Retail Speak

Business Rates

2010-09-23T16:42:00.006+01:00

It is not the first time that I have commented upon business rates but it is worth mentioning them again because the BRC have issued a warning about the impact of rises. I believe that the BRC members are well capable of withstanding some rises but that is not the issue with Business Rates, or Non-domestic rates as they are more correctly known. The issue is the manner in which they are assessed and the apparently spasmodic manner in which the revaluations are applied. There is also a serious associated issue about appeals; the sad fact is that it is not the average BRC member who is most at risk with this arcane and discredited system it is the smaller business (SME) - and I believe that I can demonstrate that fact.

In a paper that was published in July 2009 (Hallsworth A and Orchard J, 2009, Retail regeneration in Southampton: seeking the bigger picture, Journal of Place Management and Development, Vol 2 Issue 2, pages 140-153, Emerald Publishing) , John Orchard's work in reviewing the entire functional city centre of Southampton demonstrated that SME businesses are most at risk of higher relative valuations and are less likely to appeal. He demonstrated that the valuations are not correlated to position within the town or of any other factor that might be regarded seriously as relevant to such a valuation. In more recent work in Barnsley he has identified that the highest rateable value rises for the current 2010 list were applied to SMEs in a street which is demonstrably not a thoroughfare that would ordinarily attract an increase in excess of 70%. This apparent unfairness is not justified but when challenged various authoritative sources have rejoined that there is a discount for small businesses!

Well, they are right of course, there is a small business discount. The question then is "Is that the logic of government that you provide a hefty discount and that justifies a even more hefty rate hike?"

The problem lies with the arcane system of basing a tax upon a notional rental value. There is a correlation between the paper value of properties owned by landlords and the rental returns that they expect of them - true it is in some degree mitigated by market forces, but when the main drivers for decades are the landlords with 'upward only' rent review clauses then it is not difficult to see that market forces are being manipulated against the interest of just one side in the contract. I have listened to the arguments from landlords saying that if retailers had only one price rise in five years they'd be wanting upward only clauses, but that, put simply, is hogwash. If retailers charge other than a market rate then their customers simply go elsewhere - if a retailer who is entailed in a ten year lease, or longer, then they are not in a position to just change landlords, but they'd have to pay higher rents irrespective of the condition of the trading environment - and they would have a higher rates valuation because the rents are higher.

Many smaller businesses, wishing to ensure the survival of their businesses for a long time (and as a retirement fund) purchase the freehold of their businesses - in these cases the 'tone' of the area is applied, meaning that the landlords of other shops, who are not retailers themselves, will effectively force a decision of a rateable value on the landlord who does happen also to be a retailer. If this new government really wants to show that it is in support of small businesses then it will radically overhaul the business rates system and provide a taxation system based on matters that businesses feel that they have some control over.

Local Enterprise Partnerships

2010-08-24T23:45:00.003+01:00

During this past week there has been a vast amount of comment being made about the forthcoming launch of Local Enterprise Partnerships (LEP) which the Government has announced will replace the Regional Development Agencies (RDA) during 2012. The RDAs have had a chequered history as have other agencies that are being scrapped by the new Government in its bid to cut the expenditure plans from what they perceive as unnecessary gatekeepers for public funding.

This blog is not going to make a comment on the rights and wrongs of the scrapping of the RDAs since I am ambivalent about them - they have been costly and overly bureaucratic, and at times in my own dealings with them have actually totally lost sight of the funds and the end-uses; but they have also been able to act strategically across a region which has sometimes been immensely beneficial.

In the time beyond RDAs we will have LEPs; these we are told will be made up of councillors and of business leaders, led by the Council Leaders and they will have a geographic coverage to suit local needs but will be based largely on the major cities of England (Scotland, Wales and Northern Ireland having devolved administrations will thus be able to think and act in a regionally strategic way, but not so England). They will, we are told, be able to cover natural economic areas. I have to report that I am deeply unhappy about these airy fairy definitions and have, elsewhere, predicted that in all likelihood the development of LEPs will pass through a number of stages before it is realised that they will not deliver effectively to many places and eventually they will go the way of the RDAs, but with less dignity.

The first stage, which is where we are right at this moment, is the horse-trading stage. Following an invitation from Government, local authorities up and down the land are pausing to consider the best approach to the problem - if any. They are considering the problem of critical mass, to address the strategic planning issues; they are considering bids merely on a lone borough basis to offset the potential loss of influence if the more dominant neighbour in a city region becomes the dominant partner in the local LEP; they are even falling out with each other as they draw up newly imagined boundaries between 'natural economic areas'. Imagine, the Government believes that there is an actual definable concept as a 'Natural Economic Area' within the scales that the LEPs will be working. I wonder how those LEPs with multiple local authorities in membership will divide the council representation, and will the Leader of the Council that is dominant in the particular 'City Region' automatically be chairing the LEP? What when Eric Pickles vision of elected Mayors for all is a reality, will we have the likes of the Mayor of Barnsley battle it out for supremacy with the Mayor of Rotherham whilst both looking over their shoulder for the better equipped Mayor of Sheffield?

The second stage will be the introduction of the 'business leaders into the equation - I have yet to find an easily indentifiable 'business leader' who would, in my mind, be those who have made significant sums of money in their businesses or contributed significantly to the development of a tangible business idea or area, or have a proven track record in understanding the economy in their geographic area and the ability and erudition to champion the issues. My guess is that the 'usual suspects' in any area will be brought on board in the same game of jobs for the boys (or girls) but in a less prestigious location than the current RDA office facilities. How these people will be selected and how their performance measured is seriously unclear.

The third stage will be more horse-trading - where the pet schemes of the principal stakeholders of the LEP will be aired and haggled over to determine which of them will be most likely to gain the most value for that particular LEPs share of the £500 million pot. Naturally these decisions will be scrutinised but to what extent remains a mystery. Currently the monitoring is done by a range of organisations - too many in fact, but they include the Audit Commission (do you remember them, they were set up to monitor local authorities in the wake of the excesses of Liverpool City Council during those heady years of the Derek Hatton era - but they are being axed, so Derek could make his comeback on an LEP any time soon!); the RDAs own monitoring teams (but, of course they'll be gone); the Government Offices in the Regions have done some of this work (but, hang on, they're being scrapped too!); so it'll all be down to Whitehall then - that's Ok then, we know how they never get it wrong.

The fourth stage (which could start even before the third stage) will be the problems of the administration of the funds and the servicing of the LEP itself. It will not be funded for its own organisation, so the constituent local authorities will have to service them and provide the administration support. In a period of severe fiscal constraint in the town halls this must have an impact - something must suffer. I fully understand and acknowledge the statistical arguments about inefficiencies in local authority administration that have been much discussed in the press during the past few weeks - I am wondering how this will help in that regard. The councils are already giving notice that jobs will be made redundant, even before the autumn review that the Government is undertaking. So there is a double whammy - have fewer people and have them double up for the LEP.

Then the fifth stage - the bit where the work of the LEPs begins to be measured. This will be the bit where the publicly announced spending plans will become an actuality. Remember that the only PR people will be those employed in the reduced PR departments at the competing town halls - it will be interesting to see what happens, especially when the high profile projects fail to materialise - and that is not a cynical swipe against the proficiency of the embryonic LEPs but a pragmatic expectation that with complex projects things can go wrong, and statistically somewhere it is highly probable that a high profile project will fail.

The Government is taking away Quangos and replacing them with - well, Quangos on the cheap! It will be of immense interest to dispassionate spectators to see how the competing interests and aspirations between the local authority members of these bodies will compromise; it will will be similarly interesting to see how strategic regional planning takes place in this environment. As a perfectly passionate spectator I have no less interest but may be considerably more alarmed at the potential for real problems.

Changes in town centre management - a silver lining?

2010-07-20T22:59:00.003+01:00

For some weeks now Welbeck has been exploring the range of difficulties that will impact upon the management of town centres because of funding constraints which are evolving as local authorities gear themselves up for the Government's spending review in the Autumn.

There seems to be a great deal of real worry amongst staff, managers and elected members in councils across the land - here they talk of probable job losses, of retrenchment of programmes and cutting services. Welbeck is not entirely convinced that there is not actually a silver lining in this cloud somewhere - not for any staff losing their jobs, which is an awful experience at any time, but for the town centres and actually, in the longer term, for councils too!

In any period of relative prosperity processes and organisational traits develop in many larger organisations that in more straitened times would not be adopted for reasons of cost. That's not to say that anyone is necessarily guilty of profligacy but if it make life easier, why not take a more costly but eminently affordable route. When the economy hits the buffers then things change, and they change rapidly. The most important thing at that point is to be clear about what is necessary - because it is all to easy to make the opposite mistakes during periods of constraint and the proverbial baby gets ejected with the bath-water.

The challenge now for town centre management schemes and for their managers is to produce the levels of service that you would aspire to in the good times but without the cost implications. The issues for TCMs and their authorities are many, but especially include communications with all stakeholders - from council tax payers (and voters) to businesses and other organisations operating in their areas, especially those with whom they are in some sort of 'partnership' arrangement; they include also the need to support drivers to the local economy; they have myriad legal responsibilities as an authority, alone or in concert with other statutory authorities, which each bring a crop of underlying problems that are aggravated by a reducing expenditure budget. During the past few weeks Welbeck has been undertaking an investigation that is highlighting some interesting conundrums and for which answers may already be at hand. Watch this space, or if you are a local authority or other major town centre stakeholder contact us for a more in-depth conversation.

VAT crisis?

2010-07-20T22:08:00.005+01:00

At the time of the 'Emergency' budget, the Chancellor of the Exchequer, George Osborne announced that the VAT rate on standard rated goods would rise in January 2011 to 20%. Without missing a beat there followed the predictable shouts of horror and predictions of gloom from among many in the retail industry. On 23 June in the Retail Bulletin there was a note saying that 81% of UK retailers believed that the Government would increase VAT and that if this were to happen then disaster would be manifest.

The costs of changing the rate in practice on the shop floor price indicators was cited as one of the major and most costly difficulties with the suggestion that one in fourteen retailers would slash jobs being another. These rather horrifying predictions were dumbed down a bit post-budget with the BRC amongst others saying that the retail industry did not want the rise but realised that the Government had no easy options - but jobs will be hit, consumer spending will be hit and these would contribute to a slowing of the pace of recovery and also fuel inflation. OK, so now that the dust has settled, the VAT increase will be with us in six months time; what is really likely to happen?

Clearly there is no precise model on which to base a fully reasoned appraisal, and it is entirely reasonable to suppose that the rise will have some effects. The effects on the retail industry concerning the implementation are real, there is always a cost when the standard rate of VAT is altered, but any retailer will tell you that a rate change is a real possibility at every budget and this risk therefore ought to be part of every retailers normal risk management strategies with their sytems geared up to enable a cost efficient rate change implementation. If it really is so burdensome that the implementation would take months, as some have suggested, then their systems are either poorly devised or badly executed.

Losing jobs is an emotive threat. I don't doubt that there will will be implications for jobs in some sectors, but mostly those firms who lay people off will be doing so for reasons of corporate efficiency rather than merely the impact of VAT rises - I have seen no arguments put forward yet that are not open to serious question except the more general trend arguments that the rate rise will impact on discretionary spending and that this and related issues may depress the levels of trade in the short term sufficiently to warrant reductions in overall staffing. Even with these though, the most efficient of firms will be able to withstand the impact with perhaps the need to minimise hours worked rather than actual job losses.

It is easy to understand why the government has decided to take this step, and it is only the cynic deep inside me that believes that at least part of this has been to provide the government with a wonderful tool to use towards the next election - the announcement that the fiscal measures taken by them have been gloriously successful and they are now able to reduce the rate to say 17.5%, which will be hailed by all as a miracle - and will, I guess, promote far fewer complaints by retailers about the costs of implementation than the rate rise has done.

Reporting Trade Figures

2010-05-11T17:24:00.002+01:00

I am sorry to have to report that those upon whom we rely on much of our news and information seem to have developed a process by which they inform us of 'facts' that are nothing more than speculation.

For example, Retail Week is reporting that a dip in the 'retail sales' in the past week or so was due to pre-election jitters. It is possible that the election was a factor, but to what extent and in what way that effect was felt would need to be researched thoroughly to determine anything approaching a precise conclusion. What would be easier would be for the journalists concerned to read the work of their colleagues - for instance the 'ash cloud', the outpourings of the volcanic eruption in Iceland is stubbornly refusing to abate and in the Retail Week it is reported that a 16% fall in international trade through the airports can be directly attributable to this natural occurence.

I have absolutely no idea what percentage of the whole of the UK retail trade is made up of airport shopping, but my guess is that it is a factor and we must remember that the context of the 'dip' is only 0.2% against the previous figure. It must be remembered also that these figures being reported are about the month of April - a notoriously difficult month to make comparisons with on a year to year or a month on month basis - the Christian calendars make sure of that! The date of Easter, being a truly movable feast, ensures a marked inconsistency in results every year! In fairness to Retail Week, they do mention that Easter came early this year, but have they considered providing a measure that truly encompasses the entire Easter period (by that I mean the period in which Easter falls in every year in the Western church calendars, probably taking in all of March and April together!)

