Join our community of smart investors

FTSE350: Opportunities remain despite consumer demand hit

While the retail outlook is uncertain, products and brand equity should allow some companies to escape the pain
April 28, 2022

The general retailers have had mixed experiences over the course of the pandemic, and while things are looking brighter on the Covid-19 front, these companies now have to reckon with soaring inflation and consumers who are dealing with rocketing bills – meaning the outlook suddenly looks a bit shaky again. The largest annual fall in consumer confidence since the global financial crisis, as recorded by PwC's spring consumer sentiment survey, looms large.

On the other hand, cost-of-living pressures are forcing consumers to seek out better deals on common expenses. This is good news for price comparison companies such as Moneysupermarket.com (MONY), which announced an 8 per cent increase in revenue in its recent first-quarter trading update, driven by consumers seeking better borrowing deals – as well as close to pre-pandemic levels of travel insurance. 

But there are arguments that say this is just masking longer-term decline for such companies due to regulatory pressures. The Financial Conduct Authority’s insurance reforms, which ban insurers from charging a higher renewal rate to current customers than to new ones, are already having an impact on the propensity to switch. There is also the energy crisis to contend with – nil energy revenue was recorded in the first quarter after suppliers withdrew tariffs from the market.

This is subscriber only content
Start your trial to keep reading
PRINT AND DIGITAL trial

Get 12 weeks for £12
  • Essential access to the website and app
  • Magazine delivered every week
  • Investment ideas, tools and analysis
Have an account? Sign in