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Book sales may not be hit by the effects of the recent Comprehensive Spending Review as consumers will shun big ticket items like furniture instead, a retail analyst has claimed.
Nick Bubb from Arden Partners is one of the co-authors of the Retail Think Tank's (RTT) recent white paper into the future of retail following the announcement of Government cuts. The report said Chancellor George Osborne's review will contribute to low growth in the retail sector.
Bubb suggested consumers will shy away from buying big ticket items like electronics and furniture. He said: "Inherently low ticket purchases, like books, we would expect to be relatively resilient. The book market's success will be driven by the release scheme more than anything else.
"Recent market trends in the book market are looking better. This is more important than the macroeconomic picture."
The think tank suggests the effect of public sector job losses has been overstated. RTT member Mark Teale of C B Richard Ellis said: "Spread across the UK as a whole and over a number of years, spending losses attributable to a public sector jobs contraction of 100,000 annually over five years cannot have an appreciable impact on aggregate retail consumer spending trends, assuming the latter figure is exceeded by private sector employment growth."
The white paper also argued the cuts would exacerbate existing trends. Tim Denison of Synovate said: "There will be winners and losers in many different locations, with the smaller, secondary and tertiary locations which already have trading problems hit hardest – a trend the RTT has been
monitoring for some time.
"These tend to be in less prosperous areas with a lower level of investment in infrastructure and a higher dependence on consumers supported by welfare, who are less mobile.”
RTT is also expecting low rates of expansion over the next 12 months. Richard Lowe of Barclays Retail & Wholesale said: "Over the past 12 months the high street has not been drawing down the cash facilities available to it and has been postponing capital investments. We expect
retailers to remain prudent, borrow less, improve their working capital and increase their cash reserves as the whole economy continues to deleverage."