Another factor is the weather - this is the UK and what we can rely on in March to May is unreliable weather patterns. This has nothing to do with climate change, although it too may be making its mark steadily, incrementally, year on year, but at this time of year with the days getting longer and the ground being warmed for longer, but with the danger that slow moving high pressure weather systems in the North Atlantic will bring winds across the still cold northern land masses of Scandinavia and the ice fields of the Arctic; the weather is inevitably going to act in the most irritatingly changeable manner at the most inconvenient of times. This too will affect retail sales - especially if all the goods from the new Spring collections are pushed to the fore and the weather suggests that snow boots would be good.

Then there is the 'sales' - the effect upon the general High Street sales performance is inflated or deflated by the proportion of outlets with 'sales' in progress. Journalists are wont to cite exceptional sales figures in the midst of a traditional 'sales' period, so why is there a reluctance to report when the opposite may be true? Is it because they really have bought in to the nonsensical belief that if you mention key words then magically they become true - omitting in consequence the mention of: recession, depression and others that describe a perfectly ordinary state for a particular part of any economic cycle. This was not a flippant statement, we were told in the early stages of the recent recession by leading BRC members that we must not talk ourselves into that recession - as if retailing was the core economic activity on a global scale that dictated these things and that there was actually something that retailers could do to prevent the myriad problems in the global economy.

The point is that these 'factual' statements about the retail sales are probably based on limited sources - i.e. BRC members and other larger groups whose EPOS systems facilitate data analysis but excludes SME retailers whose turnover experience may well be at odds with their larger neighbours. These statements do not acknowledge the composite nature of economic determinants in a field as narrow as 'retail sales' and the underpinning evaluation of the figures appear to be based on a limited understanding of the nature of them. I suppose what I want to see is either a more realistic assessment, a health warning about the limitations of the data and synthesis or an altogether less grandstanding approach in what I have come to think of as sensationalist journalism.

Expert advice

2010-05-09T19:05:00.002+01:00

In these straitened times it is very possible that your skills as a retailer will be tested well beyond their normal range. It is not something that you should give yourself a bad time over, rather you should consider a review of your business with a view to making the best of the opportunities that will be confronting you and minimising the threats that will jus as assuredly be coming along.

Welbeck's advice is to make use of those funded opportunities that are available - speak to Business Link in your region or ask the local Chamber of Commerce about other agencies who might help. If you are lucky enough to obtain funding for your business review or your development idea, that you insist on a specialist retail adviser to help you - all too many advisers are generalist business advisers and the needs of the retailer are often too specialist to be dealt with by them, although they are really useful if you want generalist advice such as 'how to develop a business plan' or 'how to develop your IT skills'.

These times will present peculiar circumstances, specialist retailers with success in steering businesses through previous fiscally doubtful periods will probably have the skills that you need to bolster your own. Don't be embarrased about asking - no-one can be an expert in everything, and yet most SME (small to mediun sized enterprises) seem to believe that others will judge them harshly if they admit to not having a particular skill - nonsense, you just ask. It is those who do not ask that will probably not survive.

The people have spoken

2010-05-09T18:34:00.002+01:00

The election has been and gone, and the country still waits with bated breath about who will govern in this forthcoming Parliament. This blog has no interest in the partisan politics of the past few months but has a great interest in the state of the economy and about the nature of the threats and oportunities that face our small retail businesses in the UK.

It is to be hoped that the outcome of the 'behind closed doors' deliberations between parties will eventually result in a stable government and, a government that understands the pressures that are already applying themselves to small businesses.

The most important thing for SME (small to medium sized enterprise) retailers is to be positive in your marketing and cautious in your expenditure. The need to control costs is paramount for those that intend to survive the coming weeks, months and years. Welbeck is willing to buck the trend amongst commentators in the world of retailing and to be honest in the appraisal of the situation. There is no point in following the advice of ccertain prominent figures associated with the British Retail Consortium and accepting that to face reality is to talk oneself into a downturn - we have already been there for many months already and it will not ease by hiding from the facts. What is essential is to measure the impact that a protracted period of fiscal constraint is likely to have on your own business (you can bet that the BRC members are doing precisely that!)

Consider the effects on your customer base of the probable reduction in the number of public employees - if your business is reliant on a customer base in which public and civil servants are a major factor, then it is probable that your trunover may be affected unless you change what you do. Consider the effects of increased pressure on your supply chain, especially if it is reliant on the UK or other nations where the fiscal pressures are most pronounced. Will the suppliers be forced out of business, will their terms alter unfavourably towards your business - have you checked to see if your supply chain can be made to work better for your business? Consider the effects of any increases in taxation on your business - VAT, Income Tax and National Insurance, Corporation Tax and taxes on fuels and commodities such as alcohol.

It is possible that none of these will have any impact at all on your business, but it has to be admitted that that is extremely unlikely. It does not mean that we all need to panic and run for the hills; it does not mean that we need to give up now ( a tough period in your own business is better than an even longer period on diminishing state handouts!). What it all means is that we all need to be extremely conscious of carrying out practical risk assessments on our businesses.

Take a look at your processes are they cost effective and achieving what you need them to? Look too at your supply chain - it's amazing how often SME businesses fail to negotiate, or even to look beyond the suppliers that they have used for years - now is not the time to base buying decisions on so-called personal friendships; personal friendships are for personal life not for business life.

It is sensible to review all of the costs in your business to ensure that the investment that you have is being made to work most effectively - question and challenge every expenditure and keep a close eye on the cash flow. That is not to say that you will not sepnd, that would be inviting a business death by a thousand cuts - you must still invest; invest in marketing (but remember to measure the performance of your marketing activities so that you repeat only those that give a good return on that investment), any business that fails to communicate with its customers will simply ...fail! Invest in your staff - that does not mean pay rises all round and taking on extra staff, but it does mean ensuring that they are performing to the best of their abilities and achieving what your business needs them to do. The investment will come in well targeted training, in building upon the skillsets that individuals have and in rewarding improved perfomances - even if only with a very loud thanks!

Welbeck will be watching the state of the High Street with extra interest during this period.

Public Procurement and SMEs

2009-11-17T17:25:00.003Z

Has the time come for a fundamental rethink in the realms of public procurement. I remember a time when small businesses were able to 'bid' for small projects and small supply tenders by representing themselves to the 'buyer'. There was a need to provide evidence of being able to provide value for money, but since, so very often, these small bidders were also local ratepayers there was an inbuilt sense of a need to provide value for money.

It would be naive to believe that simply because someone was local that they were above a bit of 'adding value' to the end accounts, but there were also local remedies and blocks to that happening. Now though, as with so many things in this post-neo-liberal, neo-hysterical world, there now has to be so much regulation that a completely new industry is being born. Doubtless the European Union will be blamed for this shift in attitudes and for the adoption of this new paradigm supposedly protecting public funds - but the British Government are quite likely to be the greatest of sinners in my opinion.

The whole shift seems to have been accelerated by the hysteria whipped up over the scandals of the Members of Parliaments' expenses and the even more scandalous underwriting of the British arms trade that has a full culture of over-runs, over-charging aimed at the curiously complacent British Government whose complimentary culture of over-spend and under-manage has left massive holes in the UK balance sheets. The press eventually begin to wake up to these facts and with customary self-righteous indignation splash near hysterical headlines across their front pages. The reaction by Government - simple; they make it next to impossible for any small business to make a successful bid to any sort of tender. They make the paperwork impenetrable and the hurdles too great for anyone who has not got a trading record dating back to the last century - even though many are well funded and have vast experience.

The latest wheeze though, is the icing on the cake. In the past few weeks I have been inundated by adverts - usually from the Government funded Businesss Links, offering me training courses on how to cope with the paperwork (which confirms the levels that are now in place!). These courses vary in price and location but the cheapest that I have seen is about £75. I wonder how many take up this amazing offer - I must also wonder why it should even be necessary!

No taxation without representation!

2009-11-10T12:46:00.007Z

It is good to hear that at least one MP has been on his feet in the house telling all that will listen that the current system of business rates is arcane and far beyond its useful life.

I am carrying out a study in a small market town for which an analysis of the rateable values was essential for a number of purposes. I noticed when reviwing the 2010 list that there were some anomalies and rang the Valuations Office Agency to try and discover a explanation.

The anomalies were simple. This is a very small town with one road acting as the primary shopping street with a traditional market place on one side and the remainder of the town's civic and other activities on the other. This shopping street goes through three name changes in the space of less than half a mile, and it is impossible to see, today, why the name changes were imposed at the points that they were. Let us call them Hill Road, Shopping Street and High Street.

Just off of Shopping street is the main pedestrian entrance to the markets and on the opposite side of the street is the most important secondary road which houses the civic offices, post office, the parish church and the cinema. We'll call this Cinema Road.

The busiest approach road into the centre of town is up Hill Road from the river valley below lying just north of the town. Through this valley runs a major trunk road linking two major conurbations. The Hill Road/Shopping Street/High Street route leads circuitously to another important town and Cinema Road leads to the nearest City, about twelve miles away.

The 2010 rates list shows that if your shop happens to be on Hill Road or Shopping Street then your rateable value is likely to have increased by 20%; if on High Street it is likely to have been increased by around 20% if in the first three or four shops closest to Shopping Street. Oher shops in the town have been increased by a staggering 0% - nil! Zilch!. I am quite sure that those retailers in the latter group are quite pleased but, why the level of difference. Why not an area where the average was around say, 10%?

The VOA oficer, with whom I spoke, told me that it was because the valuations of rentals in the area in 2008 were indicating these changes. I questionned him about the reasons that might have existed whereby a property might have had a rental increase of 20% over its immediate neighbour. He was insistent that this data was based upon rental returns and information supplied by landlords and tenants in the area, and that there would have been a factor pertaining in 2008 that would have affected these figures.

I have carried out a reasonably thorough investigation, talking to retailers, commercial agents and local estate agents, talking to the local council and looking through three or four years worth of council and newspaper reports and I can find nothing. There is no evidence that would support this kind of differential. A cynical person might opine that the VOA were guaranteeing themselves a job because of the number of appeals that this kind of differential would generate? Not that I would hold any such thought, but you can see where it might come from!

The fact that a system that is based on rentals; rentals that are themselves often artifically inflated by upward only rent reviews; and that these rentals are measured in a time of significant boom, only to have the resultant valuations implemented during a period that is dominated by a long and deep recession a couple of years later, is careless at best. This is an issue where the size of your business is not a determinant of your opinion about the system - retailers believe this to be an iniquitous system - members of parliament believe this to be an iniquitous system. Who is it, I wonder, that believes this to be a good system? The Chancellor I must presume, and the Prime Minister - but who else?

The time has come for root and branch reform. Let us question the validity of the basis of the valuation; let us question the concept of setting a universal business rate; let us investigate the formal relationships between business and government, at all levels, in terms of taxation and representation; most importantly, let us free up the system so that local needs are met by local decision-making, supported by regional strategies developed in concert between locally elected bodies. Whatever system is adopted it must be fair and equitable to all sizes of business and not with the current need to employ professional intermediaries to argue the case with a central government department - the current system has an in-built bias towards those businesses who can afford that professional input and is especially bad news for SME businesses who are consequently disadvantaged..

Customer Service

2009-10-23T11:50:00.004+01:00

It has been a while since my last posting, mainly because, like everyone else at this time, I've been out there chasing ever less business opportunities. Which is why I was surprised to read in an article in the Retail Bulletin this morning about the number of businessses who have indicated in a survey that they intend to cut customer service training and also customer facing staff.

If there was ever evidence that the accountants rule, then this is it! It is easy to trim away at non-revenue bearing costs with an entirely clear conscience. But then it is also easy to claim to be a retail expert when things are good and it is a customer boom time. Then things start to go wrong; things begin to get harder and then... Well, in short the real experts come to the fore; they are the retailers who know how to get the best from their staff and who in turn are able to coax the best from their customers - money and goodwill! Retailing is a people activity, on both sides of the counter, notwithstanding the e-tail phenomenon which, incidentally, relies on many of the on-line customers being aware of products seen and demonstrated in-store.

How does customer service affect my sales and bottom line - well let me give you two examples of my own experience in the past week (I have written to the CEOs of both organisations!)
In one store of a large group I was approached by staff but then offered so much unnecessary advice that I felt harangued; the staff member concerned had even continued to pile benefit upon benefit and providing personal anecdotal examples of the benefits even when I had expressly told him that a buying decision had been made. To make matters infinitely worse, he was actually with other customers for the last onslaught of advice and cut across their enquiry in doing so. But the service of this store ought not to be judged by the one over-eager member of staff; so we'll get to the point where my wife and I had reached the check-out and were making purchases. My wife offered her debit card and it was not accepted; the cashier quietly explained that it had been declined but then, to judge by the gormless expression, apparently it was over to the customer. Not, as my staff would have done, ask if we had an alternative means of payment, so as not to lose the sale. It got worse!

Having made the purchase, we moved, as one does, out of the checkout area by moving towards the door on the windowside. The congestion of dump-bins and offers piled high was such that the route to the door was seriously restricted; but to cap it all the most obvious route was blocked by a 'supervisor'. When I commented that the exit was not clear she retorted that customers normally 'go the other way', which would entail re-entering into the main body of the store complete with carrier bags past a range of gondola ends and lots of easy targets for shop-lifters - completely ignoring the fact that it was also considerably further for the customer to travel. I challenged her by asking what would have happened had I been in a wheel-chair; her reply was terse, they too would need to go back. To achieve this the wheelchair user would literally have had to reverse (presumably past a waiting queue) and then change direction to make an exit. It got worse!

