There was further media connections to our town centre retail clinics, as Friday’s The Wright Stuff included a short discussion on Britain’s High Street problems during the newspaper review from The Sun.
Join the forum discussion on this post As HMV announces the closure of dozens of branches, and other big-name retailers continue to struggle, is the future for our town centres all Poundlands and betting shops?
Two and a bit years ago, it was the demise of Woolworths; this week, the predicament of the British high street has been reflected in the increasingly uncertain fate of HMV. Yesterday it emerged that British retail sales across the board had suffered their worst December since 1998. And in the wake of profit warnings and a plunging share price, HMV’s suppliers have been cutting back credit, debt advisers have been called in to look at the business’s finances, and 60 shops are now set for closure – including 20 branches of Waterstone’s, the once-thriving high street name that was folded into HMV in 1998, and may now be sold off. This week, a number of record companies announced that they would support the chain by leaving their trading terms unaltered, but the latter half of 2011 could be yet grimmer, because without the additional goodwill of the people who make DVDs, computer games and the rest, it will be almost impossible to build up stock before Christmas.
In response, as with Woolies, scores of voices have been dredging up their HMV memories. You will doubtless have your own: mine go back to the mid-1980s, and endless trips to the two branches on Manchester’s Market Street, where I would habitually buy 12in singles by the Style Council, and wonder whether to spend what money remained on the Redskins, Easterhouse or the Faith Brothers (don’t ask). Of late, as the music industry tumbles towards doom, I have been thrown by HMV’s decision to push music further and further towards the back of their shops in favour of more profitable lines, but have still been gripped by a regular urge to go inside in search of some unexpected musical discovery. Certainly, the idea of London’s Oxford Street without their two signature stores seems very strange.
Yet that may be where we are headed. In countless towns, and parts of our cities, the basic story is simple enough: first, the big chain stores saw off independent shops, but now they themselves are either ailing, or off somewhere else. The result, to use a phrase invented by the New Economics Foundation (Nef), is a passage “from clone town to ghost town”, driven by three factors, much more deep-seated than economic ups and downs, which point to the likely shape of the retail future. First, the rise and rise of the internet – 39% of CDs and 34% of DVDs are bought online, yet only a miserable 10% of HMV’s business happens there. Looking ahead, music, films and games – and, yes, books – will increasingly be downloaded rather than physically owned, and we’ll also see to even more of our personal finances and house buying online (according to the Ordnance Survey, between 2008 and 2011, the high street presence of building societies came down by 29%).
Second comes the ever-growing tyranny of the supermarkets, and third, the retail trade’s ongoing shift from the cramped environs of urban streets to places where the big names can stretch out and keep their customers captive. Increasingly, when you think of Boots or Next, you will not picture a standard-issue, high street shop, but a much bigger construction, either placed within a town centre “retail destination”, or plonked on a ring road in an American-style strip mall built around a vast car park. By comparison, the idea of walking down the street while doing your shopping looks quaint and inconvenient, and the likes of HMV find themselves laid lower and lower.
In February last year, Nef published figures for shop closures in the 12 months up to April 2009. The death of Woolworths accounted for 807 stores. The Stylo group, which owns the shoe chains Barratts and Priceless, had shut 220; 214 Celebrations card shops had gone, and another 125 shops had become empty thanks to the death of the misfiring entertainment chain Zavvi.
There was also bad news from chains such as JJB Sports (55 closed shops), the Officers Club (32), and good old Passion for Perfume (45), and since then, the great emptying-out of the high street has continued. Philip Green’s Arcadia group is set to close up to 300 shops, mostly less-than-sexy brands, such as Burton and Dorothy Perkins. The once-ubiquitous chain Game has announced that 90 of its branches are going.
Every six months, people from a research firm called the Local Data Company walk the streets of around 800 towns and cities and chronicle their fate. “There is a fundamental change happening,” says their business development director, Matthew Hopkinson. “I can’t prove it yet, but that’s my gut feeling.” He mentions plenty of ailing businesses, but also what’s happening to thriving chains. “The big retailers – the Nexts and the Topshops – are cutting their number of stores, and they’re going for big-box formats,” he says. “It’s cheaper to do business that way, and they don’t have to contend with councils. These are controlled environments.
