Don Quijones: Retail Melts Down Before Christmas in the UK, Spreads to Continent

By Don Quijones of Spain, the UK, and Mexico, and editor at Wolf Street. Originally published at Wolf Street

With just one week left before Christmas, Europe’s fashion retail sector is showing little sign of yuletide cheer. On Monday, the shares of UK-based online fashion and cosmetics retailer Asos Plc plunged 37% to £26.14 after the company warned that Christmas shopping on its web platform had got off to a disastrous start. The stock rout, the company’s worst in almost five years, wiped more than £1.4 billion of its value and raises fears that Europe’s high street malaise may be spreading from bricks-and-mortar stores to e-commerce. Since its peak in January 2018, shares the stock has plummeted 65%.

Asos slashed its full-year sales-growth guidance for the year to August 2019 from 20-25% to 15% on the back of a “significant deterioration” in sales in November, which was followed by just a slight uptick in December. The company laid much of the blame for its weak performance on big price cuts across the market, which had forced it to sweeten its promotions to attract customers.

“In fashion we are seeing an unprecedented level of discounting, certainly something I have not seen before, and that’s across the board,” said Asos chief executive, Nick Beighton, adding that the disposable incomes of Asos’s twenty-something customers were still well below the levels they were at a decade ago. “It’s more than just the Brexit-related factors,” he said.

Another possible reason for Asos’ shrinking sales is the over-indebtedness of consumers in its domestic UK market. British household finances, among the most solvent a generation ago, are now among the most indebted of the Western world. According to official data, unsecured consumer debt (not including housing related debt) last year reached a record high of more than £205 billion (€227 billion). PwC says that by its measure, it’s almost £100 billion higher.

This summer the Office for National Statistics (ONS) warned that the accumulated deficit of UK households was equivalent to 1.2% of GDP. That compares with a surplus in France equivalent to 2.7% of GDP and a surplus equivalent to 5.1% in Germany. But that’s scant comfort for Asos, whose sales in France and Germany, which account for over half of its EU sales, are also languishing. On Black Friday, the company knocked 20% off everything, as it did in previous years, but to little avail. Its rivals went lower.

News of Asos’ sales warning sparked a frantic sell-off on Monday of other online retailers such as Boohoo Group Plc, whose shares plunged 13.7%, and Zalando SE (11.6%), as well as store operators like Marks & Spencer Group Plc (4.5%), Next Plc (4.6%) and Hennes & Mauritz AB, the owner of H&M stores (8.5%), compounding concerns that Christmas sales could be exceptionally bad this year. On Tuesday the shares staged a recovery but not to pre-Monday levels. Asos’ stock clawed back less than 5% of the value lost.

Mike Ashley, the founder of discount retailer Sports Direct, last week described November as “the worst on record, unbelievably bad”. Sports Direct recently reported a 27% fall in half-year profits after taking over the insolvent department store chain House of Fraser for £90 million in August. Since then the department store has clocked up additional losses of £31.5 million and Sports Direct’s shares have slumped over 45% since hitting a 52-week high of £4.36 in July.

Holders of retail debt are also feeling the pain. UK department store chain Debenhams’ £200 million of bonds due July 2021 have plummeted 36 pence on the pound since the start of 2018 — on surging fears of a default.

Even Europe’s two biggest high street behemoths, Spain’s Inditex and Sweden’s Hennes & Mauritz, are finding life a little harder this Christmas. Last week, Inditex, whose subsidiaries include Sara, Massimo Dutti, Bershka and Pull&Bear, missed sales and profit forecasts, which it blamed on an unusually warm September and adverse currency moves.

The fast-fashion group, founded 33 years ago by Europe’s richest man, Amancio Ortega, operates some 7,500 stores in 93 countries. It generates over half its sales in currencies other than the euro. But thanks to its centralized sourcing and distribution model, a sizable chunk of its costs are in euros, meaning that when important emerging market currencies fall, as has happened this year, the company’s margins can suffer. At constant exchange rates, the group claims it would have reported nine-month earnings growth of 14%. Instead it had to make do with a meager 3% rise, to €3.07 billion.

It was less than expected. Indeed, the company is on track for its weakest full-year earnings growth in at least four years, according to Bloomberg. Since reporting its latest sales figures, Inditex’s market cap — the largest in Spain and one of the largest in Europe — has shrunk by 15%, to €73 billion. Barring a dramatic turnaround in the next two weeks, the world’s largest fashion retailer will notch up its second consecutive year of declining share prices, which are now down 36% since hitting a historic peak of €36 in June 2017.

Inditex’s biggest rival, H&M, is in similar straits, having seen its shares tumble by over 16% since the beginning of December. Unlike Inditex, it has been slashing its store prices. Yet despite reporting local-currency sales growth of 6% during the September-to-November period, the company is still heading for a third straight year of declining profits as a result of slowing footfall at its core brand stores, which are struggling against online competition.