Two identical products that I purchased were faulty - something that would have made me, as a retailer, concerned immediately. When I returned the items on a following day the staff member who dealt with the query assured herself that they were faulty and then, she assured herself that I had in fact actually paid for the items. All of which is good practice and the staff member to be applauded. However, to be regarded as good customer service the staff member needed to engage with the customer, to smile occasionally, deal with the customer with good humour (especially when refusing something). Instead, in this case, I might not have existed, she was head down and was very soon completing the process for a refund. No offer of an alternative, no apology for the inconvenience, no engagement whatsoever. Then, as I was trying to engage her with a question and statement about the product, another member of staff, who had apparently been dealing with the cashier's previous customer with a specialist product, strode into view and immediately began talking about the previous customer and her query to the cashier who was supposed to be concentrating on me. This was bad enough, but the cashier, without any reference to my presence; without acknowledgement of the fact that I had been mid-sentence speaking to her; completely without thought, she responded to her colleague and turned her attention entirely over to a problem that had occured with their EPOS data and ticketing during the previous transaction. Eventually she turned to me and off-handedly asked me to sign a couple of slips and the transaction was over. It was a thoroughly bad experience and one which will influence my spend in that store in the future. I will add that whilst I have never rated the service in this chaain as great, the other local stores have never produced such a consistently poor showing over two successive visits.

By contrast I visited a 'local' branch of a major food chain and was really surprised by the attention to customers, which is in itself unusual in these convenience stores. I entered the store and began to look for inspiration for dinner along the aisle that was furthest from the checkout. I quickly made a decision and set about gathering the products that I wanted and started to make my way towards the checkout. I had been aware that staff were busily milling about, filling shelves and productively talking with each other. As I went along my aisle I was conscious of a member of their team quietly singing as she pushed a trolley with goods along the neighbouring parallel aisle to mine and in the same direction. As we were travelling at a similar speed it was not a surprise to find that we exited at the same time, but as I was turning towards her direction she immediately stopped, smiled, said "you go first sir" and let me through without a moments thought. This, I have to tell you, is one of my main criticisms of supermarkets trading through 24 hours - when the staff are filling they very seldom pay any real attention to the needs of the passing customer. Anyway, back to this 'local'; I went to the checkout and there was already a gentleman waiting with a newspaper to pay. I heard a comment of "oh sorry!" behind us and a member of staff rushed to the checkout, apologising as she went that she had not noticed us before - she had been shelf-filling. She immediately started serving the other man and simultaneously pushed the help button to summon another member of the team. This new team member appeared immediately also apologising for any delay as she went, even though the 'wait' was far less than I experience in the convenience stores that are slightly more local to me than this one.

She chatted amiably but was clearly focussed on her work, she was clear in her language and extremely friendly. I left that store feeling that if I have to use a 'local' then I would happily go there again. Strangely, there is a branch of the same 'local' about the same distance from me in another direction and there I have never felt any sense of pride in the work of the staff, nor much friendliness. I think one of the morals to be drawn from the experiences that I have outlined here, is that the mission statements and intentions of head offices and chief executives are not consistently met on the shop floor. This says clearly to me that now is the time to improve the customer relationship, to improve staff training and to stop looking at cost cutting based upon theoretical notions of good accountancy practice - cash flow is king and happy customers provide that cash!

Local Retail Trades Associations

2009-08-27T00:04:00.001+01:00

This week there was an attempt by a local politician in a southern coastal city to try and drum up support for the formation of a local traders association formed from amongst the SME retailers in the area. Why would this be sufficient reason for me to comment? Simple! It was of immense importance and serves to highlight a problem which, if not resolved, will continue to hamper the effective promotion of vitality in our town centres and will mean that Government (both local and national) will continue to fail in the delivery of well meant ideas and strategies.
In itself the meeting was not a particularly spectacular event; low key and poorly attended – in short quite typical for the type of meeting that was being envisaged by its sponsor, a local ward councillor. I know this particular councillor and fully recognise that she is personally committed to the regeneration of the subject area which is the rump of what has been, economically and socially, an enormously important part of the historic city of which it forms a part. The irony is that the prime reason for the dereliction of the area has been because of the planning decisions made by previous generations of councillors, all of whom one supposes were acting in what they regarded as the best interests of the area and of the wider city centre. What is equally clear though is that the very people upon whom the long-term down-sides would fall were not consulted effectively and decisions were made that have undoubtedly blighted the area and paved the way for it to be ‘zoned out’ of the city centre permanently with the attendant drop in local authority expenditure that accompanies that status.

Let us cut to the chase; there is a pressing need for effective communications between planners, decision makers, service providers and all stakeholders representing one part of the community or another. This blog is concentrating on the SME retailer community, if community is aptly applied to this diverse and often disharmonious group. I am not intending to relate the importance of SME retailers to the local economy here, because those arguments have been well rehearsed elsewhere, on this blog site and far beyond. Let us, for the purposes of this note assume their importance. Let us also ask the question about how they are communicated with? They ought to be able to communicate with representative groups – retail trades associations; but they mostly are unable to because they do not exist, or are not active.

Over the years I have frequently heard local authority officers expressing real unfeigned exasperation when attempting to gather real feedback from local businesses about things that were very likely to affect them. I have also known when that exasperation became too much to bear and they simply chose one of two options – they simply did not consult, or they ‘consulted’ with a self-elected person who was neither representative of, nor even aware of the opinions of the neighbouring businesses. I can sympathise with the officers, who having fixed time frames for reporting back to members choose the line of least resistance – the social infrastructures rarely exist in towns for these small, often micro-businesses, to be part of an effective group; they cost in terms of money or of time, or perhaps of both – and whereas there is often a willing horse to carry the immediate burden that comes with trying to disseminate information to these diverse and geographically well spread businesses, that horse will become jaded and less willing when the inevitable happens and the other traders begin the process of shooting the messenger when bad news is disseminated. Changes of bus routes, closure of roads, planning issues and a whole myriad of details that the local authority are responsible for and which will have an impact upon those small businesses.

There are, I know, many organisations who claim to be representative of SME retailers, the problem is that they are usually unable or unwilling to be useful at a local level. There are still many local retail trades associations covering discrete geographic areas, however, these tend to be under-funded and reliant therefore on the goodwill of otherwise busy activist members who invest a great deal of time and resource into ensuring that the area is well served. Where these exist, they can be very good, but they are sporadic, very often they are limited simply because of the time constraints of the activists and the breadth of their knowledge of the workings of the local authorities, of place marketing, of town centre management or of other serious matters that are outside of the normal scope of activities that it would be reasonable of an ordinary shopkeeper.

There are then those organisations that exist to support retailers of which I have counted, so far, over seventy. Of these there are several that claim to be both representative and the most effective. The question is, effective at what. Analysing my list I find that most fall into a small number of categories – those that represent retailers at national level, such as the British retail Consortium, but with a membership fee of over £3000 and with most of the major retailers playing significant roles in the management and strategic directing of the organisation they are very unlikely ever to really be truly representative of the SME sector. There are those who are at the national level representing specific sectors of retailing such as the Toy Retailers Association or the British Shops and Stores Association (recently merged with the British Hardware Federation) or the Association of Convenience Stores; then there are those who represent a smaller geographic (but still wide area) but who are also sector specific such as the Scottish Grocers Association or the very lively Northern Ireland Independent Retail Trade Association. There are those organisations who are not even retail specific, and do not have a retail specific sub-group within their structures, the Federation for Small Business and the Forum for Private Business are two well known examples. This is not to say that they do not carry out very worthwhile work which SME retailers will benefit from, but they won’t help with the local marketing, or the Christmas lights. Unfortunately, local Chambers of Commerce also have too broad a brief in representing their members and this can often lead to conflicts of interest. Many retailers join organisations for specific benefits – for maintaining their knowledge base in their specialist skill area; for obtaining specific and advantageous terms in banking, legal aid or insurance; for keeping up to date with industry trends and developments and for finding new sources of supply. Local trade associations probably would not be any use in providing any of these things, but they would have advantage in having local knowledge, in having a mutual interest in promoting the area and improving its facilities, there would be advantage in many eyes and ears monitoring local events, including planning applications; there is certainly advantage in having a representative voice that acts as a focal point for the local authority and other organisations that impact upon the traders’ area.

Recent Governmental strategies that are intended to make the country work more effectively and to make local communities more responsive and therefore encourage people to take ownership of their area have highlighted a real need to have effective lines of communication open to these small businesses. How, I ask, will the ambitions in the Leitch report ever be realised if SME retailers (and other small businesses) are not fully on board with the idea of training and up-skilling the people who work within the industry? How will local authorities ever achieve what is now their legal responsibility under section 5 of the Sustainable Communities Act 2007 in consulting with representative groups, if when it comes to matters affecting retail trading areas the SME retailers are not ‘grouped’ together. I believe that there is good reason to believe that local authorities should fund local traders associations in the same way that many fund local residents associations. The costs will be small but the returns ought to be immense – democracy amongst the retailers with the costs of communications covered by the LA. The idea of retailers groups ought to be fundamental to any regeneration or renaissance scheme involving retail development, make them compulsory. It’s just an idea, but one which needs to be explored and costed effectively.

Let’s hear from the Councils, what do they think?

Workplace Parking Levy

2009-07-12T10:51:00.004+01:00

There has been a great deal of debate on this issue during the past week and it prompted me to go and have a look at the proposals in Nottingham before deciding whether to add my name to a petition to have the idea stopped in its tracks (if such a thing were possible!)

There is, as there always is in matters such as this, a great deal of emotive language being employed by the detractors and I wanted to see if they were right in their assertions. Such phrases as 'stealth tax on firms' have been bandied about. Immediately I knew something was up, because clearly a local authority who says in brightly coloured leaflets that "we are going to charge ever increasing amounts of money for those car parking spaces that you have at the back of your premises until it reaches a zenith in charge terms in 2015" is not doing anything that might be regarded as stealthy - it is up-front and quite in-your-face. So clearly the headlines were inaccurate, but then I'm not surprised since they so often are!

Looking at the facts, it becomes more apparent that here is a local authority who intends to make full use of legislation to bolster their income and, ostensibly at least, to enhance their green credentials. So are they wrong and who will this hit?

Without doing a formal study it would be impossible to come to absolute conclusions; indeed just reading the publicity material and the reaction from employers' organisations it would be impossible to gauge the actual impacts that may occur - what I predict however, is that whatever either side of the argument are saying there will be good and reasonable arguments for and against and there will certainly be unintended consequences that quite possibly someone in council circles has already realised but has not bothered mentioning in the blurb!

From the perspective of Nottingham City Council I can see no fault in having an ambition to reduce the congestion in the city, to make better use of the public transport system (PTS) into which they have so heavily invested with success, or to find new ways of legitimately raising ring-fenced funds for improving public transport still further. I would criticise them if they had not already established a good track record in PTS in the city and I would be extremely vocal if it transpired that the funds were not then ring-fenced but were used by a change in political leadership for subsidising general funds or other areas of the City's expenditure - but let's give the city council the benefit of the doubt at the start. So what about the vexed problems of exemptions, of establishing the number of spaces and the monitoring of the whole scheme?

These are areas in which I believe the city council is very brave to venture in - for a start I would want to know how they intend to deal with their own staff car parking? Is there a council that does not offer car parking space to a large number of staff who DO NOT need their cars for use on council business? There are literally hundreds of teachers who arrive at school each day and their cars sit on the former playground before being used to go home again in the evening - will the school budgets be hit by the WPL, and if so have the school managers and governors been warned to make provision in their budgets? There are also literally hundreds of non-eesential car users in civic offices - will the city council be charging itself for these spaces? Then there is the central government civil servants in Job Centres, Tax Offcies etc - will Westminster be paying the levy to Nottingham.

Itwill be interesting to see the exemptions applied - I note that NHS premises will be exempted, surely this cannot be right? I agree that a doctor on call, a visiting nurse or midwife, an ambulance or even an ambulance car driven by a volunteer should be exempted - quite right too, but there are dentists who do not use their cars except for commuting, the admin staff, should these be exempted, I can see no reason for it. So that will be a real hard one to tackle. What about undertakers - they have a real problem too, will the hearses and limousines be exempted, or at least their parking spaces? If not, what happens when the staff use the spaces when the hearse is not present? It says in the NCC leaflet to businesses that the emergency services will be exempted - again I'd ask why?
There is a small Police station near me where a fair number of support staff, permanently based on the premises arrive in their cars and park throughout their shifts - why should the spaces that they occupy be exempt, indeed in most areas officers can travel free on public transport and in consequence help with the policing of those very services, so they would have no need for the spaces anyway. I can understand exempting spaces for marked vehicles, and for those being used by plain clothes officers during their working day - but for the so-called 'civilian' staff who man the front desk or carry out other functions (with the possible exception of those whose shifts are in the middle of the night , but then that would apply equally to plumbers, printers, underground train drivers etc) - surely the space that they occupy needs to be charged.

It will be interesting to seek information under the Freedom of Information Act when this scheme has been up and running for a while to see how much the Council does collect from governmental departments, whether local or national. Just as it will be interesting to see how the council intend to accurately establish how many parking spaces are to be levied. Surely those spaces outside the Managing Directors' office are for the customers? Those cars belong to shoppers - they'll be somewhere arounds town! Is this where the council has to employ more investigators and CCTV cameras to spy on the business population to see whether they are cheating?

