Okay, it’s cold. Airports are chaotic. Brits who are currently abroad are struggling to get home for Christmas. Holidaymakers are reconsidering their plans. And High Streets are looking decidedly quiet. But what makes the snow this time around especially unfortunate, is its timing. The consequences may well prove to be serious. But whether they are seriously bad or good, is another matter.
Usually, it works like this. The snow comes down, and many of us stay at home. Fewer of us go shopping, and as a result retail sales fall and business productivity drops. But then the snow melts and we go rushing back to work, and then we are busier than ever and so our productivity rises. We return to the High Street with a vengeance, and buy all those products we couldn’t buy a few days earlier.
But what makes it different this time is Christmas. Just imagine if the bad weather persists. Some forecasters are predicting snow every day this week. Imagine we can only get ourselves in to the local shopping centre for a few hours.
Maybe as a consequence of the snow, there will be fewer Christmas presents this year. But this begs the question, will fewer Christmas presents really be noticed?
The FT quoted Colin Ellis, chief economist at the British Venture Capital Association, who put it like this: “Weather is only ever a temporary impact.”
Well, he is right. At least, normally he would be right. But it seems less certain his comments apply in the week before Christmas.
Of course sales have been down. Apparently, ‘even’ John Lewis saw a 10 per cent sales drop on Saturday. ‘Even’ John Lewis; it seems not ‘even’ the retailer that has come the closest to performing miracles can really do the stuff of magic, and increase sales when the roads are frozen over.
The Independent quoted Royal Sun Alliance as estimating that the total cost of the bad weather will be £13bn. Actually, that’s not trivial, and is approaching 1 per cent of GDP.
But we suspect the estimate is too high. The short-term cost might be £13bn, but by the time everyone has returned to work, a big chunk of that lost output will probably have been regained.
But the real hit may come in the form of all those Christmas presents that are not actually bought. But how many of these un-bought presents will be missed?
How many toys are never taken from their packaging, and so are never used? How many candles don’t leave their packaging? How many packs of handkerchiefs remain unused?
This article may sound ever so slightly like a ‘Christmas is humbug’ piece, but it is not meant that way. We are merely saying a lot of money is wasted over Christmas buying things that no one really needs or wants.
And if the bad weather means slightly less of that, it could be a good thing. And maybe the effect will work next year, too. Maybe we will change our habits. Maybe next year people will be just that little more discerning in their spending.
And yet it is bad for retailers. Retailers gain when we spend money recklessly.
Maybe we can coin a new term: the paradox of silliness. The more silly we are with our spending, the better the High Street does.
There is another point, too. If shoppers are planning to spend in advance of next year’s VAT increase, but can’t get to the shops, then presumably total spending won’t recover in the New year when VAT goes up.
And now, to cap it all there is talk of a tube strike on Boxing Day. The British Retail Consortium (BRC) wasn’t impressed.
“London retailing,” says the BRC, “provides jobs for 380,000 people. Nearly a fifth of all the UK’s retail spending takes place in London, generating a turnover of £54 billion last year.”
It said that: “In recent years, Boxing Day has grown in importance with more stores now launching their post-Christmas sales on that day. With impending tax rises and spending cuts undermining expectations for 2011, many retailers were hoping a successful Boxing Day would make a major contribution to a final big week at the tills before January gloom sets in.”
So that’s it then, snow followed by transport strikes.
Well, at least households may not get into quite so much debt this time around.
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