But if Asos’ recent tribulations are any indication, even the online competition may now be struggling. “This goes against the script,” said Stephen Lienert, a credit analyst at Jefferies. “It was supposed to be bricks and mortar that’s dying and online is the future, but that headline gets ripped up today,” he said.

While other online retailers such as Boohoo and Zalando predictably deny having similar troubles to Asos, if sales in December don’t dramatically improve on Europe’s high streets and e-commerce platforms, the New Year could bring with it a flurry of profit warnings, or even worse.

In the US, e-commerce sales growth is still hot, but the brick-and-mortar stores that populate malls face a grim reality. Read… Mall Retailers Melt Down in Four Charts

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  1. Colonel Smithers

    Thank you, J-LS.

    A bit off topic, I have just heard from a regulator friend “familiar with the issue, but not authorised to talk” that my former colleagues at the banking trade body have crunched the numbers with the members and concluded that Brexit, even a soft version, will result in “armageddon” (their words) in the mortgage market, especially as so many UK borrowers are maxed out (not just from housing and student loans, but car loans, too) and much of mortgage lending is funded from wholesale deposits. The trade association and authorities dare not publish.

      1. Colonel Smithers

        Thank you, J-LS.

        One of the reasons for the demise of the UK High (Main) Street is the presence of private equity locusts.

        A few weeks ago, I fell into conversation with an EU27 finance ministry official on secondment in London at a City discussion. The official expressed concern that the worst aspects of anglo-saxon capitalism were making their way across the water, the gates being further opened by Macron.

        Since the summer, one has noticed EU27 officials, academics etc. talking out of turn when away from home and expressing disillusionment with their elites / neoliberalism. They believe that many of the drivers of Brexit exist in their own countries and it was more due to the lack of organised, coordinated and focused resistance (albeit this was said before the gilets jaunes from November onwards) that allowed the elites / neoliberals (and their media and technocrat enablers) to get away with it.

        1. Stanley Dundee

          Thank you, Col. Smithers:

          One of the reasons for the demise of the UK High (Main) Street is the presence of private equity locusts.

          I am seeking to make widespread the usage of pirate equity for obvious reasons. Anglo-american business: looted to husks.

          1. Colonel Smithers

            Thank you, Stanley.

            The phrase private equity locusts came from a German politician a decade ago. I often use the term parasite.

            I support your phrasing.

        2. flora

          Thank you for this information. More and more stores on my town’s once thriving Main Street(as in 10-15 years ago) are now empty, where before, finding an empty story front to rent was nearly impossible. On line retailing can’t entirely account for this change.

          1. ambrit

            Yes. As usual, the South leads the way, down.
            There has been an explosion of beggars and panhandlers around here. Whether they are “Hobos on Holiday” or locals newly fallen through the cracks, the outlook is grim.
            Money is Tight.
            The above is my new mantra. I stopped giving the odd dollar to beggars last year after the chimerical ‘retail inflation’ overtook our Social Security payments ‘store of value.’
            The Hattiesburg Downtown has been repurposed as a “Retirement Destination” for the more frugal retirees. The lofts and apartments in the refurbished midrise older buildings are renting and leasing out fairly well. The street level storefronts are still half empty.
            Money is tight for almost everyone now.

    1. Ignacio

      I suspect, no proof I admit, that this time the social safety nets (official and unofficial-FFF) are much weaker than during the great recession so we will see more pain. Too many are still on fiscal consolidation mode.

    2. PlutoniumKun

      Its a year or two ago, but I heard it said by a BoE official that their big fear with a Brexit shakedown was car loans, specifically PCP deals (which technically speaking aren’t even loans if I understand correctly). Because they are unsecured, they anticipate a wave of cars simply handed back in the event of a sudden recession, with all sorts of implications through the car business.

      1. Ignacio

        Car “sales” (car registrations) in Ireland, measured as monthly sales by 1000 inhabitants, are the lowest in the EU and OECD. Denmark is the opposite. Link

        1. PlutoniumKun

          Thats quite curious – I hadn’t realised that – the economy here is doing very well (around 3-4% ‘real’ growth and Irish people love their cars. I suspect one feature is that at the moment Ireland is getting flooded with lots of cheap second hand cars from the UK (as we are also right-hand-drive, the only thing that needs changing is the speedometer from mph to kph). The weak sterling might also be encouraging southerners to buy in Northern Ireland.

            1. PlutoniumKun

              I don’t know the current rate, but its still among the highest taxes in Europe – thats why cars cost a lot more here than the UK and there is an active trade in used cars going over the Irish Sea and even from Japan. As sterling weakens along with the UK economy, thats expected to be a flood.

    3. fajensen

      That would be my estimate of the situation also.