“It’s best to have total control over what the consumer sees, smells and everything else. Because once you’ve got them under your roof, you can manipulate them until the cows come home. And on the high street, it’s very difficult to do that. That’s what the supermarkets have taught us.”
After decades of ceaseless expansion, talking again about how Tesco et al have strangled the high street might seem like a cliche, but as the so-called big four extend their business into lines once undreamed of, it’s easy to miss the potentially momentous consequences. “They’re not really supermarkets any more,” says Hopkinson. “They’re almost becoming mini-villages. You get your milk, bread and all your food, but Tesco is launching places where you can get your hair cut. It’s: ‘Buy your school uniform, go to the doctor – and if you come to us, you get your loyalty points, and it’ll be cheaper than anywhere else.’”
Among other consequences, this means the retail equivalent of the “squeezed middle”, and the likely survival of only those businesses that sit either side of it. “The quality, niche guys – like Burberry – have done bloody well, and the Poundlands and 99p Stores have done bloody well,” Hopkinson adds. “But if you’re in the middle ground, you’re right where the supermarkets are.” For proof of this polarisation, look at recent headlines about some of the few high street businesses that seem to be on the rise. Bookmakers are doing well, increasing their share of the high street over the last two years by 5%. Meanwhile, the 99p Stores chain recently announced that it wants to increase its shops from 138 to 600.
At the same time, an even more pernicious divide seems to be taking root. When I talk to Tim Danaher, editor of the trade magazine Retail Week, he makes a distinction between two kinds of place, and what tumult on the high street means for each of them. The essential divide, he explains, is between such urban centres as, say, Manchester, Bristol and Leeds, and much smaller places, which will feel the pinch: your Tauntons, Grimsbys, Barnsleys and Wrexhams.
“In our top towns, with a handful of exceptions, we’re getting to a stage where the focus of our high street is going to be on fashion,” he says. “But in the secondary towns, who knows? Value retail is growing, but it’ll only go so far. Beyond that, what’s there going to be?”
Empty shops, I suggest.
“Empty shops. That’s right.”
The first panic about increasingly gap-toothed high streets happened in early 2009. The recession was in full swing, and the average shop vacancy rate in towns and cities was forecast to rise to 15%. The independents that remained in urban centres were falling like flies, and the only businesses that were bravely announcing expansion were such titans as Asda, Subway and KFC. There was talk of empty shops being handed to artists, musicians and community groups: in April of that year, the government announced a £3m package to encourage precisely that – though its effects on most high streets seemed negligible.
Two years on, we’re supposedly out of recession, but the picture is still grim. The aforementioned 15% average vacancy rate will soon be passed, and in some places – such archetypal “secondary towns” as Rotherham and Margate are good examples – the figure is closer to a third. There are ongoing complaints about distant retail landlords, ever rising rents and the current business rates regime – although some people in the trade say there are glimmers of hope in the government’s localism bill, whereby councils will have powers to take a much more flexible approach to the last.
In the midst of all this change, one set of statistics has always chilled me to the bone. It comes from the work of a US academic named Kenneth Stone, who famously studied what happened when Wal-Mart moved into the state of Iowa. In the following decade, the state lost more than 555 grocery stores, 298 hardware stores, 293 building suppliers, 158 women’s clothing shops, 153 shoe outlets, 116 drug stores and 111 children’s clothing stores: in total, 7,326 businesses disappeared.
Is this where Britain is going? At Nef, Elizabeth Cox has been examining the fate of our high streets for eight years; looking ahead, she sounds a little more upbeat than I expected: “We’re not America, are we? That’s the worst-case scenario, and we have to heed that warning. But I think there is more opposition to that vision in the UK, and people are trying to do something different.” That said, she agrees that the current moment is fraught with danger: “It’s about whether people see this as an opportunity to build something different, or they say, ‘We’re doomed, and we’ll leave these places closed down’. That’s the fork in the road at which we’ve arrived.”
So what will the high street look like in, say, 2030?
