Attitudes towards spending are mixed.  41% believe now is a good time to make a major household purchase, such as white or brown goods; that compares with 29% a year ago.  In contrast, the positive rating for even larger spends such as a house or car has more than doubled in that time.

Nationwide's chief economist Martin Gahbauer believes confidence will remain fragile as we continue to see contrasting news about the state of the economy:  "While some reports suggest tentative signs of a slowing in the pace of economic decline, it is important to remember that a number of sectors are continuing to contract and any recovery is likely to be sluggish. What is clear from our findings is that while consumers remain pessimistic about the present situation, they appear to be much more confident about the future than they were at the beginning of the year."

Planning ahead

In the past month or so, a number of multiples have been demonstrating their own confidence about the future.  John Lewis plans to open a chain of ‘at home' stores, Best Buy is building a strong team for its UK launch next year, Tesco is taking on Carphone Warehouse in the broadband market by offering a free laptop at fifty of its in-store phone shops, and DSGi managed to raise £310 million in a placing and rights issue, despite another profit warning and the revelation that year-end debt was more than double the level expected.  Jessops, the digital camera specialist, is also hoping there is light at the end of the tunnel, though shareholders can write off their investment.  The retailer reportedly retains the support of its bank HSBC, who ‘could have pulled the plug but didn't', so a debt for equity swap appears the likely outcome for the troubled chain.    

DSGi's fund-raising will give some financial headroom and allow an acceleration of its Renewal and Transformation Plan.  The difficult trading environment, which had seen like-for-likes at Currys down by 12%  and PC World 14% in its second half (to April 18), has placed significant pressure on its resources.  Heavy restructuring costs across Europe, higher finance charges, significant movements in foreign exchange rates and difficulties with suppliers' credit insurance each contributed to an increase in the group's indebtedness which had reached an uncomfortable level.

So far, 60 UK stores have been reformatted, with average gross profit uplifts across the different formats of between 11 and 65% over a five-month period.  The new 55,000 sq ft Currys Megastore in Birmingham that opened in October achieved £2.2 million sales in its first four days and is on track for £30 million in the year.  The group believes there is scope for between 20 and 50 such stores in the UK.

At home

John Lewis too is expanding, with the opening in Poole in October of its first ‘John Lewis at home' store, which will include a full range of electrical and home technology products.  At 45,000 sq ft it will be a third of the size of a typical department store.  The Partnership believes there are around 30 other suitable locations across the UK.

And finally, a quick update on John Lewis's recent sales performance.  With Easter and the bank holidays behind us, the weekly comparisons will now be more meaningful.  In the first three weeks of May, sales of ‘electricals and home technology' improved year-on-year but a poor fourth week brought the month as a whole back to an increase of less than 2%, and that includes two new stores.  That May performance did, however, improve the year-to-date position, and for the 17 weeks to 30 May, sales are down by 5%, with nearly half its stores showing double-digit declines.

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