      Maybe Christmas Shopping sucks because those who are better off and safely away from Ground Zero, which I am, are putting money together for shorting the indexes (DAX, OMX and FTSE) rather than buying expensive Christmas gifts?

      Those who are worse off and closer to the impact are of course putting money together for when they possibly lose their jobs after March 2019?

      1. California Bob

        Why do you need to ‘put money together’ for shorting? Aren’t the shares borrowed, then sold immediately (hence the risk)?

        1. fajensen

          If one was shorting, there would be margin requirements. But, I prefer derivatives because the risk is limited to only the total capital invested.

          I find that individual stocks are too risky right now*, we see up or down days of double-digit percents even in large stocks so I prefer “low-pass filtering” via indexes and then getting the leverage via synthetic options. Brexit is a systemic thing anyway, so it will show up in the indexes also. The synthetic options looks like: “BEAR/BULL ‘underlying’ X’leverage’ ‘issuer'”.

          The available leverage is up to 10x which should be exciting enough for anyone, however, in the fine print there is a 30% daily stop-loss clause so unlike with options it is possible to get stopped out on a big “winning” move at “only” 30% profit – especially at the higher leverages. I keep to the lower leverage range because I don’t want to check positions more often than daily.

          These have about 3% entry fee (execution, slippage), however, index PUT and CALLS trade in minimum blocks of above 200 kEUR which is too rich for me.

          *) I have to look at short-duration out-of-money options on individual stocks for truly huge leverages, problem is that this is so risky that one cannot put serious money into it and the winnings will therefore be small even when one is perfectly lucky.

    4. Redlife2017

      Colonel – as always thank you for that missing piece of analysis.

      This lines up with the very weird Christmas season in general. I think I’ve heard Christmas music once. And stores on busy non-tourist London high streets like Holloway Road (North Islington) and Upper Street (Angel Islington and ALWAYS packed with locals and youths with money) are decidedly less cheery. It’s like they are downplaying Christmas – little decorations, less people.

      Even in the City I’m not noticing lots of dudes in black ties which you normally see tons of at this time of year. I was around Liverpool Street last night and it was definitely not crazy with drunk and vomiting people like you would normally see the week before Christmas. Everyone has a slight crazed look in their eyes…

      “We are living in dangerously weird times now. Smart people just shrug and admit they’re dazed and confused. The only ones left with any confidence at all are the New Dumb. It is the beginning of the end of our world as we knew it. Doom is the operative ethic.”
      Dr Hunter S Thompson, Kingdom of Fear

      1. Colonel Smithers

        Thank you, Redlife.

        Good point about Liverpool St. Plus an increase in the number of homeless around this week.

        See you soon into the new year.

        1. ambrit

          Colonel, is ‘squatting’ still a going concern in England? If so, I wonder how much of it we will see by this time next year?
          Jack London did a book about hard times in London a century ago called; “The People of the Abyss.”

          1. Colonel Smithers

            Thank you, Ambrit.

            I don’t know about squatting. There has not been any coverage for years.

            1. ambrit

              Richard Nixon rolled out a wonderful phrase to describe such ‘non-reporting;’ “Benign neglect.”
              Welcome to the new, new and improved, practice of Obscurantism.
              I hope the stormy surf of Brexit washes you ashore on some tropical paradise. (Do not settle for a water park situated on the North German Plain!)
              Joyeux Noel!

  2. Clive

    I have another theory which is unrelated to the debt-load angle (which is germane, but I think the retail woes problem is also overly-determined — there’s several possible separate and inter-related causes).

    Namely, I cannot buy — at any price (in any mainstream retail outlet, I don’t know enough about bespoke to even start looking there) — any of the following items:

    1) Well-made, reasonably durable men’s apparel (I don’t care about the fashion aspect, I just want garments which will last a year or more without buttons coming off after a few washes or seams unravelling)
    2) Light fittings which either don’t come — right out the packaging — with obvious electrical faults or are so cheaply made they can’t be appended to the light fixing and/or are damaged such as problems being obviously apparent in the finish
    3) Cups, mugs, plates and so on which can withstand a normal dishwasher cycle and don’t have the colour or pattern disappearing after less than a year
    4) Bed linen which is actually the stated size
    5) An electric kettle which doesn’t corrode within less than two years
    6) A bathroom cabinet which will withstand a humid environment without the MDF / chipboard bubbling

    I could go on but hopefully readers get the point. I will not now buy anything that doesn’t at least give the suggestion that it won’t look awful or need to be replaced within a couple of years or less. But this means that — through any mass-market retailer I have access to (and keep in mind I am 50 miles from London so I am drowning in retail of every known description, plus online) — I simply cannot obtain what I want to purchase due to endemic crap-ificaiton.

