend to continue in 2018, as the British retail market remains highly competitive while facing changing shopping behaviour (i.e. increasing price sensitivity and a growing share of online retail sales) and lower consumer spending. Additional issues are the weaker pound making purchases more expensive (this especially affects “big ticket” and furniture retailers) and minimum wage increases, leading to increased input costs for consumers in a highly competitive and shrinking market environment.

Business insolvencies are expected to increase by about 5% in 2018 after already rising over the past six months. The industry is going through a period of correction, with businesses failing to adapt to online demand facing serious troubles. We currently maintain a neutral to restrictive approach to underwriting in the consumer durables segment. The household appliances sector is holding up reasonably well for the time being, but future deterioration cannot be ruled out. As large ticket items in the furniture segment face major sales decreases we observe that the largest players are struggling, while a number of smaller players already became insolvent. In the consumer electronics segment phone retail is a particularly troubled segment due to lack of innovation, longer lifespan of handsets, and a change in the legislation of EU roaming tariffs.

We continue to monitor developments in the sector on a regular basis, making as much contact with buyers as possible; in particular with those who heavily rely on sourcing materials from overseas, those who have large store portfolios, high levels of debt to service and those whose financials are showing signs of deterioration. In general there is a willingness for retailers to share confidential financial information, allowing us to make the best informed decision.

Documentos relacionados

Disclaimer y Buró de Entidades Financieras

Este informe se presenta, con fines de información únicamente y no está pensada como una recomendación en cuanto a las transacciones particulares, inversiones o estrategias en modo alguno a cualquier lector. Los lectores deben tomar sus propias decisiones independientes, comerciales o de cualquier otro tipo, con respecto a la información proporcionada. Aunque hemos hecho todo lo posible para garantizar que la información contenida en este informe sea obtenida de fuentes confiables, Atradius no es responsable por los errores u omisiones, o por los resultados obtenidos del uso de esta información. En ningún caso Atradius, sus corporaciones o empresas relacionadas, afiliadas y subsidiarias, ni los socios, agentes o empleados, serán responsables por cualquier decisión o medida adoptada con base en la información en este informe, o por ningún daño directo, indirecto, especial, incidental o consecuente, resultante del uso de la información de las declaraciones hechas en este documento. BURÓ DE ENTIDADES FINANCIERAS ¿Qué es el Buró de Entidades Financieras? Es una herramienta de consulta y difusión con la que podrás conocer los productos que ofrecen las entidades financieras, sus comisiones y tasas, las reclamaciones de los usuarios, las prácticas no sanas en que incurren, las sanciones administrativas que les han impuesto, las cláusulas abusivas de sus contratos y otra información que resulte relevante para informarte sobre su desempeño. Con el Buró de Entidades Financieras, se logrará saber quién es quién en bancos, seguros, sociedades financieras de objeto múltiple, cajas de ahorro, afores, entre otras entidades. Con ello, podrás comparar y evaluar a las entidades financieras, sus productos y servicios y tendrás mayores elementos para elegir lo que más te convenga. Esta información te será útil para elegir un producto financiero y también para conocer y usar mejor los que ya tienes. Este Buró de Entidades Financieras, es una herramienta que puede contribuir al crecimiento económico del país, al promover la competencia entre las instituciones financieras; que impulsará la transparencia al revelar información a los usuarios sobre el desempeño de éstas y los productos que ofrecen y que va a facilitar un manejo responsable de los productos y servicios financieros al conocer a detalle sus características. Lo anterior, podrá derivar en un mayor bienestar social, porque al conjuntar en un solo espacio tan diversa información del sistema financiero, el usuario tendrá más elementos para optimizar su presupuesto, para mejorar sus finanzas personales, para utilizar correctamente los créditos que fortalecerán su economía y obtener los seguros que la protejan, entre otros aspectos. Puedes consultar la información relativa al Buró de Entidades Financieras, tanto de Atradius Seguros de Crédito. S.A., como de todo el sector asegurador en el siguiente enlace: http://www.buro.gob.mx