Any self-respecting business is going to blank out the car parking bays and leave it to chance - so how is the city council going to deal with that?

Oh yes, this is a story to watch; it is essentially a perfectly laudable idea - but then so was the originally envisaged Poll Tax and we all know what happened then!

Upward only?

2009-07-07T15:05:00.002+01:00

The Irish Government has announced that it will be banning upward only rent reviews from next month. An unusual and, frankly, brave decision by a government whose country which has an economy that has been all about massive, unprecedented, growth for a lengthy period and which has now stalled. Certainly from this side of the Irish Sea it will be interesting to watch what happens in the Republic.

As for the UK and its upward only rent debate, what will happen next is that the retail sector will bring out the big guns again to argue the case that in these economic times there has to be a modicum of give and take in any contractual relationship, especially where this impacts upon the bottom line of businesses who are otherwise struggling for trade for reasons beyond their control. In response to this the property sector will engage with counter-arguments that these contracts are set down for relatively long periods and the charges set out are fixed for that period - "how would retailers feel if they had to set prices for five years not knowing what will happen in that period to their own costs?"

This last argument seems to have been taken as the stronger by British governments who are less courageous, perhaps, than their Irish counterparts because the Westminster government has seen fit not to outlaw this archaic practice and in consequence the SME retailers has borne the brunt of yet still further increases whilst their most major competitors who operate in the rented sector are often in a far stronger position to exercise negotiating power. The fact that very often, even these chains are unable to negotiate confirms the inappropriateness and ineffectiveness of the system in a so-called market economy.

So, do the property owners and agents have a point? I believe that they do! In just one very specific area, they have a point. I believe that if you are creating a product, or are the first line of marketing of a newly created product then you are likely to adding something to the economy by the process of creating. In the case where a new building is created then this would, to my mind, qualify for being able to recover the costs and achieve an equitable profit as with any new product. Rarely in these cases is there any significant research and development costs (I do not see land searches as R&D!) so the profits that would be fair and equitable should be in line with established products from any manufacturer - albeit the period over which this profit might be attained could be over a longer life cycle than say a loaf of bread.

Fair enough then, the builder, the developer and the owner all look to make a profit over the design and build. From that point on though, the profit is made from the recycling of an existing product - second hand indeed! In what other market do second hand goods gain, unquestioningly, a guaranteed increase in returns year after year with the power of the law to protect that interest? It beggars belief that the Thatcher and Major Governments did not see off this idea - is it not the very type of regulation that the neo-liberal economic theorists abhor? Perhaps the influence of vested interests prevailed, who knows? But it is very odd!

Landlords might argue that they invest and re-invest in their properties and this needs to be reflected in the costs. Of course it must, but that surely is the basis of negotiation, these factors are all taken into consideration and if the parties involved cannot agree then arbitration should be sought. What should not be allowed is for notional repairs and upgrades, or even real upgrades whose values are grossly exagerrated, to be used as justification for raising rents without evidence of the facts.

You have only to walk down any British High Street to see that there is a real malady. The prime shopping areas have achieved serious rentals (which then directly affects the valuations for business rates) that never go down under this strange system - this in turn prevents new or newer businesses from setting up in that area meaning that the local economy is forced to rely on major national and international organisations to occupy these spots. Nothing intrinsicly wrong with them being there, but they do not, indeed cannot, be as significantly beneficial to the local economy as locally owned businesses. When the bigger chains catch a cold elsewhere, they pull out of the local prime area leaving a hole that it is incredbly difficult to fill. This hits the local economy with a triple whammy - loss of local jobs (the large organisation will usually have employed local staff), loss of the continuity and visual amenity in the key shopping street (very often a factor that reduces footfall with the attendant knock-on effects on remaining businesses), and still no opportunity for new local businesses to get a foothold.

Land banking v local trade

2009-06-28T16:34:00.005+01:00

The Retail Bulletin has today drawn our attention to a piece in the Observer (28.06.09) that adds weight to my own suspicions that those who have the capability will milk the downturn to the long-term detriment of local economies right across the nation. It is a matter that all those who understand the importance of encouraging local trade must be concerned with.

Governments and increasingly, large business, utter a mantra about sustainable development without, it would seem, actually understanding what that phrase encompasses or means. In most cases it is vaguely related to 'going green', or in ensuring fair trade with less developed nations. Perhaps it is about making sure that wood from which has been constructed the latest garden patio set is sourced from 'sustainable plantation'. All of these things are quite laudable in their own way but the problem is not simply complex, being global, relating to climate, human impact and a whole host of other inter-connected issues not least of which being tran-national corporations and supra-national regulatory frameworks - it is also considerably closer to home in economic meaning.

The Observer, or specifically Nick Mathiason, has highlighted the opportunistic land grab that is currently being undertaken by the 'big four' supermarket chains. They are targetting 'distressed' locations and buying the properties for future use, and given past performance, to ensure that rivals are excluded from the area. The impact of this will directly affect the price of property locally - any 'sale' will determine a 'renewed confidence' and push prices up; it will remain unutilised as a shop because the chain concerned had not actually planned this particular expansion into its development plan - consequently because of the Government's richly stupid policy to have empty shops pay full business rates it is likely that a large proportion of these recently acquired premises will be demolished pending the eventual gathering together of the neighbouring plots to enable a 'viable' megastore or 'local convenience' store to be developed successfully.

The premises will no longer be available for local businesses, the local authority will not benefit from rates income, the rival major chains will be excluded (thus killing off any real competition arguments) and when the great day does arrive and the major chain sets up shop, they are likely to employ tactics to undercut the local stores to such an extent that they simply cease to be. Local areas do not benefit directly from large chains in the same way that they do directly benefit from locally own stores (even local chains!). The benefits do acrrue from the salaries that are paid to locally based staff, but the likelihood is that these are the lowest paid employees. The local economy does benefit from the business rates paid into the local authority's coffers - but these are based upon space occupied and a similar pot would have accrued in the event that smaller businesses occupied the sites in larger numbers. It is arguable that the local retail economy benefits where these stores have opened because they draw people in from further afield who might otherwise have been attracted elsewhere, but this is usually at the cost of the local specialist and non-specialist alike who is in direct competition, so it is only those stores not in direct competition with the supermarket who benefit - and that's only until the supermarket adds a new string to its bow and expands into non-traditional areas. In contrast, locally owned stores and chains ensure that even the profits and dividends from these enterprises get back into the local economy.

The long term effect will be the withering of the retail offer on the vine of local shopping towns. Market towns have traditionally served as places of public socialising as much as market activity and the advent of the one shop town is diminishing that; the idea of public space is undermined and the town centre loses its importance in the life and development of local communities. The longer term effect is that the very arguments currently being put forward as reasons for our Government to support people in so-called 'less developed countries' will become commonly used as cogent arguments for the support of some of our own towns and cities.

Astounding discovery - customers are important

2009-06-11T17:09:00.002+01:00

Has anyone else noticed? There seems to be a theme coming from the global sages of retailing that it is important to listen to and to repsond to customers. Well there's a novel idea!

Has it really taken the shell-shocking, mind-numbing, business threatening recession for retailers to discover that their cuistomers are all important? I find it hard to credit, yet these are the words coming from conference after conference. Is it really me, or did I miss something by not paying huge sums of money to attend these mutual back-slapping events. All I do know, is that the reports being published in the trade press over the last couple of months suggest that the really hot news that customers are important. I am amazed!

Having been in and around retailing for almost half a century it was to my mind at least the very bedrock of what retailing is all about. Perhaps someone will offer me a lucrative deal to speak about those other shockingly newsworthy discoveries such as - you need to supply the right goods at the right price and at the right time! We'll keep the location bit until you're all ready for it - perhaps in the next lesson?

The Wonder of Woolies

2009-04-17T17:02:00.002+01:00

Although Woolworths' demise from the high street is now one-quarter of a year past, not many days pass without comment or reflection about the post-Woolworth impacts on town centres and upon other businesses. Today we hear from the Retail Bulletin that "Original Factory Shop" is to take various post-Woolworths sites and is also aiming to recruit former Woolworths colleagues into their ranks. They argue, so it is inferred, that the sites lend themselves to the "Original Factory Shop" trade and that the Woolies people will be well trained retailers who will need little or no input to help the "OFS" to gain market share and increasing business.

I can see no fault in the idea; on behalf of the town centres who once hosted a Woolworths, I welcome the plan that will do much to help fill otherwise darkened spaces amongst many shadowy places - not to mention the good news for the people who lost their jobs, a light at the end of their tunnel too!

Not for the first time, what I am wondering is whether, and by how much, the local SME retail communities have sought and gained business that had hitherto been captured by Woolworths. It seems to me that a good number of other, larger, businesses are making their mark. With the exception of the well publicised efforts of the manager and her colleagues at the renamed Wellworths in Dorchester, I have not seen much other evidence for small businesses making hay in the Woolworth meadow. But, perhaps it is because these businesses are so local that those of us a distance off simply fail to see it - if you know otherwise, leave a comment!

New schemes under threat

2009-03-12T12:19:00.005Z

The development of new retail centres seems, over the past decade or so, to have viewed by many authorities as a bit of a cash cow - certainly in the case of town centre or near centre developments they have often been promoted as economically essential improvements that also impact positively on the visual amenity and upgrades to local public space, something that I believe to be more than just slightly disingenuous.

It seems that the farm-yard animal has changed and it is now the chickens that are coming home to roost. Ben Cooper in 'Retail Week' has today reported on the fact that the City of Wakefield near the eastern fringes of West Yorkshire is having to come to terms with the fact that the principal financers (Anglo-Irish Bank) of the proposed new centre named 'Trinity Walk' have withdrawn the funding. In the current climate it is difficult to see how replacement finance will be procured. I have not had the time nor inclination until now to investigate how this scheme was originated nor how it was to have been implemented, but to judge by the already secured anchor store and those other retailers committed to the scheme it is not difficult to imagine that this was to have been another scheme that was dominated by the usual brands. I am left wondering what role Wakefield's SME retail community were to have played and what impact the development was likely to have had on their existing businesses upon completion?

In the same 'Retail Week', Ben Cooper's report has made mention of the fact that one of the the joint developers, Modus, had already last December announced that it wanted to sell its 50% share which is hardly a ringing endorsement of the scheme - but then they already had had the finance withdrawn on two other schemes in Warrington and Crewe. Is this trend telling us something?

One thing is certain, the City of Wakefield and other local authorities should pay much more attention to the risk management aspects of the processes that they employ in furthering these schemes. The money is never guaranteed, even in good times - and now is not that! Perhaps as I have said in this blog before, it is time that planning authorities took a more balanced approach to these things and considered how they can help incubate high quality new businesses in their new developments, because even if Trinity Walk had actually opened it is arguable that some of the original lease signatories may well not have survived for too long in the current climate and a poorly populated centre is not one which sends out positive messages to the visiting public. By this time of course, the traditional areas round these new schemes are invariably shot to pieces with vacant plots and over-priced rents and business rates, all acting as barriers to any smaller business wanting to open in the centre - here's a thought, how about a business rates moratorium on locally owned businesses for the first two years of their trading from a town centre site?

OK Mr Darling, let's see if I understand you correctly...

2009-03-10T23:43:00.004Z

It's just that I'm struggling here Chancellor, and if you could just help me confirm my understanding...

You are quite adamant that the non-domestic rates rises planned for April will go-ahead as planned; you're putting the VAT rate back up to 17.5% in December and presumably there will be new measures to balance the books in the Budget in April too?

I suppose what puzzles me is the sheer scale of negative messages pouring from the Government and other agencies with whom they have a direct relationship with. You have told us Mr Darling that you intend making the non-domestic rate system fairer in the future, but the new ratings list will be published in time for the start of the tax year 2010 and many of us out here have warned often enough about the iniquitous rateable values and the real lack of fairness in the setting of these when comparing SME businesses with larger more erudite firms; yet here we are at the start of what is rapidly developing into the single worst depression since the dust bowl era and you assure us that the above inflation rise this year will magically be mitigated by a fairer system in the future - even though the next damaging blow is already well advanced in the planning and is already being readied for execution.

It would be interesting to measure the impact on all traditional town centres where the reduction in the overall number of SME retailers is already being trumpeted by employers' organisations. My guess is that the increase in rates, with the forthcoming increases in the rateable values (Of course I am guessing here that the Valuations Office Agency do not plan wholesale reductions in the 2010 lists) will all add to the general malaise in the SME retail world and will have the effect to scare quite a number of businesses away - to stop trading, to cease employing people! Then what? Under this Governments' regulations the landlord will have to pay the new rates on the empty properties - so the landlord, not being stupid, offers the premises to a charity at a heavily discounted rate and thus loses the burden of that cost. The sudden expansion of charity shops will in turn provide still further competition for the remaining small businesses, all of whom have to pay their rates and their staff as well as their stock! I am one of those who would describe this process as blight.

Then there's the VAT rate - with much cockolorum the government's announcement of the VAT rate reduction was met (as predicted on this blog) with an understandably muted welcome from the buying public. Surely it was never a serious idea that the 2.5% rate reduction would encourage spenders out into the shops? What is serious though will be the impact of the reversing of that process. Any retailer will tell you that a 10% discount off of the price of goods has a disproportionately smaller effect on sales than the negativity of a 1% increase in price. Imagine - you want to put 2.5% on just at the critical period for many retailers in what looks from my perspective to being another seriously low point in what will, by then, have become a growing depression.