    Not so much, then a savings paradox (whereby an economy deteriorates due to people hoarding savings) more a The Whole of Retail is Rubbish Tat paradox (whereby I have money to be spent but cannot buy anything worth buying anywhere). I haven’t bothered going into H&M in years, TK Maxx is worse, Marks and Spencer Home (a bit like Macys) is beyond a joke, Next has always been junk — I never understood why people went there — and even John Lewis (snooty UK upscale department store) has been sunk by the influx of MBA management consultant types who are doing their best to turn it into the Sears of the UK.

    I tend to be an outlier on most things, so perhaps I am here, too. But in my (admittedly very narrow) circle of people I talk to, I hear pretty much the same story.

    1. Colonel Smithers

      Thank you and well said, Clive.

      You’re not an outlier.

      BTW, as we are City timewasters, is Manchester United CEO and former JP Morgan bankster Ed Woodward the Paul Achleitner (Deutsche Bank chairman) of football, i.e. neither is able to find a long-term gaffer?

      1. Clive

        Yes, and you do begin to wonder, is it lack of available, ah-hem, talent — or is it that it is the gig itself, a poisoned chalice masquerading as a golden opportunity (but only for the terminally gullible)?

    2. fajensen

      Very true.

      I can’t fix this, only recommend German-based Webshops (but not!) for most common things and higher end “Nature-” / “Hunting-” type stores for clothing. Auction houses for furniture. Electronics liquidators for computers and tools, like “Arrow Value Recovery”. Smaller kitchen appliances I buy at restaurant suppliers who also sell privately.

      There are some local quality shops “around here”, especially for food, but too often one has to go to Copenhagen or “Germany” to get quality items.

      Maybe it’s like the Danish Bacon and Scottish Whisky? The good stuff goes to export and the garbage is sold in the home market; In this case the good stuff goes to (or rather stays inside) China and the useless crap is sold to the dumb westerners who asked for “Cheaper Goods”?

      Maybe this is projection. But. There also seems to be a tiredness with buying things. My adult “teenagers” are more and more like “Nah, stuff, don’t need it” if we offer to buy something we think they need. They will buy a few expensive quality items like bags, shoes, kitchen knives and little else. The rest is thrift store “rentals”.

    3. PlutoniumKun

      I suspect that another element is the difficulty in young people in getting their own homes. You need a home to store stuff – if you are sharing with others or in your parents house, you simply can’t store all the clothes you might want to buy and you’ve no need for much housewares.

      Incidentally, there has been a wave of ‘vintage’ shops and clothing repair shops opening up in my area. It does seem that keeping your clothes in good shape for years has become a ‘thing’.

      1. Eureka Springs

        Second hand with delay reflects the supply stream of original content. In this case crapification of, well almost everything, including much of what’s labeled as high end is just that… crap. Second hand Wal-mart is bad business. Wal-mart level of zero quality has been around for decades running now. There is very little supply of vintage/second hand quality out there in clothing or household goods. Used to be one could circle like a vulture around the upper 20 percentiles refuse and find a fair amount of quality goods for resale… Not so much anymore. Clive mentions other store names but the problems are systemic on both sides of the pond. If the Clives of the world can’t find quality to begin with then the thrifts wont have much as well. They don’t make British Walkers and Harris tweed like that anymore…)

        One big part of the problem is most people have no idea what quality is. Crap and bling suffice when there is no quality as an option to compare.

        I’ve started interjecting a corrective note in conversations along these lines. People often curse the “Chinese” makers in these discussions. I always say blame belongs with those companies at home who order and except crap as much if not more than a maker who is just following orders in order to stay in business.

        Used to be mid range quality goods like a men’s shirt from Sears or Penny’s would come with extra buttons, often sewn inside. Those garments often lasted decades. And it would be years before one needed to use the extra button. Now, hardly anyone knows how to sew a button, much less find or be able to afford clothes which have an extra to begin with or a garment which would last long enough to outlive the first button loss. Hence the disappearance of tailors, seamstress, shoe and leather repair shops. The repair would cost as much as the garment and be of higher quality than any work in the original garment.

        Notice also, the loss of – pride in ones work. There is very little pretense along those lines.

        1. BlueMoose

          It is funny that you mentioned JC Penny’s shirts. I just retired two casual business shirts that I had bought there back in the 90’s. I still wear them in the garden to keep the sun off my arms. If I recall, they were made in Taiwan. I think I got my money’s worth!

        2. Cal2

          Use this trend against retailers; Instead of purchases by you a customer, consider items to be borrowed and replaced when they fail as thought the retailer were a library lending books.

          To do that you need to keep every receipt for every item purchased. When the item fails early, or even later, if you are persuasive, return it for a refund or more easily, a replacement. I got four pairs of pants out of the parasites running the GAP. Each time the crotch in the pants with their brand tag on them prematurely got holes, I’d take them back with the receipt and decry the quality. No problem with getting replacements. The fifth time they no longer had the pants in stock and I demanded and got a refund.

