Lots of retailers in the news. None with good news.
The recent scale of administrations is similar to the worst levels of the 2008 recession.
Habitat, Focus DIY, Moben/Dolphin, Jane Norman, have all recently folded up. Comet's owners are rumoured to be looking for a buyer.Clinton card's are trying to delist to avoid the media glare as it tries to find a solution to its problems. Mothercare/Game/HMV are downsizing, or moving out of town. Waterstone's saved only by a generous oligarch...
This is the reality behind all 2009/10's hot air about a double-dip. A double-dip is only a measurement. The reality is many chains got through the recession but took a battering and growth has been poor. Those who just survived can only hang on with lower profits, smaller margins for so long. Rates and wages have increased since the recession and cost prices have risen dramatically. Vat pushed up prices, took another slice and further damages profits.
There are many, many more companies, teetering that need a result, and soon, or they will just eventually be unable to continue. Its not just loans that are due. Its the annual maintenance bill, vehicle replacement, packaging replacement costs and a hundred other things. If profits are razor thin, then no reserve can be built up. Eventually, the money just runs out.
The next round of minimum wage increases will push another few over. And minimum wage increases, though a pain, aren't normally too onerous on companies as the increases are inflation-ish amounts.
The climate is actually incredibly benign for a recession, which helps. Rents are falling. Interest rates are minimal. And these recent collapses have probably ensured that they will stay low, whatever inflation does.
This is the reality behind all 2009/10's hot air about a double-dip. A double-dip is only a measurement. The reality is many chains got through the recession but took a battering and growth has been poor. Those who just survived can only hang on with lower profits, smaller margins for so long.
ReplyDeleteAnd few prospects as yet. An astute investor in the markets will keep on keeping on but the majority in the country are heading for a fall.
Indicators at the lower end are not good.
Pesto's article about forbearance was interesting. We might be seeing something similar in retail: lots of people holding on for dear life in the hope that something turns up. I fear we may be looking increasingly like Japan.
ReplyDeleteThorntons also having to bite the bullet and start axing stores as leases expire.
ReplyDeleteThey operate on very slim windows and frequently find they haven't made enough from a season. A few years back they lowered prices, sold loads more, had great turnover figures but couldn't quite figure out why they hadn't made any money.
This year the hot Easter on the back of a snowed in Christmas probably means they couldn't generate enough of a surplus to keep going as they are and there is no more time 'for something to turn up.'
There is some good news. Our old friends Ocado made a profit! First 1/4 ever.
A bit beside the point but many of these shops are unbearable to use.
ReplyDeleteIt's not just a matter of recession: they are unapproachable other than on foot or by taxi; they are devoid of assistance, once arrived; their offerings are pawed, repeatedly tried-on, hanged in sad rows from gibbets so packed nothing can be released from its neighbour; asking for help from the asistants is met with, 'Everything's out.", as if fighting through the mess is nothing to do with them. Every hat, glove, scarf is pinned up on the racks, and pulled about.
And if you eat chocolates as rarely as we do, would you buy them from Thorntons?
Yet in other countries there are staff pulling pristine gloves onto your hands, fitting shoes, warning against the unsuitable or the unwearable dress, not just in grand magasin or posh boutique, but everywhere.
And until they stop abandoning customers to their fate they will continue to lose them. The 'shopping as a huge jumble sale' model is not good enough any more. When we spend our money now we want to discuss its disposal and be encouraged and assisted in our choices - and get them in an unused condition.
What Hatfield Girl said, and to note that even very small high streets have at least three charity shops doing the jumble sale, if that's what you want. (I do).
ReplyDeleteThe high street puzzles me because half the shops there cannot possibly scrape up enough customers to pay their electric bill, let alone make a profit.
Has anybody ever had a need to go in to Clinton cards? If you want a card all the supermarkets do them as do newsagents, charity shops, giftware shops, garden centres, department stores, thousands of on-line retailers (I'll probably buy some from a forces charity), the entertaining personalized producers such as Moonpig (who take the address and sort out the mailing for you), tourism venues, not to mention the dozens of crafters of my acquaintance, which means all the craft shops are selling the fixings in bulk.