We have all heard the mantra of the Prime Minister that this is a global problem, but what did the former Chancellor do in the relatively good times that the country experienced in the earlier days of New Labour? Did he reverse the policies of the previous Governments and invest heavily in new manufacturing industries that would actually provide real and sustainable growth - no, rather he continued to watch them reduce and decline. It is impossible now for the Government of the UK to avoid the criticisms and time for them to be honest and respond accordingly.

Rates Supplement Bill

2009-02-27T12:43:00.007Z

This blog tries to avoid being partisan political but there are rimes when it is difficult to understand the machinations of a government whose meanderings seem confused and ill considered. The most consistently ill-considered has been the policies relating to transport.

Transport policies that have been considered include the Cross Rail project which is intended to link to far west of Greater London with the far east, taking in the centre along the way. It will serve, should the bill be passed a heavily congested and populated area - but then it will also be an area that has a huge amount of, albeit disjointed in parts, transport infrastructure already in place. Were we not treated in the west to years of building with the Heathrow extensions to the tube services? Did the Docklands Light Rail not do great things linking the east end and the developing docklands to the centre and the underground network? But what about those other schemes whoch were proposed that never saw the light of day because the government policies of the day ruled them out?

In south Greater London there was a scheme that would have linked Croydon to Greenwich, to complement the Croydon Tramlink scheme which links Croydon with Wimbledon in the west and Beckenham to the north east of the borough. This scheme's real merit was that it was to offset the historically problematical transport geography in the capital which can be likened to the spokes on a bicycle wheel - their were plenty of routes providing you were travelling to the central hub. Try going around the wheel east or west north or south if you happened to be in an outer London Borough (where a huge amount of the commuting population actually live) and you'd be stuck. Consequently the hub gets congested because of the throughput of people trying to get elsewhere, alongside those whose destination happens to be the hub. No, that scheme was dropped along the way.

How about South Hampshire? There the scheme was actually winning the argument for integrated transport - even with the government. The scheme which would have joined rail, road and passenger ferry services, was proposed in a number of stages; the first was to link Portsdmouth city centre and the towns of Fareham and Gosport just across the harbour. This stage was important for two reasons - the economic future of the two smaller towns was certainly in doubt given that they are set, as are so many central southern coastal towns, on a peninsular with the limitations of road access that peninsulars always provide - in this case with the A27 and M27 running east west at the top of the peninsular and the A32 running down its length. These roads, along with the minor roads, are frequently congested and the movement of goods and people is a significant problem.

The second stage was to have provided a link to Waterlooville, a dormitory town just up towards the downs and also this stage would have linked Fareham to Southampton central. This last named city, like the town of Gosport, is on a penisular - I forgot to mention that Portsmouth has it even worse because it is actually an island (the Island of Portsea). These towns and cities are an economic powerhouse for the south (that is the south outside of London) and the congestion in the area is frequently the subject of radio traffic reports.

The third stage would have linked Southampton with Totton and the waterside towns on the western side of the Southampton water adjacent to the New Forest - another important trade route (Oil refinery and dockside works), commuter towns for Southampton and beyond and the holiday traffic would all have benefitted from its completion.

So why was it that the scheme was scratched - because of a lack of evidence of the social and economic benefits to these communities? The South Hampshire Rapid Transit system would have provided a relief and the only viable alternative to road transport in the region linking these places. No, the decision was taken by the then Deputy Prime Minister to scrap it on the basis of cost! Not an altogether unreasonable position one might think, except that there had been strong government support at all levels for a great deal of time and the project team were well advanced - but then it happened. This same government's integrated transport policy was shattered by another conflicting government policy - one must presume that the Deputy Prime Minister and the Secretary of State for Defence never actually spoke to each other - the Navy decided that it was to make Portsmouth its home port for their aircraft carriers. The greater draught required by these huge vessels meant that the tunnel under the harbour would need to be deeper and therefore incur far greater costs.

So it was a government decision that adversely affected the costs of the proposed project upon which they based their opinion that the costs were too great. At the time the costs for the project would have equated to about 4 miles of new motorway construction. Is this not perverse?

For the retailers in Fareham, Gosport and Portsmouth they must now face a far more uncertain future and with this new bill before Parliament they will have the double whammy of seeing London, once more, becoming the beneficiary of taxpayers money for which the only possible and frankly dubious benefit will be the London Olympic games of 2012, and they for their part being saddled with the possiblility of further rates charges being sneeked in on the back of Cross Rail. They wonder why people do not trust them anymore?

Lapping up after Woolworths

2009-02-27T12:33:00.003Z

The Retail Week has a piece by Nicola Harrison about how specialist toy retailers, having had a torrid time of it during the closing down sale when Woolworths were selling toys at or below cost price, are now reaping the benefits of their closure.

This blog discussed the probability of this happening and urged smaller businesses in close proximity to Woolworth sites to maximise their potential for generating new business; I wonder how many have done so - clearly from Nicola Harrison's article the toy group The Entertainer have capitalised, but then they have a higher profile as do Hawkin's Bazaar, who are also mentioned.

I know that within the toy retail sector there have remained a core of SME businesses around the country who now stand to gain local market share - but have they? If anyone reading this has any evidence then please post a comment. If they have not then the question must be asked why?

Conflicting pressures - potential for problems

2009-02-16T16:48:00.004Z

There was an interesting piece by Mike Dennis in 'Talking Retail' just over a month ago (16 Jan) where he looks at the potential for opportunity for SMEs amidst the chaos of the growing number of closures and administration orders in the High Street.

I have noted a similar potential for SMEs and added that it is crucial for SMEs to remain focussed on the markets that they know and understand, provided that such a market is to continue in existence - changing shopping habits because of on-line provision, changing technologies, cultural and demographic changes can all substantially undermine previously solid markets. It is right nonetheless that SMEs look to the gaps being left in the market by defunct or retreating businesses with the purpose of exploiting these opportunities.

Unfortunately, there are signs that the credit crunch is having further unexpected impacts upon the trading environment of SME retailers and the threat appears to be coming from the Town Halls. There have been a number of reports in the press recently of local campaigns by small businesses - especially in market towns - against the introduction of parking charges where previously there were none, and raising the charges beyond the rate of inflation where charges already existed.

I believe that these measures are being adopted by local councils simply because it is easy to do and has a marginal effect of voter intentions; I believe also that it is foolish to introduce these kinds of charge changes without substantial and meaningful discussions with the local businesses. In an e-mail conversation that I had recently with an academic we had reason to discuss the interaction between local authorities and SME retailers and he emphasised the difficulties that exist in finding a mouthpiece for these smaller businesses. I did understand, and indeed have discussed this problem previously on this blog - but these logistical difficulties cannot be an excuse for not engaging with small businesses, especially where the impact of decisions has an impact on their businesses and their investments.

The period of recession will not last forever and the local High Streets will be sadder places if not only have they lost their Woolworths and their M&S food offer but that their independent businesses were also lost in an attempt by local authorities to balance the books.

Retail Bulletin Blog

2009-01-11T12:10:00.003Z

Welbeck would like to direct reader's attention to a new retail blog on the patch...
Retail Bulletin has launched a new blog called, not inappropriately, the Retail Bulletin Blog. It really does "do what it says on the tin".

Congratulations to Mark Higgins, the editor of RB, on this initiative - I hope that he has more time to devote to the venture than I have been having recently, but then it is more in his line of country - I'm still practicing the arts of retailing and am often called away to remote and foreign parts.

Good luck Mark, and thanks for the Bulletin!

Small towns and the loss of big players

2009-01-10T00:03:00.003Z

In the withering economic and trading climate on the High Street it is worth stopping to consider the impact that the closure of key national brands will have upon small market towns and other secondary shopping streets in the UK.

Certainly there is evidence that the most notable of the recent closures, Woolworths, will have a measurable impact in these places; what is less certain is whether on balance the effect will be for good or ill upon the SME retailer population. On the face of it there is good reason to believe that the disappearance of the likes of Woolies from rural market town settings would be a nail in the coffin of the retail offer in those towns - where else can locals get their music and their computer games, or perhaps schoolwear or haberdashery? The logic of this position is that Woolies, and firms in the same position (often Boots are in a similar role as a national brand in an otherwise purely local retail offer) will drive footfall and attract numbers of residents within the hinterland of that particular town to shop locally, rather than embark on an expedition to the more distant regional hub.

There is, of course, a counter-argument; this being that the very presence of large purchasing firms directly suppress the development of certain local markets, because they were using loss-leaders and other means of exercising their relatively strong purchasing power. This has certainly been an oft used argument when describing the activities of the main players in the food retailing sector. The removal, therefore, of the offending large retailer thus frees up the local market for the entrepreneur.

There is clearly a large space between these two contradictory positions and neither may turn out to be entirely correct nor entirely wrong. It will be interesting to measure how these towns progress from this point. If I were advising the local planning authority I would strongly advise that they based their planning opinion on the basis of a loss of footfall with the attendant need to bolster local regulation and planning to mitigate the worst effects of the current downturn with every tool and weapon available to that local authority.

Smaller businesses in these areas need to be reflecting upon the fast changing markets that are open to them; in these times of 'downturn' there may be useful opportunities to refocus the business and to gain new markets previously denied them.

Happy New Year ?

2008-12-30T22:53:00.006Z

Readers of this blog may have spotted the mysterious absence of the author during the past month, and a period of relatively little activity immediately before. I can tell you that it has not been because of a shortage of issues or comments that I should like to be making.

The fact is that I have been out around the country seeing at first hand the impacts of the current series of large business failures in the High Street and I shall be coming to this blog with a whole raft of things to say in the not too distant future. What is a constant surprise to me about the furore in the press is that it should have been surprise at all, and the fact that we as a nation appear to applauding politicians because they are making promises about how they will manage the economy through this period seems to ignore the fact that have been largely responsible for many of the factors that have led us into this situation.

Agreed, the credit crunch, as we must now call it, was something that started in foreign parts - especially in the USA - but did our senior politicians argue with President Bush that his policies about de-regulation in the finance and credit services sectors were potentially liable to undermine the whole global financial system? Did our politicians - and by this I mean of all persuasions - stop to consider that the housing market was overheating and that personal debt in this country was apparently being hiked up with little or no regard for the consequences? Yet they were told about it - regularly!

Going back a bit... where were the plans to effectively replace the decimated engineering and manufacturing sectors that were left over from the Reagonomics/Thatcherism years? Did they really believe that a reliance on the incomes derived from being a mere hub in the global financial markets was really going to sustain an economy permanently and that allowing the national economy to be measured by the collective value of houses and the performance of major retailers was anything other than 'in your face' consumerism.

The current epidemic of retail businesses entering administration will result in a huge number of redundancies arising from failed larger businesses; this is obviously not good for the economy and disastrous for those losing their jobs. What is not being spotted by the press is the knock-on effect that some of these high profile closures will be having on the SME retail sector.

My prediction is that during 2009 -10 there will be real hardship in small market towns where currently SMEs still dominate. I anticipate that a great number will lose not just their jobs, but probably their entire savings and even their homes. There are things that can be done, but I am as yet unconvinced that there is a political will at national or local governmental levels to recognise previous shortcomings in policy and decision-making, and still further a reluctance on the part of far too many retailers to acknowledge that the downturn has been the final straw rather than the primary cause of their problems.

My hope for the New Year is that the discourse associated with the current difficulties in retailing will embrace a far-wider cross section of the retail trades than just the membership of the British Retail Consortium; that the critical analysis of the circumstances that have led us here will be honest and probing; that all participants in these trades will be empowered to be able to influence their trading environment.

Local Authorities should look after their SMEs

2008-11-29T22:10:00.004Z

This subject has been a perennial topic for this blogger because it is one about which I feel passionate and it never ceases to astound me about the ways in which local authorities interact with the SME retailers in their areas of responsibility (and this doubtless applies equally to SMEs who are not retailers).

In case there is doubt this is not a side swipe against local authorities per se, but against those who find it easier to either discount, or to ignore, the plight of their local, often locally grown, entrepreneurs in favour of others and often it seems in name of expedience. The trouble is that local authorities in the main pay too little attention to their local investors because they are very often in the earlier stages of their corporate development; unlike many of their more established counterparts they are not cash rich and therefore less able to donate to the various local schemes that in the past decade or two have been a feature of town centre management.

There are some notable exceptions; Sheffield city council for example. In this authority area the leader of the council, as I have reported previously, announced to a gathering of small businesses that he was appointing a cabinet member to look after entrepreneurs and developing businesses. He was not being philanthropic but rather pragmatic. By establishing a clear line of communciations with these local business people he and his colleagues are considerably more likely to obtain realistic feedback of the impact of their decisions on local business and have a ready made structure for consulting with that particular constituency. All too many other authorities have no such mechanism and, it might even be argued, find dealing with small businesses is an altogether tiresome and time consuming occupation - far better then to just deal with the big boys and try and tap into their resources. OK, this may seem a great plan, but what happens when those big boys start getting the jitters, or indeed simply fail. Where's the contingency plan? Do the council officers rush unceremoniously, cap in hand, around the phalanx of small businesses in the hope that they can explain why these consistently good investors in the local economy have heretofore been studiously ignored.