          Apple products no longer have a CD drive. Buy one, use it to copy your CDs and then return it for a refund.

          1. Mirdif

            A friend’s mum does exactly that. Just before the statutory 12 months warranty on electrical goods is up she goes and returns the item and then “buys” a new one.

      2. Auntienene

        This week I bought an extension dining table and 6 chairs via Craigslist. Beautiful, modern design, solid wood (made in Canada), $250. If I bought it new, the table alone would have been $2000. Sorry, retailers, I’m not spending that much or buying junk.

    4. Jackm

      Clive, while you do have a fair point that so much of mass market department store goods is designed to have a limited shelf life (“planned obsolescence” as us product designers call it), there is still quite a few independent brands which sell good quality goods built to last, to say nothing of the array of premium brands which still build durable usable goods.
      Having said that, none of these independent or premium brands feature “every day low prices”.

      I suspect this crapification of consumer goods as you put it is merely one of the many things we sacrifice in the name of consistently lower prices. The fact this price difference between the cheap stuff and the premium goods is drifting further and further apart over time is I believe one of the real indicators of how long term wage suppression has really affected us.

      1. ljones

        >there is still quite a few independent brands which sell good quality goods built to last

        Good point although these days (for example in electronics) crapification has even reached the component level. You’ll pay a lot more for decent quality components or otherwise it is a case of using lower quality parts which will fail more quickly – or in the case of china simply selling fake parts which are either totally out of spec or even do not work!


    5. Larry

      That’s a bit surprising to hear, at least with regards to clothing. Here in the US both Lands End and LL Bean make fairly high quality clothing and back their products with a significant return policy. My kids put the winter clothing through the ringer and it stands up.

      1. PlutoniumKun

        I think there are plenty of brands that do good stuff, its just you have to really search it out. I’ve certainly noticed a significant drop in quality of standard things over the years – for example, I find jeans just get baggy and loose much more quickly now, even from quite good brands.

        I would recommend Howies as a UK brand that does really high quality clothes that are made to last. I’ve t-shirts from them that are still perfect 10 years or more after I got them.

      2. Lynne

        In my experience, LLBean is well on the way to crapification. Just browse the online reviews of women’s clothing. Flimsier fabrics, poor cuts, inconsistent sizing are all things I experienced last year in trying to buy things there. Plus, they now have things like shorter, tighter sleeves. Either they have changed their models or are trying to eke out a few pennies on fabric costs.

        1. sd

          That started back in the 1990s when acrylic sweaters showed up. I actually wrote a letter to LL bean, they wrote back that ease of care was more now important to their customers than fabric content.

          Pretty much stopped buying anything from them other than an occasional fleece bathrobe.

        2. Jeff Z

          Ditto for men’s fashion at l.l.Bean.I have a pea coat that is well on its way to losing its second button then and the coat is less than 3 years old.

      3. Anarcissie

        Land’s End raised their prices quite a bit. I believe they decided that they had to serve either the 9% or the 90% and chose the former. Marketing to the 9%, they probably think the items they sell should at least appear to be of high quality. In any case the middle range has been hollowed out as with the middle class. I imagine the process will continue for a while.

    6. Adam1

      I increasingly find myself in this category. Just last month our HE washing machine got a bit excessively out of balance and the tub smacked and broke the lid locking mechanism. The washer won’t run unless the lid locks. The part was extremely basic and shouldn’t have cost more than $25 to make yet GE wanted $275 for the part – the washer new only cost me $600. My appliance guy thought it would be foolish to have it fixed at that prices because I shouldn’t expect more than another 3 to 5 years out of it (the washer was only about 5 years old!!!!) – he recommended I buy a new one and buy in the Whirlpool family which he said was cheaper to repair. Since when does a washing machine have a life expectancy of 7-10 years!!! I don’t ever recall my parents or grandparents buying a new washing machine while I was a kid which means they used to last 20+ years.

      1. Clive

        Yep, been there too so commiserations.

        Same story as yours. I splashed out on a near top-of-the-range Bosch dishwasher (“German quality”, I thought, little did I know…) mainly because it was top rated for energy efficiency (A+ here in the EU). I think it was just under £500.

        It got its energy savings through an inverter control for the motor drives. For those not technically minded, this is an electronic power converter which can reduce the power input to a motor when the load is low. But the components need to handle high voltages and high currents. They can run hot and if not adequately engineered will fail.

        This is exactly what happened. A new control board was £275+VAT and fitting. It was beyond economic repair. Naturally, it failed a couple of months after the 2 year warranty ran out. I bought a cheap and cheerful (and energy-hungry, unfortunately) replacement for £225. I doubt it will last much longer than two years. But at least I’ll have wasted less money.

        My first dishwasher (Whirlpool) bought nearly 25 years ago lasted 10 years.