“It’s going to be full of services, and social aspects,” says Hopkinson. “It’ll be full of hairdressers, tanning salons, cafes and restaurants. There might be doctors and dentists there. And it’ll become very leisure-focused. If there’s an area where people like the architecture, and they can socialise, and not just shop, that’s what will happen. You’ll get a place where people will go for community.”
That, I suggest, sounds rather optimistic. What of the more blighted areas of Britain, where there simply isn’t the money to sustain that kind of vision?
“That’s where you’ll get the analogy of Shitsville, Tennessee,” he says. “If you haven’t got nice buildings, or any events, or any reason to go there unless you live or work there, you’ve got a problem.”
Welcome, then, to one very depressing vision of the future. Lattes, book festivals, and high-end casualwear if you’re lucky; pound shops, Ladbrokes and boarded-up businesses if you’re not. If 21st-century Britain often feels like two countries, we may not have seen the half of it.
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Taken from The Guardian, 22/01, John Harris
Join the forum discussion on this post The government is looking for 12 run down High Streets in England to share £1m as part of plans proposed by TV retail guru Mary Portas.
Areas will bid for support from a dedicated team and Ms Portas herself.
The scheme was described as a “golden ticket” for town centres by local government minister, Grant Shapps.
The Local Government Association, which represents councils, has said that the pilot “simply tinkers around the edges”.
“We urge the government to step up and give councils some real power,” said its spokesman Peter Box.
“Councils don’t want to see short-term schemes – instead they want to see some firm action and a commitment from all government departments and agencies.”
But ministers said it was hoped other towns would “adopt and implement the ideas” in the pilots.
‘Innovative ideas’ wanted
Mr Shapps said that town centres had to become “a destination” to rival out-of-town shopping centres and the internet.
“What we’re looking for are innovative ideas, towns who are prepared to come together, put together their own town-teams, involving retailers and landlords and probably their local council and MP, to put their proposals forward that work in their particular area.”
He said the video applications, which must be submitted by 30 March, should not be professionally made, but “just YouTube style things”.
A spokesman at the Department for Communities and Local Government added: “Far from tinkering around the edges, these pilots will have every opportunity to bring real and lasting change to the role of our High Streets to turn them into places local people want to be.
“We want to see ambitious and innovative schemes that test the potential of the recommendations Mary Portas put forward.”
No magic bullet
The British Retail Consortium, which represents Britain’s retail industry, has been positive about the plan but pointed out that £1m spread amongst 12 town centres will not go far.
“High streets are a fundamental part of our communities and need to move with the times,” said Tom Ironside, director of business at the British Retail Consortium in a statement.
“Introducing pilots to address specific local issues could identify new innovations and approaches which might also work elsewhere. But this is no magic bullet and must be accompanied by other steps, as swiftly as possible.”
In the same statement Mr Ironside called for a change to the 5.6% rate of tax for business rates which is set to come into effect in April.
‘Town teams’
Ms Portas, the star of TV show Mary Queen of Shops, was appointed to advise the government on town centres in 2011.
As part of her review, Ms Portas recommended that town centres be managed through new “town teams” who would be responsible for developing businesses in the area.
The competition acts on this and introduces town teams, made up of landlords, shopkeepers, residents, and the local authority and asks them to come up with a vision for their High Street.
Other ideas from her review range from introducing market stalls and free parking schemes to cutting restrictions on night-time deliveries.
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Taken from: http://www.bbc.co.uk/news/business-16881291
Join the forum discussion on this post The owner of clothing chains Peacocks and Bonmarche has said it plans to place both businesses into administration.
The Peacock Group, which employs a combined 11,000 staff, said it made the decision after discussions with lenders over the future of the group broke down.
The parent company said it would seek a potential buyer for the Bonmarche business, but will appoint an administrator in the meantime.
Elsewhere, gift retailer Past Times fell into administration and confirmed 507 staff were made redundant before the move, with a further 67 job losses announced when KPMG were appointed administrator.
Peacocks trades from 611 Peacocks discount clothing stores and 394 Bonmarche shops in Britain.