In the press this week there have been reports of a town in Hertfordshire where the council have sympathised with the local traders for disrupting their Christmas trade while the council put their plans to pedestrianise into effect. Sympathy notwithstanding, if they had half a wit they might have stopped to consider the impact these actions might have had on these traders and have negotiated a satisfactory compromise; it might have been easily possible to continue trading effectively in such a circumstance if the traders needs and the council's needs had been shared and solutions sought before the event.

Just today I was chatting with a trader from Bilston in the West Midlands whose business is tied into a long lease in a centre that is becoming a little jaded through age where the local authority has acquired land immediately behind the businesses to provide car parking. From what I gather at least some if not all of these adjoining businesses had always had access to the rear of their premises and at least one had signed over, perhaps foolishly, to the council their rights of way to enable some disabled bays to be constructed. The council now wish to charge for keys to the gates that now bound and bar access to the rear entrances of these businesses. Frankly it beggars belief.

The message I would give to Councils is "think this one through" - these small businesses dedicate a massive proportion of their business investment in your town; they are promoters of your town and very often the owners are council tax payers in addition to Non-domestic rates payers. Create effective mechanisms, even if you have to fund it, for communicating with SMEs.

The message to SMEs is simple: "organise" - I realise that doing so will mean that someone will need to give of their time; but it is worth the effort in the long run. Do not let your Local authority work unchallenged in making changes to your businesses, but embrace those ideas that might be really useful to you.

15% VAT?

2008-11-23T13:19:00.004Z

It is a matter of some moment when the Chancellor of the Exchequer indicates his intention to reduce the standard rate of VAT to the legal minimum, and he is probably right to think that this will bring muffled joy to a great number of consumers and retailers alike, but...

I remember, as the operations manager of a small department store with some 20,000 SKU/PLU stock lines, some held in significant numbers, holding my breath during the budget speeches, awaiting the announcement that rarely came of changes to the standard VAT rate. Why should it be so concerning to an operations manager? Primarily it had to do with my budget, the cost control factors of people and resources. To effect a change across our product range that would retain our compliance with regulations and primary legislation about price labelling meant a huge investment in time and effort to reprice everything that was affected effectively and accurately. Inaccuracies would affect my stock records, create queries which are time consuming to deal with, create non-compliance issues, and ultimately cause my customers to have problems - which as a customer focussed retailer is something I abhorred.

Ah! I hear the comments - but surely a reduction in VAT is a good thing? Yes and no is my best stab at a reply to that one! Sure, the reduction will ensure that people buying standard rated products are spending less - but at this time the signs are that most people are resisting the need to spend money at all, and I have my doubts that a 2.5% reduction in VAT will make a huge impact in that; this is especially so when you consider that those who are spending are doing so on the 'essentials' which will usually include food and children's clothing - most of which is rated in the UK at zero for VAT purposes. So whilst I accept that any reduction is generally a good thing to encourage spending, I believe that the reduction will be insufficient to make the kind of impact on spending that seems to be being posited in the media as the Chancellor's desire. Instead it will be a further cost and distraction from making sales in this key point of the retail year - but I really do hope that I am wrong about this one!

Impacts of major centres

2008-11-09T19:18:00.004Z

November 2008 has witnessed the long awaited opening of the Westfield centre in London. Opening at such an inauspicious moment in the current economic cycle it will be interesting to see how this massive centre fares after the dust of the opening period settles; in the meantime the measurements are already being made on the impact that it is having on other retail centres.

Comments in the Sunday papers this week strongly indicate that London shopping areas have been hit on the first weekend which is to be expected but the pundits are expecting that these competitor areas are likely to see a longer term downturn. When the Bluewater retail campus opened the effects were felt across a wide area, the overall level of effect was probably influenced by the proximity of the competitor centre and the quality of the links between the hinterland of that centre and the new outlets. Secondly the retail offer influenced the impact - Bluewater being fashion and textile based influenced in a different way to that of the earlier Lakeside, whose offer was more broadly based.

It is not at all surprising then that the new Westfield has made an impact; what is yet to be tested is the nature and reason for the impact, other than the obvious novelty effect that all new centres enjoy. What is also uncertain is whether rival centres need to react to the newcomer by any other means than reviewing their own offer and the trading environment. It seems to me that a return to first precepts are needed by planners, developers, politicians, retailers and town and centre managers alike in order that the boomtime rationale of retail development is underpinned by a fuller understanding of the trading environment and the fast changing dynamic of the spending public.

There is a serious challenge here for research and analysis of spatial relationships in retail to inform those charged with making decisions in those centres who feel the need to respond to new competition.

High Street difficulties - observations

2008-10-16T22:54:00.004+01:00

It has been a very hectic month which is why there has been a noticeable absence of blogging going on on this site. In going around the country I have noticed something that had not occurred to me previously; perhaps another illustration of the differences between SME retailers and somewhat larger concerns.

Almost everyone who has ventured into their local shopping mall, retail park or high street will have seen well known names in difficulties. It is impossible, of course, to make real comparisons between these large businesses with SMEs but reflecting upon the issues I have begun to wonder how much direct impact the recent financial catastrophes have had upon retailers - since it seems that people happily talk about the credit crunch as if it were answer to and reason for all of the current woes. SME businesses that are successful, and there are plenty of them, appear to have one characteristic in common they are prudent; they develop their businesses by organic growth and avoid indebtedness. By contrast a significant number of major brands rode the recent period of boom with an apparent disregard for the fact that throughout the history of modern economics the cycle has revolved and downturns will occur. Perhaps the boom time rationale of buying oneself out of problems can work in a limited number of cases, but in most situations the result is overstretched resources that will ultimately cause the business to shudder to a halt.

In good times the overstretching is not a problem; in mediochre times the overstretching can be managed; in circumstances where nations appear to be facing bankruptcy with all the attendant problems that that will have on their internal economies, businesses who do not have firm fiscal controls and who are highly geared are extremely vulnerable to any unplanned external pressure or interruption to their trading. In the current financial environment the external pressures are coming from institutional lenders and the insurance market whilst the public perception of a downturn fostered by 'collapsing house prices' and rising unemployment provide a significant interruption to their trading - particularly if their business model is not cost conscious and offering good value for money.

The options that are open to those in difficulties must be constrained by significant pressures from all sides and will be accompanied by some really difficult decisions. The consequences will mean that some businesses will go, some will re-emerge as leaner entities and many of the leading personalities will disappear from view while some will survive to prosper. Successful SME retailers, however, will have traded through; will have refocussed their offer and will have ensured that their costs were controlled and will live on to benefit from the upturn which will eventually follow in the cycle.

Myth busting or myth making?

2008-09-26T13:50:00.004+01:00

A piece in today's on-line Retail Bulletin is about the current success stories of the growing discounter food retailers. It is written on the premise that the sector is sheathed in a veil of mystery and myth and that the growth of the sector is perceived by some as an aberration. The problem that I have with it is that it may create as many myths as it dispels and those readers without further information may well be misinformed.

There has certainly been a great deal of nonsense in the media concerning predictions within the retail industry and the likely impact of prevailing economic conditions upon the public's buying patterns. Even in the specialist industry press there have been continuous reports that appear to have contradicted similar reports in the same journal only a week before, with a similar change in opinion following on behind. We have heard, for instance, that the John Lewis numbers are up, then down, then up again - to be followed by the inevitable down. With each turn these reports are accompanied by predictions that all is well, then all is woe etc... it is true that the John Lewis Partnership (JLP) are ordinarily a good bellweather for middle England spending and thus of the state of the retail sector in general, but the danger of the media focussing on a single group is that if the majority of a retailer's core customer group is adversely affected by economic or other factors then that retailer may instantly cease to be an effective benchmark.

Where are the real analyses, it certainly was not that described in the Discounter Myth story in Retail Bulletin - it was written by the marketing manager of Netto Foodstores, and it just might be that he has a biased viewpoint. That's not to say that he should not be able to express his own opinion or that of his employer, because he should, but Retail Bulletin ought to balance this with an independent and informed correspondent to provide a wider view that is less influenced by the 'golden rule'. For the uninitiated, the 'golden rule' is 'He who pays the gold makes the rule'; which makes for chauvinistic rather than non-partisan outcomes, whatever the endeavour unless the paymasters are themselves neutral.

It is clear, we have the opinion of no less an authority than the Chancellor of the Exchequer, that this country is moving into recession. It will not be alone - Ireland, Spain, Germany and others will be there too, if that is any comfort to anyone. With this being a fact then the media has a more pronounced responsibility to ensure that its reporting is accurate and that its opinion and prediction is based upon broad based research with good analysis. Short term, knee jerk reporting is potentially harmful, since it may feed a particular viewpoint and not actually address the underlying key issues that actually affect the economy. The danger is that these cock-eyed reports may serve to undermine any recovery when it begins to develop.

I do wish to point out that this blog is NOT a criticism of Retail Bulletin specifically, it just happens that the example that I have happened to choose was in their daily bulletin today. The
criticism is a general one of the specialist and general media and the manner in which 'sound-bite' reporting seems to have become the norm - there are, as ever, exceptions and I hope that these exceptional reporters will be emulated throughout the press.

Climate Change

2008-09-19T15:59:00.004+01:00

George MacDonald writing in Retail Week has reported on a letter sent from some notable names in retailing to the Prime Minister urging that the Government raise the target for the reduction in carbon emissions by 2020 from the current target of 20% to a new, higher, target of 30%.

I say well done to Tesco, John Lewis and B&Q for having such a public spirited approach to the needs of the Earth and the people and other organisms living on it. One presumes that this request is accompanied by a plan to ensure that their outlets are only positioned in places where the existing transport infrastructure will cope with the necessary abandonment of the use of private cars to move customers to and from their stores? The next step will doubtless be a commitment to town centres, where rail, tram and bus services already offer the best means of serving the travelling customer's needs without recourse to a private car. The free delivery service for all heavy and bulky purchases in those green vehicles producing nil carbon emissions will complete the package and really demonstrate that these businesses really mean that they are serious about carbon emission reductions.

I look forward with growing interest to the fulfilment of these brave commitments - that's what they are, right?

The wisdom of Conran

2008-09-13T14:07:00.002+01:00

Sir Terence Conran is someone that has achieved a first ranking position in the annals of retailing and it is difficult to imagine the UK high street without his influences - Habitat, Mothercare, BhS and a host of others. A designer with a magical flair for retail marketing he has inspired many within the industry and has provided openings for a not inconsiderable number of well-known names.

In an interview with Retail Week, he has reflected on the past, the current and the future - and the wise will take note. The wise that is from all sizes of business; because Sir Terence (he ought to be Lord - No 10 take note!) has reflected upon what are the essential truths that have underpinned his success in retailing and these truths are of as much relevance to the emergent entrepreneur as they are to established chains.

Without this sounding like an advertisement for Retail Week, this is one that ought to be read, so go and subscribe at www.retail-week.com.

In the meantime, keep a watch on what is written in these blogs because they echo many of Sir Terence's opinions - keep down costs, maintain margins, focus on the product and be aware of the customers needs. This is retailing in a nutshell.

Empty properties and business rates.

2008-09-13T13:45:00.005+01:00

Another 'In brief' in Retail Week tells us of the fact that Asda is demolishing a property to avoid the payment of rates on an empty property.

This change in the rules that has been in force this year has all the hallmarks of another classic 'good idea' by an ill-informed civil servant that has the potential for so many unintended consequences that the Government ought to be embarrassed.

I can fully understand why Asda would take such a step, but as a large company they had the benefit of owning the whole kit and kaboodle of the building without there being any hint of residential accommodation being associated with it. In my experience SMEs, where they own property, often have leases (so are not the ultimate owner) thereby in in a position to demolish. They will also frequently have residential accommodation in some form associated with the premises - this means that planning permission would be needed in order to demolish and that that would probably not be granted where the building is seen to be perfectly serviceable.

It is to be expected then that those who can demolish, will; probably wasting perfectly good buildings with all the attendant detriment that the process will have to the environment and the Government's green credentials. It will also be expected that those least able to do anything to ameliorate the effects of paying a heavy tax on an unearning property will be the smaller business.

Many might argue that the best way to avoid paying rates on an empty property would be to occupy it and to trade from it - but that flies in the face of the market reality as it currently is. Hey ho, how many times must it be said that this country would benefit from having a period when fewer laws, regulations and rules are introduced - because that way those that do make it to the statute books might be workable, fair and actually achieve their intended outcome without dire consequences that the authors have not considered.

Business Rate revaluations

2008-09-13T12:57:00.005+01:00

In April I wrote a blog about the start of the process of revaluation for the 2010 ratings list by the Valuations Office Agency (VOA); at that time I warned of the recessionary signs that were developing and hoped that the revaluations would reflect the reality of the economy. Welbeck as ever is ahead of the game.

I note that this week the Retail Week has reported 'in brief' that the British Retail Consortium (BRC) has warned retailers of a 16 per cent average increase but also that research from two property experts GL Hearn and Investment Property Databank shows a much smaller increase for offices at 3.1 per cent.

