Despite market volatility, the synchronised global economic recovery has continued apace. In the UK, GDP forecasts were revised up to 1.6% on the back of this stronger growth, whilst we also saw wage growth exceed inflation for the first time in twelve months. However, this dip in inflation (to 2.5%) has caused the market to speculate that UK interest rates – and therefore bond yields – will not now rise as fast as previously thought.
The first estimate of Q1 US GDP growth came in at 2.3% on Friday afternoon, slightly ahead of consensus expectations but much lower than the 2.9% seen in the previous quarter. Some may see this as a disappointment and a further sign that the global economic recovery is slowing. However, we believe Q1 GDP numbers have structural flaws, which means that the US Federal Reserve (Fed) is unlikely to reverse their plans for the trajectory of interest rates.
As the current challenges in the department store sector are increasing, the question is whether the department store model, in its current form, is sustainable and relevant in the current retail market. Is its decline inevitable, or can it possibly be reversed? What could be done to address the many challenges it faces and make it fit for purpose in the modern age of retailing?