Investments in UK retailers are potentially a "disastrous" investment due a perfect storm of problems afflicting the sector, according to UK equity income fund managers.
Job Curtis, who runs the £1.5bn City of London investment trust, said there has been a perfect storm for retailers.
He said: "Wages have gone up with the minimum wage, business rates have gone up for many, there has been higher inflation and political uncertainty and there are questions about the impact of technology."
A number of retailers, including BHS and Toys R Us, have gone out of business in recent years.
Eric Moore, who runs the £190m Miton Income fund, said: "I have not owned any retail shares for a long time.
"They are a disastrous investment because of the changes brought by technology. There are other concerns now as well, but I have avoided retail for years after three experiences I personally had."
Mr Moore said one encounter that resulted in him pulling away from retailers was with Jessop's, a camera retailer.
He said: "It was great, I got to speak to a very knowledgeable and friendly chap about cameras, and decided the exact one I wanted. I then left the shop and bought it online because it was cheaper.
"That is the thing with retail, there is now great price transparency. Consumers know exactly how much they should pay for something online. It’s not great for shareholders."
Mr Curtis is somewhat more sanguine, and owns shares in a couple retailers, Kingfisher and Marks & Spencer.
Kingfisher owns DIY chains including Screwfix and B&Q.
Mr Curtis said the company can perform well despite the wider economic conditions as it reorganises, selling a reduced range of products that he thinks means the margins will be better.
He said: "With Marks & Spencer the key might be the appointment of Archie Norman as chairman.
"He has a tremendous record in the retail business, from his time at Asda and at Next. Marks & Spencer can improve its supply chain and it has far too much floor space, so that is something else it can work on."
Edward Park, investment director at Brooks McDonald, said he has long been sceptical of the investment case for UK retailers because consumer confidence remains weak and wages are rising at a slower pace than is inflation.
david.thorpe@ft.com