I think it was the landlords representatives in the recent continuing discourse on rent reviews who argued that "if we can only negotiate new rates every 5 to ten years then we must be able to introduce a level at the start that will give a fair return at the end of that period". On that basis, and some of the BRC members are also landlords, so it is pertinent to introduce this line of argument, 16% seems quite realistic - recent fuel charges for heating and lighting has risen by over 30% in one hike, with more to come? But I am not condoning the rise given that it is introduced arbitarily .This arcane system of taxation is based upon notional rental values in a concise area. Given that landlords are notoriously slow in reducing rentals even when areas suffer loss of markets because of new developments or other factors, there can easily be a delay in reflecting the loss of trade in the rateable value. This is especially true at times such as this where these developments come late in the 5 yearly cycle and revaluations are already set for the next ratings list - a valuation established in 2008 will apply to a property from 2010 to 2015.

It is, of course true, that retailers can appeal the rateable value by making a proposition to change it, and I am sure the VOA would tell us so. However, I carried out some research in Southampton last year and discovered some really strange anomalies and also some evidence to suggest that the VOA is not fair in the way that it carries out valuations and that smaller businesses fair far worse than larger ones. This seems to be primarily because of a lack of understanding and expertise on their part of this arcane system rather than any ill will on the part of the VOA, but I will note that 2005 revaluations saw increases of above 100% for some small retail businesses in that City - they'll think themselves well pleased if the increase were constrained to 16%. I will not labour the point since it has been made in a paper that is to be published in the new year and I do not wish to get ahead of myself, but it would be good to subscribe to the 'Journal of Place Management' and to read the paper there.

Recession coming - let's plan for it

2008-09-10T17:35:00.004+01:00

I read a report somewhere the other day that I hoped was not true. It said that a well known and normally quite sane business organization in the UK was criticizing someone else for "talking us into a recession". My immediate reaction was simply that the remark undermined the credibility of the organization uttering such nonsense rather than besmirched the character of the person being criticized.

It did make me wonder though! I suppose when an economy has reached a point where it could go either way, then a few negative comments about trends might feed into a general feeling of uncertainty which just might create the right conditions to cause investors to retract, or to intensify the feeling of confidence in the minds of the public who reasonably might then retrench their own financial plans - but how likely is it that a negative comment will really create the right conditions for a recession in a national economy? In my opinion, it is extremely unlikely.

The EU has announced that in common with Germany and Spain, the UK is entering a recessionary phase in its economy. I believe that the seeds were sown many years ago; the reduction of this country's ability to manufacture, the reduction in its heavy industries and the diminution of other industries such as fisheries have all led to the point where the economy was less resilient to outside pressures. For any nation that has fully embraced a deregulated ideal in a global neo-liberal model economy it must be prepared for the cold winds that may come from unexpected quarters by ensuring that its domestic economy is robust and based upon solid capital production. In the UK the nation's economy has been increasingly reliant upon the financial markets - weren't we one of the premier markets of the World, up there with the US and Japan; weren't we a major node in the global capital networks? Well, yes, we were. The fault lines in the London markets became all to apparent this week when traders were unable to trade because of the extended 'down-time' of the vastly expensive technology that enables the global trading that is supposed to take place at London Stock Exchange. The consequence of this appalling flaw in their continuity planning? Loss of market share to other newer Bourses that exist because of the EU's policy to open up the markets; another jolt to the confidence within the UK. I wonder what the commentators in the business organizations will think of that one?

What, you may ask is all this doing in a blog that is written exclusively to promote SME retailers in the UK? Well it is a lesson to be learned, and learned fast. Just because you are a SME retailer does not make you any more likely to succeed or to fail simply because of the arrival of a recession. Indeed it is reasonable to argue that the very flexibility of a SME retailer actually lends itself to a greater expectation of survival than a much larger organization dependent upon impressing investors in the markets. What will affect your business is debt and a lack of planning. Some wise sage once said that the absence of any plan to succeed is by default a plan to fail. Just because you are a small business is not a reason not to plan and it is impossible to plan unless you have a full grasp of what your business is doing, how it is doing it and how it could be improved. Planning demands, as a stable mate, essential bench-marking and the ability to track the progress of the plan - it is really no different than planning a hike into the hills - you must know your destination, understand the capabilities of the participants and the equipment available to you and you must then plan a route accordingly. With a primary plan in place the wise expeditioner will ensure that escape routes and survival strategies are plentiful and cater for the hazards that you will have considered in your risk assessments along the way.

A small to medium sized enterprise is by definition a small to medium sized organization and s with any organization its state of development will determine its complexity. If yours is a relatively small and simple organization, take advantage of that fact by getting to understand every aspect of how your business functions and the systems and processes by which it earns its living actually work. The entrepreneur that does this will not simply survive a recession but will, in fact, be well placed to emerge as a strong player in their particular field of expertise and trade.

Whistleblowing

2008-09-04T15:03:00.004+01:00

I notice that M&S are reported to have sacked the employee who passed details of the company's plans, to reduce redundancy payments to a large number of head office staff by some 25%, to the press.

It is interesting to speculate how the proposals contained in the new Equality Bill would impact upon this apparently heavy handed decision. The bill contains measures including a ban on gagging clauses in contracts which would enable employees to compare wages and to challenge any employer who is unlawfully underpaying them. Since minimum redundancy payments are set down in statute one has to hope that discussing redundancy payments will also fall within the ambit of this new piece of legislation.

I am unable to comment upon the details of the M&S case which has been broadcast widely but without substantive detail, because I am not privy to all of the facts; however, I would hope that M&S has acted fairly and legally and that the legal minima are to be paid to their employees shortly to be out of work. If not then the act of dismissal takes on a whole new complexion.

Out of town v Town centres

2008-09-03T15:46:00.009+01:00

The Retail Bulletin (3rd Sept 2008) tells us of a report by Malcolm Pinkerton, senior analyst at the much respected Verdict Rearch group in which he outlines what he sees as the probable future relationship between town centre retailing areas and their out of town counterparts.

I am always interested in opinions from this particular source since they are extremely well placed to obtain current intelligence, and their analysis is founded upon good research methodology, but today I have to question at least in part, the conclusions reached in this report.

I have not read the original Verdict Research paper and so it is impossible for me to comment beyond given in the Retail Bulletin, but whilst a number of Mr Pinkerton's conclusions must surely be proven correct it is equally clear that a large amount of crystal ball gazing must have been employed in order to reach any conclusion. In my humble opinion the report has been produced to early in the current economic cycle and too early in the current down-turn phase meaning that a number of possible challenges may yet arise that cannot have been taken into consideration - what was it that Donald Rumsfeldt had to say about unknowns?

What does seem certain to be right in the Retail Bulletin report is that there has been, and perhaps continues to be, a glut of new un-needed retail development and the danger for town centres especially is that their historic cores are altered by partially complete schemes that will permanently throw the town centre dynamic out of kilter and give rise to the potential for marginalised traders to be further disadvantaged. Retail development tends not, any longer, to be piecemeal and that can be a good thing from the perspective of planning schemes; unfortunately it also means that organic growth in a retail centre is also more difficult to obtain - but organic growth is really what we should all be striving for since this tends to be more sustainable.

Bad news for Oxford - or is it really?

2008-08-12T15:43:00.004+01:00

Retail Week has run a report today by Ben Cooper about an announced delay in developing the Westgate shopping centre in Oxford. The report says that in the opinion of research group CACI that this will hamper Oxford's bid to achieve what would in their opinion be the 30th most important shopping destination in the UK.

So what? Have we become so enamoured with rankings and superlatives that they have taken on a life of their own and as such have sufficient real meaning that they deserve to be an end in their own right? Oxford may not achieve this apparently coveted position in the minds of those who give a damn (I have to admit that I am unsure as to who precisely covets it...) but it does not alter one iota the position that, in this case, Oxford holds in reality.

Oxford has significant standing as a visitor attraction and any retailer worth his or her salt ought to be able to make a perfectly good living in such a vibrant city if they target their audience accurately and ensure that their marketing mix is appropriate to the particular customer mix that the city offers. By being 30th in the rankings will not mean that potential customers in Arbroath are suddenly going to wake up on a Saturday morning and say "I hear Oxford's reached No 30 in the charts - I know! Let's go shopping there today". The good citizens of Arbroath will continue to make their way to those shops that they find convenient and which offers them the goods they want at the price they wish to pay - without the inconvenience of staying overnight.

One reality that is being imposed by the combined stresses of the effects of the global credit crunch and the cost of oil is that the hinterland of the average shopping destination is almost certainly shrinking. So to have national league tables of shopping centres is as meaningful as a national league table for car fuel prices at the pump - if it's too far away then it really has no meaning at all to the punter. Oxford, when compared to the centres that it currently is actually in direct competition with will be ranked far higher than 30th. Oxford has the strengths that are peculiar to Oxford, with its pull of visitors from across the globe as tourists - could Milton Keynes, for instance, ever really trouble Oxford as competition for the Pounds, the Euros, the Dollars and the Yen in the pockets of those visitors; yet MK is developing a significant and broad shopping interest in a purpose built modern centre and it is only an hour away by car from Oxford. No they are in different markets for those whom they seek to attract from a distance.

But this is not about Oxford, this is about meaningless comparators that presumably do mean something to someone. The point that I am labouring to make here is that local authorities, as lead authorities in planning matters and who in the modern age are largely responsible for the vision that is their town centres, ought not to be drawn into this charade of league tables for the sake of it. Your town will have its attributes, it will have its peculiar strengths and it will have a definable hinterland beyond which the hopes of attracting visitors are small, no matter how well placed you might be in the league tables. Individual stores may have a hinterland that are well beyond that of the town generally, but this will not mean that town is likely to attract significant general visitors from equal distances.

It is, of course, a fact that there is a gravitational effect for retail centres and generally speaking the larger they are the greater the hinterland they will achieve. It is also a fact that the greter the non-retail entertainment and leisure offer, the greater the hinterland - because it will become a day out. The rational plan is to ensure that your local shopping core has all the characteristics that will draw the bulk of the custom from that area surrounding the centre in terms of affordable travel distances and to be the best for your local residential population and those visitors who will be arriving anyway. Let us ditch the notion that a shopping destination will ever be anything but sub-regional in nature and ever likely to be in absolute competition with the other end of the country.

Boris Johnson has hit a chord!

2008-08-08T13:00:00.006+01:00

It seems that landlords and organisations representing the larger retailers are not necessarily in favour of one particular sentence in the "Planning for a better London" report published by Mayor of London, Boris Johnson, in July.

I remember a conversation that I had a long time ago; it was a chance encounter on an aircraft flying into Leeds-Bradford airport. My passenger neighbour was the developer of what was then a new retail scheme being built in a North Yorkshire spa town. I asked him his opinion on the issue of anchor stores in this sort of scheme and I admit that I did start to preach to him just a little about the disbenefits of offering peppercorn rents solely to the 'usual suspects' from the corporate world of retail and suggested that there were many benefits to be accrued to the scheme and to the 'uniqueness' of the centre if a similar offer were available to a local 'anchor. I was delighted to hear his response; he told me that he had already been doing some work on precisely this notion and I could expect to see incidences of this phenomena in the future.

In my travels I have become aware of increasing numbers of independent retailers taking space in major centres but I am equally aware that they are not offered the same terms as their better known neighbours - yet they have to comply with the same conditions and standards of trade. In the case of one well known Mall in the north of England I know that one year leases are the norm. It is very restrictive on a growing business if the level of investment that you make in your store is premanently reflective of an investment of just one year. It is another example of the imbalance of opportunity that exists in the world of retailing. If you are able to convince a backer to loan you the capital to invest in a chain, then you would immediately attract better rates - notwithstanding the potential that your business might have if the economy was to suddenly find itself in a potentially recessionary phase. If, on the other hand, you are hard working and wish to grow your business organically in a way that is fiscally more sound then you will apparently be penalised by the landlords.

I, for one, think Mayor Johnson should be congratulated on his proposal to use section 106 agreements with developers to ensure that they provide affordable space for small businesses. I notice however that the landlords foresee doom and gloom and that all sorts of unintended consequences will issue forth from this decision - perhaps they will, the nature of unintended consequences is that they were not planned; I'd throw out the challenge to the landlords and their representative organisations - tell us what you believe to be the likely consequences that Mayor Johnson is leading us into, and let those of us without a directly vested interest in the issue make a judgement. Until then I will end by simply saying that I am still waiting to see the phenomena of local anchors in new schemes and "Well done Boris!"

Red Tape woes for SMEs

2008-08-08T12:31:00.003+01:00

The Forum of Private Business (FPB) is welcoming apparent moves to reduce red tape for micro-businesses (i.e. those with fewer than 10 employees) according to the Retail Bulletin and they add that Brian Binley MP, a Conservative member whose name has appeared on this blog recently was the first Member of Parliament to sign the "Think Small First" pledge in the house. The idea behind the campaign initiated by the FPB in March is to get all forms of Government that affect our smallest businesses to think about the time that it takes to complete the forms that are associated with many new bits of regulation; the FPB claim, and I have no reason to disbelieve them, that Governmental organisations regularly underestimate the time that it takes to make the statutory returns that are imposed via law and regulation.

It does not take a genius to realise that if you apply a one-size fits all approach to gathering information then it must have the greatest effect in terms of proportion of management and staff time on those with the smallest work-force. I say that the FPB is absolutely right in their campaign and well done to Brian Binley for taking the lead in the House of Commons - now all that needs to happen is for this enthusiasm to be reflected in a dramatically reduced amount of red tape to micro-businesses.

Conservative Small Shops Commission

2008-07-21T10:58:00.006+01:00

I probably should have read the interim report of the Commission into small shops in the High Street which was set up by the Conservative Parliamentary Enterprise Group and whose final report was published this month (July 2008). I probably should have read it so that I could comment before the final version was published, but sadly I was not on their circulation list.