        1. Ignacio

          Motors that can function with different work loads reducing power input are probably mandatory these days, nevertheless for me the best approach is to make it work always at full-load but at the lowest water temperature possible. My german A+ has been working like that for some 12 years and it still looks young.

        2. ambrit

          Up until Katrina, we had a thirty year old Maytag top load washer. I replaced the bottom gear solenoids once, and the bearings once. If not for the hurricane, it might be washing yet.
          Strangely enough, right after the hurricane, we got a Eurotech brand front load washer and dryer pair. That’s 2006 range. Both are still working merrily away. (Knocks on head for luck.) I had to send off to England for a replacement driver band for the dryer last year. 20 USD, and several hours of screaming and kicking to replace. I believe that the pair were made in Italy.
          Globalism does have a few bright aspects.
          Dishwashing is done by yours truly.
          Happy Holidays.
          This might be, even with the apparent doom and gloom, the last ‘good’ Christmas for years to come.

      2. Cal2

        Buy Speed Queen Commercial Quality.
        Made in America, solid steel and will last at least 25 years.
        “You’ll see Speed Queen commercial washers and dryers in laundromats. The Wisconsin-based manufacturer claims its laundry appliances for home use are “built with rugged, commercial-grade construction and pushed beyond their limit” in the [Consumer Reports]test lab to deliver 25 years of performance.”

        Yes it’s expensive. But consider the cost and inconvenience of a cheap machine flooding your house, or the added up costs of multiple cheap machines.

        1. kareninca

          I got a Speed Queen; it is wonderful. It actually wasn’t any more expensive than the other brands. It did take forever to reach me from Wisconsin, but it was worth it. It is built like a tank; I don’t know how hard it would be to fix since I bought it in Sept. 2013 and so far it has not needed any repairs.

        2. Harrold

          Speed Queen changed their washer design this year.

          Instead of the standard knobs, its now all push button madness. Consumer Reports actually gave a Poor rating to their 2018 model. It rated LAST out of the 100+ washers they tested. And goes for $1000+.

      3. Other JL

        My MIL had a 30+ year washing machine that started to leak last year. The repairman said the tub was going, and it’s not really feasible to fix or replace. Sourcing a good used tub would have cost as much as a new machine, and it’s hard to verify the condition. He warned her that she shouldn’t expect a new machine to last nearly as long, now they’re built to last only about 5 years. There just aren’t any manufacturers building to that standard any more.

      4. V8

        The issue with spares for all equipment is that unless the manufacturer actually makes the part, they are not interested in selling, hence the high prices, as the parts they are selling is keeping someone elses production line busy rather than their own.

        Ultimately, all manufacturers are only interested in keeping their own manufacturing line employed.

        Manufacturers of most equipment are really just assemblers of other companies manufactured parts…

      5. fajensen

        buy in the Whirlpool family which he said was cheaper to repair.

        In the EU, all brands owned by Whirlpool and of course Whirlpool itself, are widely considered to be Garbage that cannot be repaired even if it was profitable to do so. Whirlpool are universally hated for their shitty customer service and only voluntarily installed by landlords because in new apartments, the appliances are the responsibility of the tenants and they can be taken by the tenants then they move.

        Bosch, Miehle, Foss and Asko are still trusted. Bosch is the cheapest brand, starting around 400 EUR for something decent.

        Siemens try to be high-end but is still garbage, only their brand of garbage is about as expensive as Miehle providing triple the grief of owning a Whirlpool.

        1. Olivier

          I can confirm that Miele (not Miehle) is still good: I’ve had my WM (middle-of-the-line model in the Miele range) for 11 years now with absolutely no problem.

    7. Mirdif

      I note, Fat Mike’s tat shop is called a discount store above. It certainly was not the last time I looked as I saw a polycotton shirt for 25 notes.

      About Next, thank you. I thought I was the only person who could never find anything in there worth buying. My own guess is that most people just buy stuff from wherever everybody else is buying from and saying non-complimentary things about Next for example usually raises eyebrows. Ditto Fat Mike’s but there’s a specific demographic for whom that is the height of sartorial elegance and unfortunately that demographic is much more likely to feel the pinch in a harsher economic climate.

      On the cups and mugs, I get called boring by my son for my insistence on this, but plain white never fades.

  3. Ignacio

    Here you have a handy map on retail sales interanual variations up to october 2018:


    Ventas minoristas = retail sales

    There are wide variations within the EU, looks like EU economies are anything but harmonized/sinchronized/coordinated at least regarding retail

  4. Ignacio

    I have read that in the particular case of ASOS, which somehow represents the fastest of the fast fashion, part of the fall in stocks migth be due to unexpectedly increasing operating expenses (deliveries and so).

    1. PlutoniumKun

      Completely anecdotal, but in my experience the biggest expense companies like Asos must face is women buying a whole pile of clothing, trying them on when delivered, and then sending most of them back, just keeping the one or two items they really like and fit.

