Good morning! It’s Paul here.Both Graham and I will be working today. Graham will be emailing me his sections, which I’ll include in this single report, marked clearly as being written by him.Retail sales volumesOver the weekend, I was looking at some data, showing that the latest retail sales volumes have apparently fallen about 2%. This seems to have cast a cloud over consumer spending related shares.However, the way I see things, consumers only have a certain amount of money to spend. Therefore, when inflation starts rising, as it is now (due to the fall in sterling), then one would expect consumers to continue spending roughly the same amount. However, that amount will actually buy a smaller quantity of more expensive items.From the retailer’s point of view, this shouldn’t really matter very much. In such a situation, LFL sales would simply be flat. Fewer items are being sold, but the prices have gone up, so the retailer ends up achieving the same overall sales figure. Moreover, with lower volumes of goods being sold (at higher prices), the retailer will actually achieve some cost savings – e.g. fewer plastic bags being used, savings on staff rotas, warehouse costs, etc.
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