I agree with HG, a lot of these business failures are less to do with "recession" and more the point that shoddy shops survived so long because of unlimited custom during the upswing. We are at a similar stage with retail as we were with manufacturing in the 1970s: a lot of it does not deserve to be propped up because it is rubbish.
ReplyDeleteAlas, and TJ Hughes as well, my tailors.
ReplyDeleteRetail as jumble sale has it's place - in TKMaxx, which I happen to enjoy.
ReplyDeleteOtherwise, I completelty agree.
There is another issue that I think is finally coming into play:
Basically, recession or not, there is only so much money that can be spent in a shop on a national basis.
If a growing percentage is spent online ( 38% at argos), then there is less spent in shops.
For a while, this is absorbed in narrowed margins, but after a certain point something has to give.
A good website provides a neat and convenient experience.
Can't really fault the comments. And TJ Hughes only reinforces them. I never really understood its appeal. An old fashioned, old style version of a 1980's Debenhams, but with even more bizarre merchandise. But I used to poach their staff where possible. They had good training and standards.
ReplyDeleteHmm blogger ate my big comment... Is there a character limit. Will follow in 2 parts (thank heaven for CRTL-A, C) :)
ReplyDeleteMy retail empire-ette is currently OK as we are really a service rather than trying to sell too much. We are only OK tho' because of low (read Cheap'n'scruffy) overheads. There is a choice - us or PC [Spit] World. You can pay them £220 or us £40-£80. That's why we survive.
ReplyDeleteA year ago I used to see the expensive high street shops (in Guildford) mostly empty. I walked the high street once back then and counted the people in the "Posh Shops" there were less than the assistants! They are still mostly empty. I have no idea how they make a profit. They have to be buying the stuff from cheap labour countries for pennies in the pound prices and making multiple £100s per item. That's the only way it can work (or given the collapses of the last week maybe it doesn't). There's no margin like that in selling spares and parts for PC's or laptops (see Currys).
Except for shops like ours (and it actually need not be a shop) where you need access to drop off something and collect it I see the high street as eventually doomed completely. On line and delivery will take over mostly because as everyone else above has noted:
For customers:
1) You cannot park.
2) If you can park it's 90 pence / hour. This has increased from 60p / hour at the rate of 10p every year for three years which is much higher than inflation. It means if I spend a day at the shop it costs £7.20 for the day :(.
3) The Parking Gestapo are just that!
4) Can't help but agree on customer service levels in most places, we try - but even we can't spend and hour discussing the attributes of a £9.99 item versus the £12.99 one, just can't be done you have to call a halt.
Part 2..
ReplyDeleteFor businesses:
1) You cannot park. If you do etc... Totals £2,246/year. Which is not claimable for Tax (Regular Destination).
2) The trains are rubbish even just trying to do 2 stops regularly, and that is £5.80 per day! Two stops! Then there's walking in the rain for 20 minutes each way to add. So take the bus... adds £2.50 per day. May as well take the Jag. Warm, comfy and by comparison instantaneous!
3) For parts people do enter the store then try to haggle us down to the on-line prices where margins are really wafer thin (3-7% is about all you can expect on reasonably high price items).
4) Rent and rates, we can't complain at scruffy end but over the river they are paying £30-60,000 plus rates :( I enquired about a small shop three stories (but no way to get upstairs except for a fire escape)...£60,000 PA + rates!
At the end of the lease (3 yrs) I'll probably give it up as a bad job. PC sales are dwindling with respect to tablets and hi-end phones. So the writing is already on the wall :(
I cannot for the life of me see why the local councils can't see that they are shooting themselves in the foot from so many directions. The higher parking, bus & train fares go the less business is transacted in their town. The higher rates and rents go the less business is enabled or likely to be transacted. The harsher the parking fines and associated Gestapo ditto.
Where will they be when the entire town's businesses just give up and walk away to a retail park? If I could, I would move my shop to Tesco's car park... really I would.
Sorry :) /RANT OFF
"An old fashioned, old style version of a 1980's Debenhams, but with even more bizarre merchandise."
ReplyDeleteMake that BHS instead of Debenhams, and you're talking about Boyes, a wonderful store chain in the North-East, from about Hull to Darlington. From a raincoat or a length of fabric to an angle-grinder.