  5. sd

    I just don’t seem to have much interest in Christmas shopping this year and am just giving books. If anyone has any recommendations they would like to pass along, that would be great. (We have a fantastic indie bookstore nearby.)

    1. Keith Howard

      I think Quinn Slobodian’s recent book has gotten too little notice. It is lucid, well-written, completely illuminating on its subject, and concise. I recommend it:

      Quinn Slobodian, Globalists: The End of Empire and the Birth of Neoliberalism (Harvard U. Press, 2018)

      1. Colonel Smithers

        Thank you, SD and KH.

        I was planning to ask the NC community the same as I am stumped for holiday reading and presents.

        1. Newton Finn

          “Reclaiming the State” by Mitchell and Fazi (Pluto Press, 2017) is a landmark contribution to understanding neoliberalism and, perhaps, also understanding the only way out. Couldn’t recommend it highly enough.

    2. Ataraxite

      I quite liked Pankaj Mishra’s “Age of Anger”, which I read this year. It’s a good treatment of the many ways that resentment, chauvinism and nationalism have been stoked over history, particularly in response to an overreach of a liberal elite. Wide-ranging historical narratives, and it treats things at a more interesting, and more fundamental level than “economic insecurity explains Brexit” and the like.

    3. Stanley Dundee

      sd wrote:

      If anyone has any [book] recommendations they would like to pass along…

      For fiction, I can heartily recommend the latest from Haruki Murakami, Killing Commendatore, as well as Kim Stanley Robinson’s latest, Red Moon. Read ’em both straight through and looking forward to rereading as soon as my loaned-out copies are returned. For non-fiction, your liberal friends (if you have any left) might benefit from Thomas Frank’s Listen Liberal, or more unconventionally, Ann Pettifor’s The Production of Money, (beware, self-promotion alert) which I have recently reviewed. Enjoy!

      1. Fiery Hunt

        For the history-minded, I always recommend General Wm T. Sherman’s memoir of the American Civil War…it’s fantastic.

    4. Buckeye

      SD, if you (or any on your gift list) are into real life espionage stories, two recent books are recommended.

      “The Spy and the Traitor” by Ben MacIntyre. The story of KGB double-agent Oleg
      Gordievsky and the CIA double-agent Aldrich Ames who outed him to the KGB.

      “A Covert Action” by Seth Jones. The story of the CIA operation QRHELPFUL, which covertly helped boost Lech Walesa and the Solidarity movement against the Polish regime.

  6. Jack

    The article mentioned the income of twenty somethings; “adding that the disposable incomes of Asos’s twenty-something customers were still well below the levels they were at a decade ago.” PlutoniumKun mentioned home ownership. I think it is both of these but something more that has not been mentioned. Young people today are much less consumer oriented than older generations. Millennials seem to value work place satisfaction and balance over pay. They want to work shorter hours. And they want to “experience” rather than accumulate “stuff”. As someone at the bottom end of the baby boomer generation I often have a hard time relating to the millennial generation. But on the accumulation of stuff I have to agree with them. More and more I don’t buy things and I keep moving into smaller and smaller homes as well. As Clive said most of what is out there for sale is crap anyway.

    1. jrs

      I’d like work place satisfaction and shorter hours too. As a Gen Xer those things never seem to have been on the menu.

      And I think they are much much less on the menu now than say in the 90s or early 00s when it was occasionally possible. As now the economy is so much worse (and the costs of everything needed to live so much higher). Meanwhile an increasingly contingent workplace doesn’t even get paid time off, so much for working less.

  7. leondarrell

    My wife’s business is retail and has been profitable for 30 years; she’s shutting down in a year, mostly because of age. Over the past several years, the wholesale pricing of clothing has been getting cheaper, so much so that mark ups have moved from 2x to 3x or 4x or even 5x. This was unimaginable in the 90’s!

    Consequently, gross sales have declined yet profit margins have held. Sourcing for clothing is Asian and I’ve concluded the m’fers are simply “dumping” as another capitalist race-to-the-bottom, probably politically-driven.

    1. Alex V

      Since you’re close to the trade, and in relation to Clive’s comment, how has the quality changed over that time period?

      1. sd

        Fabrics pill almost immediately creating little balls of threads which means they aren’t carding the fibers. Carding the fibers eliminates pilling which means you’ll keep a garment longer.

        You can try brushing pills out but that pretty much only works with wool.

        My mother worked in retail so as a kid I heard a lot about fabric quality.