The firm said it was in advanced and exclusive talks with a potential purchaser of Bonmarche.
It did not name the suitor, although a source familiar with the situation told Reuters news agency that the private equity firm Sun European Partners was seeking a deal that could involve a pre-pack administration of Bonmarche.
Sun European Partners declined to comment.
Originally from http://news.sky.com/home/business/article/16150393
The fortunes of two of the UK’s biggest retailers diverged during the crucial Christmas trading weeks, with Next yesterday reporting “disappointing” sales at its high street stores while John Lewis trumpeted “outstanding” figures after the chain proved a magnet for gift buyers.
Next’s chief executive, Lord Wolfson, blamed a frenzy of unplanned discounting by rivals and the mild autumn weather for weaker than expected sales at its stores and predicted another tough year as turmoil in the eurozone and high unemployment hit consumer confidence.
“December was definitely disappointing, as we didn’t see a boost in the weeks that we saw a lot of snow last year,” he said, adding that after 2010 disruption perhaps Britons had “learned not to spend so much at Christmas”.
Analysts estimated that like-for-like sales in Next stores fell more than 5% in the last two months of the year, resulting in a worse than expected 2.7% decline for the six months to 24 December. That weakness was offset by a strong performance at home shopping arm Directory, where sales jumped nearly 17%. Together the divisions delivered growth of 3.1% which was in line with guidance given to analysts in November.
It was a rosier picture at employee-owned John Lewis, where like-for-like sales jumped 6.2% in the five weeks to 31 December. “Sales during the four weeks to Christmas Eve were outstanding,” said managing director Andy Street, flagging a new trading record of £133.1m set in the week before Christmas.
John Lewis’s “never knowingly undersold” pledge forces it to match rivals’ promotions, a promise that cost it dear in the first six months of the year when profits dropped 54.5% to £15.8m. Investors are keen to know if last month’s crop of profit warnings from quoted retailers was a sign that Christmas, when many retailers make the bulk of their annual profits, had been a washout. John Lewis’s clearance sale has attracted fewer customers than last year, when an impending VAT rise prompted a shopping spree, but the commercial director, Andrea O’Donnell, said the retailer was “genuinely very pleased” with its overall performance, with profit margins “level” with last year.
New ranges and successful TV advertising campaigns had helped to cement John Lewis’s reputation as a “one-stop shop” for Christmas gifts, said O’Donnell. “We are much more front-of-mind than three years ago, when we were seen as a traditional home retailer,” she said. “In uncertain times people are increasingly looking for retailers they can trust, particularly at Christmas, when they are looking at making a big purchase.” It also saw a strong performance from its home shopping arm, where sales jumped nearly 28%.
Many fashion stores started reducing the price of winter clothing in early December after the mild autumn left them with piles of unsold winter coats and boots. The strategy is likely to have hit Next, which refuses to discount before Christmas with 10% more stock going into its Boxing Day sale. Wolfson said some of the discounting by rivals appeared to be an “emergency and unplanned” reaction to the tough trading conditions. “One of the indications of that is the number of blanket discount days where everything had X% off,” he said.
Next is still on track to make annual profits of around £565m. Wolfson, however, was “more cautious” than three months ago about the outlook for sales in 2012 and predicted profits would be only “slightly up” in the coming year, sending its shares down 3.1% and pulling rivals chains down with it. “It will be another year of walking up the down escalator,” said Wolfson. Analysts are expected to make a small reduction to Next profit forecasts for the 2012-13 financial year.
Despite the December sales fillip, John Lewis is also cautious about the 2012 outlook. “We are forecasting for very low growth if not zero,” said O’Donnell.
Conlumino analyst Neil Saunders, analyst at Conlumino, said John Lewis was probably the “standout winner” in terms of trading but that Next deserved credit for delivering growth “profitably and largely at full margin”. “While John Lewis will have had a profitable Christmas, margins are likely to have been eroded by price matching and this will result in lower profitability for the full year and a reduced bonus pool for partners,” he added.
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Zoe Wood, The Guardian, 04/01/12
http://www.guardian.co.uk/business/2012/jan/04/john-lewis-next-christmas-trading