Timbo: Its funny isn't it. You spell out for free what the government is commissioning Mary Portas to tell them. You don't need to be a retail consultant, just a user.
ReplyDeleteThe out of town/high street debate is 20 years old and no council has levelled the playing field.
What is interesting is that the high end, destination shopping streets and centres are doing ok. Its the old high streets, the older centres and the nondescript retail parks that are faring badly. At the moment there is money in quality goods {like apple store} or discount.
Poundland and Greggs are two of the best performers. And the exchange shops are doing quite nicely too.
Guildford has always been an odd town. Always busy, but a long walk everywhere to get about. I prefer Kingston/Woking/Sutton any day.
Friary still undergoing refurbishment? Has been since it was built.
I was in a high street today looking at some empty units. There was plenty of choice. Suddenly I thought of West Calder, a shopping centre in Scotland. The reason that popped into my head was it was a centre that performed so poorly that eventually all the shops in it closed. It just stopped. The whole place was empty.
That's what this town looked like today. Still plenty of shops but far too many holes. Even on free rent I didn't much fancy it.
Laban: I don't know Boyes. NE is somewhere I never go. Everywhere else, but never there.
ReplyDeleteNot my area.
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ReplyDeleteOf the comments relating to shops 'being a bit krap.'
ReplyDeleteThis rather misses the point.
Only the best will survive because their customers are probably better educated, more employable, better paid and therefore less affected by recession.
I doubt it's to do with a mass defection of newly enlightened customers or a more discerning breed of chav. Are we seriously suggesting that these people haven't stopped spending but that the economic downturn has made them move upmarket ?
A boarded up high street is what it is. Lost jobs and a downturn in spending.
PS, despite QE and record low interest rates they've STILL gone to the wall.
ReplyDeleteWhy should a continuance of these 'benign' conditions prevent others doing the same ?
Inflationary pressures are higher than official figures show in my opinion. Hidden in reduced quality of goods and materials.
What has not been mentioned is that unless shoppers are going to spend money that they have not got eg credit cards, HP (sorry consumer credit), bank loans, there is only a certain amount of money in shoppers' hands so if that money is restricted, so shoppers spend less, especially if their jobs are likely to be terminated or made less secure, only the foolhardy resort to Quanitive Easing ( borrowing, HP, credit cards). This is the sort of thing which starts to feed on itself, if a relatively poor area takes the hit of a down turn, it starts at much lower base whereas a prosperous area cannot see what the problem is.
ReplyDeleteGreat thread. I think the internet is the elephant in the room. So much shopping and spending done online. Plus I note like the US more is being spent on eating out, even pret etc seem to do well and coffees. Less on big ticket items unless there is a need.
ReplyDeleteOverall, if lots of crap shops close, so what? Better ones will replace them or else we will have to find somethign else to do with the property. Retail is 5.6% of the economy, not 56% as the papers would have you believe.
@BQ - Thanks for the reply. - Maybe we should set about turning out of favour retail parks into in-favour office / small industrial parks - but who would you run straight into head first - Yup - the local council planning dept. "What? you want change a use? [Loud sucking of teeth]. You want to park outside it? For free? [Ohhhh dear]
ReplyDeleteThe Friary is almost dismantled internally at the moment ... Exposed steel beams and columns no ceilings, building site fairy lights etc. But they have been allowed/managed to keep some shops open. 'Elf and safety should be having a field day - those steel beams should have 2 hours fire protection around them for starters. If there was a fire... (oh well, money talks).
As you know Guildford has lots of "expensive chimney pots" as we used to say, so we are luckier than some and it will probably survive longer than others due to it's well to do population who seem to love shopping.
The local cognoscenti know that we produce a quality PC product. We can it tailor to their needs and provide them with a new machine that is just switch on and use (rather than having to go through 3 hours of barely understood on screen instructions before it is finally "ready" :)
Only small companies can do this type of thing - the "Main Stream" and on-line retail is totally devoid of any such service barring a few specialists - and one of those went bust recently.