  8. Newton Finn

    Canary in the cage? As so many MMT economists have pointed out, wage suppression since the early 1970s, coupled with compensating debt now being stretched to the limit, will inevitably cripple consumer spending, which in turn will cripple customary economic vitality. This is why the big boys have moved away from investing in widget production and distribution into financial gambling, currency manipulation, usury, and other virtual forms of wealth accumulation. This is also why we 99% must move away from the big boys, which may eventually require walking on and over them. I hear that yellow vest sales remain hot. Though I live in the states, I’ll be picking mine up today from a nearby big box. No doubt the quality of the product will be low, but the purpose and pride in wearing it around will be high.

  9. paulmeli

    Apparently Retail Therapy doesn’t make us happy anymore. Maybe the pain of reality is becoming too great to overcome.

  10. Avidremainer

    We’ve had ten years of ‘recovery’ and are due a downturn. Could all of the above be the start of something worse than 2007/8?

  11. Cal2

    My favorite travel program is
    Don’t Pay, We’ll Take It Away” on Netflix.

    It’s a show about the over indebtedness of Britons and is it revealing;

    You get views into regular people’s debt ridden households, see all their junk, the inside of houses, their faces etc, as the High Court Bailiffs walk into homes, or use keys provided by landlords, seize goods, tow cars etc. Sure makes me appreciate our
    Bill of Rights this side of the pond.

    1. Cal2

      Forgot to add that a lot of the debtors are businesses as well. The Bailiffs, really nice guys BTW, just walk in and seize cash, or goods and end up shaking many hands of the people whose goods they have just seized. Talk about the opposite of Downtown Abbey.

  12. ljones

    Some intresting points made above! I don’t really want to say *exactly* where but I’m from the southern part of the UK. And yes retail shop collapse is certianly happening here too – possibly maybe even at an accelerating pace. And it isn’t just online that is doing it. There’s a couple of extra factors where I live:

    1. Rent. Some of the shops (I forget the company name) but not all are owned by one single company. And that company year on year has been jacking up the rent on these shops. Given that some of our shops are part-seasonal (they don’t close down over winter but remain open but do a lot less trade) that’s caused a lot of them to shut down.

    2. Age. Of the shops which aren’t rented out like that (but again not all) some of the shops are run by people who are now starting to get pretty old. People well into their 60s and 70s isn’t uncommon here. Eventually though the inevitable happens – either those people just get too old and can’t run the shop any more or eventually die from old age. And quite often nobody wants to ‘take over’ the running of the shop and there’s nobody ‘coming up from below’ in the shop owners’ family.

    In both cases though quite often this results in one of two things happening. The first is a short-lived “useless” shop will turn up. This might be (for example) a summer-season only shop selling plastic chinese tat for example. The other thing that happens (and is probably going to be more long term) is that the shops get turned into expensive town houses! And alas once something has become a house, you really can’t turn it back into a shop any more.

    Note: I call then expensive houses as if you live in the south in the UK and are on min. wage *ANY* house is expensive!

    Pretty much I’m looking towards 2028 and apart from a couple of small supermarkets (tesco express, CoOp) maybe a pub and (possibly) a chemist the shops will have all vanished by then.

    Some odd things have happened where I live though. Less one all the major banks have now closed their branches in the small town that I live in, with one becoming a kids’ play centre(!). It will not last long if only for the massive lack of parking places. The local “conservative club” – long derelict and now semi-demolished will become (wait for it) – expensive town flats! There will apparently be one or two retail shops but they will be *tiny* – and most likely of the “useless” kind.

    As for junk goods being sold for high price I think the sort of Maplin electronics in the UK pretty much answers that one. Still have three of their catalouges here – one from 1990, another one from 2005 and then another one again from 2015 (and I think the last one as well).

    To give you an idea of what happened to maplins it runs like this — I remember maplins from the 80s as a kid. And it was a shop although only with a few retail outlets (mainly mail-order) those retail outlets were staffed by knowledgeable people who actually *knew* something about electronics. And they were only too pleased to sell you a few resistors or transistors amounting to just a small sum of money.

    Move forward to modern times and it was a totally different story. Gone are the knowledgeable staff replaced by people who really didn’t seem to know anything about electronics – or possibly even what they were selling(!). Very few “ordinary” electronic components to buy just lots of re-branded chinese junk sold at vastly over-inflated prices. That’s pretty much the short sory of maplins and it is no surprise that they folded.

    Random point: I have an old AM radio made here in the 70s — it is nothing special or high end but it is still actually *working*! (The same thing from china today would I guess have its lifetime measured in weeks if you are lucky).

    One thing I’ve found intresting – I was thinking at least a few years ago that you might see lots of retail “3d printer” stores opening up – maybe not so much for the selling of 3d printers but as a place you could go to with some sort of file, leave it with them come back at a later point in time and collect your small 3D printed object (from what I can gather 3d printing causes a lot of mess everywhere, lots of stuff to clean up so most people presumably would not want such a thing in their home!). Dosen’t seem to have happened however.


  13. thoughtful person

    What tumbling 16%? That’s nada! Our biggest customer UNFI is down 80% in the past year!


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