Heavy competition keeps the retail sector depressed

The economy is buoyant but there are plenty of reasons why the retail sector remains depressed, not least overcapacity. In the year to date the FTSE General Retailers index has fallen by 12.9% compared with a 3.6% decline in the All-Share. Jon Thornton the manager of Aberdeen UK Growth is underweight the sector as he sees overcapacity in the high street and at out of town sites. The arrival of Wal-Mart has put an additional pressure on the other supermarkets, according to Thornton. He adds: "Discount stores have put pricing pressures on the traditional stores and their margins. Also cu...