@EK - There two things going on as Bill points out - upmarket customers don't suffer as badly as the middle or lower at least not immediately - they have "backup money" so their lifestyle continues initially like Wile E. Coyote going off a cliff, it takes a while to realise that gravity will have its way. The Chavs (can't, don't) save so have no momentum and fall immediately. If there is a £10.00 a week reduction via benefits or taxes, the effect is immediate and they are straight down to the pound shops.
And then what do I read..
ReplyDeletehttp://www.bbc.co.uk/news/uk-politics-13952431
Including:
Councils will also have the power to borrow against business rate income to fund local development.
Arrrgghh! They'll do it too! More now, now, now with More borrowing so we all lose out by whatever the banks make!
and this:
Mr Clegg will tell the LGA conference in Birmingham that councils currently control less than half of their budgets, but with the localisation of business rates, that could rise to 80% or more.
It'll just make it worse, more opportunity to waste it on pointless and expensive "initiatives".
there's something odd going on in shops -- why are so many of them rubbish in the way described. My town is twickenham which has the deadest of dead town centres :-( :-( but even there, surrounded by charity shops are one or two jewels - eg the fish-shop which is packed from morning to evening selling a vast range of high-end produce. The reason isn't hard to fathom: the product is good and the service is good. But with the example of how to run a shop right there for people to see, why can't people easily copy it.
ReplyDeleteThanks Timbo.
ReplyDeleteCU - The high street can adapt. Replace boarded windows for pound shops, squat shops and charity shops and things don't look so bad. It's not necessarily the case that it has to survive. Newton Abbot and Paignton are starting to look destitute.
I fail to see how shoppers who have withdrawn from shopping because they are strapped are going to return if the quality goes up. They need pay rises and jobs for that to happen.
BQ - but I do go everywhere - and agree with you re Guildford vs Kingston, which is a great, compact centre.
ReplyDeleteThose compact centres can generate the critical footfall which will be necessary in the next few years. Places which will really suffer will be those where retailing is scattered - a smallish high street and 3 or four small retail parks, none big enough on their own to generate the critical mass, but just scattered enough to make walking or driving between them a chore.
Gloucester is such a one - the Gloucester Quays development was struggling two years back, as was the retail zone opposite it.
But the real nightmare I looked at a year or so back was Kidderminster - a High St with loads of empty shops, a hideous central retail development (the Swan Centre) with plenty of empty units, and 3 scattered retail/parking zones - Morrisons/B&Q, the Debenhams area, the Mill Lane retail park. Too far to walk between them, too much hassle to drive.
I took loads of photos that day (can't now remember why I was in the area - oh yes, a really good value source of stainless steel flues for woodburners) - and at some stage I'll post a Kiddy version of The Empty Shops of Bromsgrove.
Laban: Agree with you about all of these except Gloucester quays, for which I have only seen the glossy brochures. - Bristol quays {can't remember its name now} is a decent new development, but has damaged the older high street and shopping centre.
ReplyDeleteThe Midlands has plenty of those aging retail centres/high streets.
West Brom, Sutton Coldfield, Redditch..Coventry
A very good example of a regeneration is Two rivers at Staines.
Staines was/is one of those towns where house prices are high, on the river Thames, good jobs from transport and excellent transportation links. Yet it was a dump. Long neglected , with an early, dark shopping centre.
The development of a new large retail park and leisure complex is directly adjacent to the high street. Part of the rejuvenation was pedestrianising the high street and tidying up the main , old high street.
Its been very successful and has moved the town into the 21st century.
Its not to everyone's taste. It doesn't have the quality of stores of nearby Guildford or Kingston,Windsor or Reading but compared to its rivals at Shepperton, Sunbury Cross, Walton on Thames, Its light years ahead. And thats reflected in its rents.
Botogol. Twickenham! That has been a pig for decades. Why is it these beautiful, wealty{ish} towns can't get it together.
ReplyDeleteThe hospitality isn't up to much either. I used to buy pinball machine parts in Twickenham. That shop was in the middle of the high street. How could a niche, arcade renovations,gaming machine shop be in the middle of a high street?
Twickenham is always going to struggle with the superlative Richmond so close by. But it doesn't even better the lamentable Hounslow.
Pinbal! whooo! brings back part of my misspent yoof! Tommy: Eat your heart out! :))
ReplyDelete