Tesco, Game: The Fortunes of the Few Won't Help the Many

Last Updated Apr 22, 2009 11:38 AM EDT

The stellar results coming from the retail sector over the last couple of days might cause you to wonder what all the fuss is about over the economy and it's certainly good for the retailers concerned, but is it helping the sector as a whole?

Yesterday, Tesco came out with its biggest ever profits for the year of £2.9bn. This morning, Game Group, a specialist in the computer games market reported profit before tax for the 52 weeks ended 31 January of £119m, a jump of 75 per cent on the previous year.

It's true that not all retailers are able to weather the downturn with such apparent ease, these two aren't the only companies to have come out with results that so significantly go against current trends.

Managers at retailers that do well can give themselves a well-deserved pat on the back for being so commercially astute, or lucky, but their good planning, or good fortune may be hampering the efforts of the sector as a whole. How can the British Retail Consortium (BRC) hope to sway the government's plans to hold fast on business rates increases, so that retailers who are struggling can get a tax break, when high street stalwarts are actually growing faster than ever?

In its budget reaction, the BRC said: "The need to have lots of shops means retail businesses and jobs are more at risk from property cost increases than other sectors. The Chancellor should have announced an immediate freeze on all new business rate burdens."

Don't the strong results seen in some areas undermine this argument that, as an economic engine contributing to Gross Domestic Product, the retail industry is as vulnerable as it would like the government to believe?

Retailers are usually better than most at getting together to provide a unified front when it comes to making demands from the government, but at the moment, the good fortunes of a few retailers are working against them.

(Pic: Stripy T-Shirt, cc2.0)