Great British of the
Government to address the issue, but nearly two years on, the future of the high street seems bleaker than ever. One in nine high street shops now stand empty as competition from online retailers remains fierce and consumer spending continues to be hampered by the poor economic climate. he high street’s disastrous start to 2013 looks set to force the Government into adopting some of the aggressive retail reforms called for by TV personality and sector expert Mary Portas. Already this month, the movie rental chain Blockbuster is to close 129 stores and the 78-year-old camera empire, Jessops, slid into administration. Last week, they were joined by HMV, the country’s biggest CD and DVD seller with 223 shops nationwide, though there are hopes that a buyer will be found soon. Some rumours have even suggested that Jonathan Ross could be part of a HMV bid. The chatshow host has admitted that “some people I know are talking about” trying to take over HMV. Another 140 chains could be in danger, according to experts. Yesterday, it was announced that Hilco, a private equity group which owns HMV in Canada, is interested in several of the stores. The question vexing retailers now is: what happens next? This spring, the Government will respond to the 28 recommendations made in an independent report by Ms Portas, which looked into how to rescue the nation’s ailing high streets. The Future of the High Street report was commissioned in 2011 as pressure mounted on the
Some of the recommendations included making it more difficult to gain planning permission for out-of-town shopping centres – which were originally blamed for ruining the high street – as well as suggesting that larger retailers should support and “mentor” local businesses and independent retailers. But a recent report suggests
“[the high street] will always lose out” that the recommendations cannot be implemented soon enough. Insolvency firm Begbies Traynor, which specialises in corporate recovery, said in a report last month that there will be a rise in high street shops facing an uncertain future. There are currently 140 retailers on the firm’s “critical watch list” which Begbies Traynor believes will not survive in their current form by the end of the year. “It is inevitable that there will be further casualties in 2013 which will add to vacancy rates and hasten the decline of some high streets,” said Joseph Robinson, lead consultant at retail consultancy
Conlumino. There has also been an explosion in single-price retailers, such as Poundland, and a proliferation of charity shops which benefit from cheaper rents. Both of which are said to blight town centres. However, there are exceptions. John Lewis, Next, Dunelm, Argos and Sainsbury’s continued to perform well, especially over Christmas, while Primark, the budget clothes store, reported rises of 25 per cent in sales over the festive season. Richard Dodds, from the British Retail Consortium, said: “There is a danger of being overly apocalyptic about what’s going on with high streets. It certainly is the case that lots of our high streets are under pressure: one in nine of our high street shops are standing empty. The retail failings of recent weeks confirm that. But it is the case, still, that 43 per cent of all retail spending happens on the high street. High streets are still a very important part of our retail mix. They’re going to go on to be significant, but there needs to be a lot of action and we need to intervene.” So what can shops do to reverse this trend? Rob Myers, managing director at Ipsos Marketing, said: “On a level playing field, [the high street] will always lose out to the lower overheads and instant search functions of the internet. So high street retailers must take ownership of the shopping process. Go to the Burberry store and you’ll see shop assistants walking around with an iPad under their arm. ‘Click and collect’ purchases also take the pain out of posting and packaging, as a trip to the shops is far more fun than a queue in the post office.”
International marketing expert Anne Marie Doherty examines the globalised nature of the high street LIKE many UK cities, Cardiff boasts a significant presence of international retailers from Aldi to Zara. Despite the recession doom and gloom, Peacocks, headed by its chief executive Richard Kirk, recently announced an increase in quarterly sales of 8.3%, having boosted its margins to improve gross profits by 15.5% during the period. This is indeed impressive, particularly in an increasingly squeezed value fashion market. Adapting to consumer demand, coupled with an internationalisation strategy, is central to their success. Like Tesco, Peacocks has significant operations outside of the UK. However, other familiar retailers
originate outside the UK such as Aldi and Lidl from Germany, Ikea and H&M from Sweden, Zara from Spain and Benetton from Italy.
opening of stores in Romania and Gibraltar also highlight how important its international operations are to its future growth plans.
These companies have come to characterise our major high streets and consumption patterns, and undoubtedly have an increasingly important influence on our lives and spending habits.
Tesco’s recent announcement of record profits of £3.1bn, in the midst of the worst recession in a generation, is remarkable. At home it has been a hard-fought battle with German discounters Aldi and Lidl, as well Morrison’s and the Wal-Mart-owned Asda. Arguably though, it is Tesco’s global business that has allowed the retailer to post such impressive results.
