Tuesday, 11 March 2008

Downturn in retailing - an opportunity?

The worry on the street is that there is a two-pronged attack on the strength of retailing in the UK; the global credit crunch has yet to fully impact on these shores - but surely will, and the the latest KPMG/BRC figures indicate a slowing spend in February.

Ordinarily I share the concern of others when viewing these sorts of single month statistics, but they do seem to be indicative of worrying trends spread over a greater period, and especially for SMEs. Given the trends of the past few years with the growth of the big food groups, there are considerably fewer SME retailers in the food and drinks sector - and this appears to be the only sector in real growth currently. There were other statistics out last week that indicated a change in the spread of spend giving the discounters and value stores a larger market share which complements the signals in other sectors that without discounting many people simply are not spending, and certainly not in sectors such as clothing. This may mean that SMEs are more vulnerable, but it may also provide a series of opportunities for partnerships with centre owners and local authorities to secure 'nursery' areas in town and city centres with advantageous terms to help establish new businesses which will bring a real economic benefit for the local area.

Jennifer Creevy in 'Retail Week' is saying that there is a glut of new space coming onto the market in new retail schemes in centres. Sir Stuart Rose is saying that he expects the latest retail downturn to last until 2011. It is reasonable to expect then that many firms who might have been expected by landlords to take space in these new schemes will not be doing so. That poses a threat to the viability of the schemes and to the town or city centres in which they are placed. There are new entrepreneurs coming to the market all the time, who are not in a position to take space in these new centres - but what could be worse for a landlord - reduced rentals to support new retailers for a fixed period, or no tenant at all? What could be worse for the local authority - reduced business rates or the thought of no rates from active retail businesses at all?

Time to take stock and have contingency plans in place for town centres and shopping malls - create the nurseries to provide the much needed nuturing grounds for the next generation of entrepreneurs.

No comments: