Retailing? Need Commodities? Let Us Show You Where the Panic Button Is

Posted on Feb 20, 2023. by NTI

2023 is not even two months old and it isn't even Shrove Tuesday until tomorrow, but clouds are gathering for retailers and any business that uses commodities, such as metals, grains, oil and gas; that would be most of them. The Financial Stability Board (FSB) (a rather gloomy organisation with a less than catchy name made up of the world’s central banks and Governments) said, at the weekend, that global markets remained vulnerable to another bout of commodity price volatility.

"Just what we need," said the global markets.

"If you haven't got anything nice to say, don't say anything at all," said the global markets' grandmothers.

There are weakspots throughout world markets, which only makes the jobs of polcymakers that much more difficult. Those in charge of the decisions must take action to protect financial stability if the prices for energy, food and raw materials spike again, but how can they do that if they cannot predict where the spikes will come from?

The FSB said the action taken by commodities traders last year to increase their access to cheap funding had meant some had taken on bigger loans from banks or reduced their hedging against future price rises, making the sector vulnerable to another bout of market volatility. More scarily, the report said there was evidence that banks would not increase their lending to energy traders if prices soared again, raising the threat of collapse for some firms that would reverberate through the financial system. Oo-er.

Whilst on the topic of 'scary', according to figures compiled by the Centre for Retail Research from company announcements, 14,874 jobs have been lost from high streets and leading shopping destinations by multiple retailers with at least ten stores during January and February 2023. Most of the jobs being shed — 11,689 — are the result of rationalisations by large retailers in cost-cutting programmes, while 3,185 jobs are being lost through insolvency procedures.

It has been a brutal start to the year. Those in our sector know of the insolvencies of M&Co and Paperchase, but there are other household names going through ... 'rationalisations' in response to the inflationary and economic headwinds include Wilko, New Look, Asda and Lloyds Pharmacy, while Tile Giant, the tiling retailer, went bust.

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