While familiar names to us in Wales, these companies are ultimately defined by the fundamentally global nature of their operations. As international operators, these retailers are not completely reliant on one national market for success and survival. Through the internationalisation of their businesses, they can spread risk while bringing consumers the benefit of their globally powerful supply chains, which ultimately results in lower prices. Peacocks enjoys strong sales from its international stores in Russia and Ukraine and its recent
Its international business contributed 51% of the growth sales and 45% of the growth in group trading profit. These figures, however, exclude its US operation Fresh & Easy, opened in November 2007, which posted a loss of £140m. This serves to highlight the challenges of internationalisation, even for the most experienced and successful of international operators.
The Big Debate: putting
Sandra Dexter, National vice-chairman, Federation of Small Businesses The Mary Portas review has brought “high streets” very much into the public consciousness and, inevitably, the question: “Are big supermarkets putting small shops out of business?” has to be right at the forefront of that debate. However, the question isn’t a simple one and the answer isn’t simple, either. Big supermarkets are very much a fact of life, a great convenience for most shoppers and a dominant force in local retailing. So, why do shoppers favour supermarkets? Everything under one roof, plen-
tiful free parking, easy access and cheapness, I believe! Let’s look at these issues one at a time. As I write, the news is still reverberating with more and more horror stories breaking daily about horse meat being found in beef products. Your local independent butcher can tell you exactly where his fresh meat comes from and what’s in the minced meat he sells you. There are actually around 2,300 varieties of British apples, but can you find one British apple in your local supermarket? From South Africa, from Israel, from South America, yes, but rarely from Britain.
Independent surveys consistently show that, when asked, shoppers prefer British farm foods, although supermarkets seldom give you that choice. When supermarkets do buy from a local supplier, it is generally sent many miles away to a regional distribution centre, before being sent back to the local store. This is environmental madness in this age of global warming. “Selling local produce puts twice as much money back into the local economy,” says the New Enterprise Foundation. Shop with your local independent store – Keep Trade Local is an FSB campaign to promote this – so that the environment and the local economy will both benefit. I believe you’ll also buy tastier, fresher local foods. The Mary Portas review has brought “high streets” very much into the public consciousness and, inevitably, the question: “Are big supermarkets putting small shops out of business?” has to be right at the forefront of that debate. However, the question isn’t a simple one and the answer isn’t simple, either. Big supermarkets are very much a fact of life, a great convenience for most shoppers and a dominant force in local retailing. So, why do shoppers favour supermarkets? Everything under one roof, plentiful free parking, easy access and cheapness, I believe! Let’s look at these issues one at a time.
big supermarkets of business?
No Richard Dodd from the British Retail Consortium
centres, when they build new stores.
Who holds the power in retailing? It’s not supermarkets. It’s not regulators or corner shopkeepers. It’s customers.
Seeing retail as some sort of battle between small and big is a mistake.
Supermarkets have grown because, over the last 30 or more years, customers have chosen to use them. Millions of people like the convenience, range, service and prices being offered. In the 1950s households typically spent a third of their income on food. Now it’s just a tenth – leaving us with more money to spend on things we want and to meet other demands on our budgets. It’s the growth of supermarkets and the resulting efficiencies and economies of scale that have delivered that. Retailers are huge providers of much-needed jobs, nearly 3 million in total with the big four supermarkets alone now employing over 760,000 people. BRC figures show that, despite tough economic conditions, retailers are continuing to invest in people, with supermarkets the most likely to be adding new jobs. That supports the communities in which those people work, live and spend. And supermarket investment is often key to wider economic regeneration. New supermarket developments tend to be in or near town or city centres. They increase the overall critical mass of retailing appeal of that location, giving customers extra reasons to go there, and benefiting existing traders. Plus, retailers often contribute to things like road improvements, even community
Attractive and vibrant shopping destinations come from a diverse mix of national names and local independents appropriate to the sort of place it is. Small retailers are unlikely to be able to compete on price alone but they can, and do, compete by catering for particular customer needs and lifestyles, whether on niche products or by providing extra advice and personal services. In some retail categories, specialist food for example, numbers of independents are actually going up.
Who holds the power in retailing? It’s not supermarkets. It’s not regulators or corner shopkeepers. It’s customers. Supermarkets have grown because, over the last 30 or more years, customers have chosen to use them. Millions of people like the convenience, range, service and prices being offered. In the 1950s households typically spent a third of their income on food. Now it’s just a tenth – leaving us with more money to spend on things we want and to meet other demands on our budgets. It’s the growth of supermarkets and the resulting efficiencies and economies of scale that have delivered that.