This week’s budget was a strange affair – ultimately, neither trick nor treat. After dire warnings by the media of multiple tax grabs allegedly under consideration, the Chancellor ultimately chose quite a vanilla approach and avoided all the potential pre-Halloween ‘fright night’ headlines. The best that can be said for the speech was that the markets weren’t spooked – thankfully, there was no repeat of the embarrassing Truss / Kwarteng debacle. Government borrowing fell slightly, the pound remained stable and the FTSE was marginally up. Thus, a huge own goal was avoided, although the can was well and truly kicked down the road. From a toy industry perspective, at least there was not too much there to give consumers a fright before they start their festive shopping in earnest, for which I guess we can be grateful.
Nevertheless, I can see why the media’s reaction the next day was ‘is that all there is?’ There was no ambition, nothing bold or brave, no pro-growth policies, and very few measures that the business – and in particular the retail – community could rally behind. In that respect, it could be viewed as a missed opportunity. I suspect retailers will be disappointed at the continuing escalation of the minimum wage – so many kids leaving school or university are finding it hard to secure their first job, and the cost of employing young people is a major factor. I was paid the grand sum of £5 a day when I started my first Saturday job. My first full-time wage was £2,500 a year. But I was enthusiastic, willing to learn and I knew that I needed to get a foot on the ladder. In my humble opinion, anything that dissuades retail and hospitality from offering these kind of entry level jobs to young people is really not a smart move in the current climate.
Speaking of retail, the Poundland saga has taken a rather questionable turn this week. While it could have changed again by the time you read this, right now the future of the chain is not looking at all rosy. Numerous reports have suggested that Poundland is on the verge of administration, after turning down a solvent offer for the company from Martin Property Group. Indeed, so incensed were the three directors recruited in October to steer the retailer through the sale process that they resigned upon hearing the news. Who can blame them? It appears that owner Gordon Brothers is effectively nudging the chain towards an insolvency process, believing that a £30m shareholder loan – for which it paid just £1 – is more likely to be repaid in full in a break-up scenario. Yes, you read that right… hundreds of stores on the verge of closure and thousands of employees’ livelihoods at risk, and the deciding factor is a loan that cost the owners a pittance. Martin Property Group is said to have proposed full repayment of the £30m on its existing terms, but as it doesn’t mature for several years, Gordon Brothers is apparently worried the business could be liquidated before that date, meaning they would miss out. I will leave you to decide whether you feel that is a valid reason to collapse the whole deal, and how you view the morality/ ethics of that course of action.
In much more positive news, the BTHA has unveiled a raft of changes to next year’s Toy Retailer of the Year awards.
Read the rest here.