Having now read the final version I think that it is worth my while commenting upon it from the perspective of an SME retailer. In general terms this document is welcomed; it certainly is a positive contribution to the discourse about our town centres and the problems relating to the smaller businesses and has a number of interesting ideas that will inform the on-going debate.

There are some criticisms that I would level at it, the first being that the recommendations which it makes to the next Conservative government are written in such a manner that the government in question, should it be elected, would be able to adopt just a few select 'options' from the list and be able to claim that they have followed the recommendations of the Commission. This being the case, then the non-MP representatives on the Commission might feel that they have not achieved all that they set out to do. But, let us be positive because all retailers have to be optimists and let us look at some of the detail - especially the details that on first reading might be seen as not very well thought through.

The Chair of the Commission, Brian Binley, MP, in his introduction speaks about some of the factors that have brought about a dislocation in our town centres such as the introduction of inner ring roads, often constructed to aid access to in-town shopping centres. It is difficult to disagree with this as a stated fact; that this disadvantaged smaller retailers is contained in the reality that High Street rentals whilst not reaching the dizzying heights of the past few years have always been regarded as 'premium'. These premium rates were very often not seriously undermined when the 'High Street' moved in to a purpose built Mall, the original 'High Street' location usually retained a legacy premium rent and, in consequence, business rate. This all served to ensure that the SME retailers was traditionally contained in the more major town centres to the periphery of the core shopping area and in secondary or tertiary streets.

The position of these shops was good enough since they were able to establish themselves and their credibility with their chosen customer group and to build. The arrival of the inner ring road, however, more often than not, cut a swathe through these 'less important' streets and this was very often because a paper exercise by the planners showed this to be the most efficient. Hopefully the current generation of planners entertain more holistic thinking about their towns and are able to understand that roads act both as connectors and dividers. The smaller businesses thus cut off from the new core area have so very often been allowed to decline with minimal external investment. This paper offers no hope for the areas in this position whose final demise has not yet been reached.

Strangely the paper speaks eloquently of the need for markets; I have just this week been visiting the thriving markets in the towns around South Yorkshire. Here the markets co-exist with shops, indeed many stallholders are also shopkeepers, and the public are keen market shoppers - this is especially true in times of downturn. The situation in the South is, however, quite different. The tradition of the market has been steadily eroded and the 'charter' markets have been sanitized and repositioned to support the most recent town improvements. In his book 'The Captive State', George Monbiot in chapter three, wrote about the plight of the St Mary's area of Southampton; an area that had been, like all retail areas, passing through phases of success and decline. This particular ancient area had from the Victorian period been a major base for those victualling the ships in dock as well as providing a local shopping area for a densely populated part of the town. In the 1970s the planners were concerned that the town had stagnated since the rebuilding of the town after the serious war damage. They put in a series of dual-carriageways to serve the 'core' and although the St Mary's area was no more than half a mile from the High Street it was effectively cut off by busy roads which had the appearance to many of being impermable barriers. They lost their ancient market and a significant number of shops. The response by the planning authority was to redesignate St Marys Street as only partly retail and to allow a large number of new residential properties on the street level. This authority has now, following a more major shift in the town centre with the opening of a major shopping centre and surrounding retail park, brought in a new market, on the pedestrianised High Street adjacent to the entrances to the new centre, and these cut into the established trade of the few remaining SME traders to the east of the High Street that have clung on to life in the new 'core'.

So, there are good reasons why I would say that markets are really good, when they are planned and properly operated and where they are not seen to cream off the sales of less mobile traders whose investment is firmly attached to their street. This does not come through in this paper.

The paper also deals with other issues such as transportation, charity shops and a whole range of other important matters, many of which I would agree with the Commission, and which like them I believe needs further work to reach a fair and equitable solution. This is key to all things with SMEs, they need fair access and fair treatment. They, of course, also need to do their job properly and not to complain that their business is suffering when the problem is self-inflicted. I am conscious that this blog is getting a bit long-winded, but I want to mention a few other points from the paper before leaving it.

There are a number of points put forward that I am convinced are a mistake. The proposal to change coffee shops from A3 to A1 may make sense if the beneficiaries were going to be nice little local internet cafes such as appears to be the thinking behind this one, but actually it will be a licence to the major coffee chains to get set up with fewer restrictions than currently obtain. I have no problems with Starbucks, or Costa, or Nero or any other fascias, but if the intention of this proposal is to encourage local enterprise - then it will fail.

The paper refers quite a number of times to the retention of the needs test in PPS6, I would reiterate my previous blog on the subject and say clearly that there is a need for local control and for ensuring a balance in the towns of the retail mix available, but the need test, even just applied to edge or out of town sites is not as pragmatic an approach as a full impact assessment - and providing that the SME retailer is properly represented in that assessment process, then the needs test is no longer viable.

It is crucial before the development of any new initiative, such as the Community Hub Enterprise areas' that the local population actually decides what the role is that they expect of their town centre. Even major town centres often play multiple roles, such as being the regional shopping centre as well as the local district shopping centre. This becomes increasingly true as greater numbers of people move into new residential areas immediately adjacent to or actually within trading areas. The amount of public space out of trading hours, for instance, is dramatically reduced in a regional shopping centre scheme than would otherwise be the case in a local shopping scheme.

I could go on, but I am in danger of giving the impression that I do not like this paper - and that's not true because I do, and I think it deserves wide recognition. But I see it as a point along the journey rather than the destination.

Praise for Sheffield

2008-07-18T12:03:00.003+01:00

Earlier this week I attended a meeting of the Federation of Small Businesses held courtesy of Costco in Sheffield. The meeting had been trailed as the launch in South Yorkshire of the Federation's 'Keep Trade Local' (KTL)campaign, something which has been the focus of my attention for a number of reasons recently and the keynote speaker was to be none other than the Leader of Sheffield Council, Councillor Paul Scriven.

Because I had not been fully engaged with the 'KTL' campaign for reasons that I have discussed with the FSB nationally I arrived at the meeting fully expecting to be at odds with the Federation and that a politician was to address us might simply add fuel to my concerns. In the event I was delighted to find that the evening was full of very positive surprises; the first came with a short chat with the local FSB chairman, Tony Cherry, who told me more about the background behind the 'KTL' campaign than anyone in the FSB had previously managed and it was fascinating. I discovered that the idea had been born, not in the FSB offices in London, where currently the campaign seems to be managed from, but in Sheffield. I learned that it had come about because of the concerns by the local FSB members that in the wake of the June 2007 floods the area was swamped by companies being brought in by insurers to carry out the remedial works that were desperately needed. Why, they asked, were local firms not used by the insurers?

The FSB 'Keep Business Local' campaign has been seen by many, including myself, as essentially a campaign about local food retailing - but I was wrong. It is much more, and includes the idea that procurement by governmental and publicly funded organisations should enable tendering by small businesses. Which is the cue to introduce Councillor Paul Scriven, the Leader of Sheffield City Council.

Cllr Scriven formed his administration after the recent local elections and apparently began his period in office with a most un-politicianlike apology to businesses in Sheffield. The apology was made, he said, because he felt the the City Council had for some time not been responsive to the needs of businesses and, possibly worse, had created an environment that was not conducive for local businesses to thrive. He then laid out the plans that he was putting into place to change things around. He has already appointed a new Cabinet Member for Employment and Enterprise and is intending a whole raft of new measures including semi-formal structures for consulting with local businesses of all sizes.

It remains to be seen whether Cllr Scriven will be successful with his initiatives, but I have to say that I have been around local politicians for a very long time and it was the first time that I have seen simple responses to the questions that were put by local people. These answers seemed considered, honest and most importantly straightforward and short! I think that we will hear more of Councillor Scriven and Sheffield City Council, which I applaud and wish well in their endeavours.

PPS6 Consultation and what Councils need to remember!

2008-07-15T12:08:00.008+01:00

The Government is carrying out a consultation about the future shape of PPS6, the guidance to planning authorities about planning town centres and other retail areas. This is one of the most important pieces of Government regulation in the development of town centres and it therefore justifies a few minutes of the time of those businesses who are often the most badly affected by local planning issues - SME retailers.

I have argued for a long time that SME Retailers are disadvantaged in terms of the influence that they bring to bear on local planning issues, far less than their larger counterparts, and one reason for this is that too many SME retailers fail to look beyond their doors for things that may influence their business until it is too late to do anything about it. Well, here is an opportunity to redress that imbalance just a little!

Take the time to visit www.communities.gov.uk/pps6consultation and have your say. Personally I am fully in favour of the removal of the 'needs' test which produced unintended consequences that served to disadvantage sectors, especially SME retailers. I am also in favour of the introduction of an impact assessment; however, unless the issues of disadvantage in the exercise of the power of influence are addressed, and the SME sector is effectively consulted on town centre planning strategies, then this too will have unintended consequences.

Another factor that seems to act as a barrier to effective communication is the view held by many local authorities that SME retailers are just too disparate a group and it is costly and time consuming to communicate with them on detailed issues - meetings of local traders simply cannot cope with detail. Local Planning Authorities then need to be mindful that one of the major factors differentiating these businesses with those of the much larger competition on the High Street is that the SME retailer has most likely committed 100% of their investment in their site and in their town and that their capital circulates locally - the same cannot be said of the more common fascias who are commonly committed to the competing towns too! This fact deserves some reciprocal commitment from the local authority. It would, of course, be foolish to believe that the local authority would be able to consult with all the local SME businesses, but then they do not consult with all the major fascias either - there is usually a small group of locally influential players and very often this will include M&S, Debenhams, Boots, and others of a similar status in the High Street. It is essential to my mind to ensure that an articulate champion of the SME retailers, who is up to date with the concerns and the issues affecting the SME sector in the town is consulted and as involved with the processes as those previously mentioned are.

Advantage in recruitment and retention

2008-06-25T01:40:00.005+01:00

Retail Bulletin is promoting the 2nd Annual Retail HR Summit which is aimed, as you might expect, at retailers but in reality it will probably not attract many SMEs - but that will not be the fault of the organisers (although it is marketed in a way that might deter many!). The lessons to be learnt at this event are fundamental even to the small employer.

The headlines are citing that it will be advantageous to differentiate your brand in the recruitment market - I have to say that that is more than possible even if you only employ a few people. They are promoting training input as an important tool for staff retention but also for adding value to the bottom line.

All too often the SME retailer falls into the trap of believing their own unfounded statements of woe and doom when it comes to training; "I can't afford for him/her to be off the shop-floor", "I can't afford to pay for any training", "They'll only leave if I train them". These perfectly understandable comments are not based on a well planned training strategy as a fundamental function within the business plan and often arise from a lack of understanding about how to capitalise on well trained and motivated staff.

My experience comes from when I devised a training programme to counter the fact that my store was based within half a mile of several major store groups, each with an effective training policy. In embracing an established programme I was able to attract funding (although there were associated costs); I was able to focus the training on the weaknesses that I had previously identifed in a simple SWOT analysis; equally I was able to build on the strengths. By ensuring that the individual needs of the staff member was also taken into consideration and that they were duly recognised for their efforts, I was able to reduce the turnover of staff, improve the performance of staff in each of the departments thus cutting costs and increasing revenues by making the sales staff better able to convert sales. The chosen route was to work towards awards that were within the National Vocational Qualifications framework, so that even though we were small, our training suited the requirements of a recognised award.

Staff were rewarded for effort, producing a far better return on the firm's investment in them and customer loyalty was noticeably improved and costs reduced. What can I say? If I can do it...

Just a small aside, depending on the size and location of the business, there are funds available to subsidise relevant training and you will be surprised how well motivated staff will commit to working in their own time. Try it, you might get the bug yourself! Contact Train to Gain and your local Business Link for more information.

Re-running the problems of the 1970s

2008-06-23T18:16:00.004+01:00

Today the news that council workers are to strike sends shivers down my spine. I remember, all too well, the problems that beset the people and businesses during the various challenges that were put up by pressure groups and the Unions to the Government of the day in the 1970s.

One cannot help but imagine that the present Government is being seen as weakened by the economic conditions, their persistence in pursuing unpopular policies and lack of leadership when the going gets tough. If this is the perception of even a moderately sizeable section of the population, then we must all prepare ourselves for the fall-out. In the case of SME Retailers it is essential that you have contingency planning for the continuance of your business during periods of disruption of essential services.

If the Government is weak then there will be many people wishing to exploit that weakness to further their causes, for good or ill. It will be interesting to see if the messages of 'prudence' that were given to the nation by the last Chancellor of the Exchequer have actually provided the Exchequer with the wherewithall to withstand a period of internal conflict such as we saw thirty years ago with similarly weak Governments; it will be also interesting to see if there are Statesmen (or women) in the present Government that act for the common good rather than the thought of losing the next election.

Tough times for consumers as well as retailers

2008-06-22T19:16:00.003+01:00

Each week now we are fed more bad news about the economic conditions and tales of woe in the High Street. This week the Observer has commented on warnings issued by Lord Harris of Carpetright fame, a very experienced and successful British retailer, who sees real problems for consumers as well as retailers with rising prices affecting the entire supply chain.

The Chancellor, Alistair Darling, has told the world that Britain needs to have restraint in wage demands in order that the Government's inflation target of 2% might be reached, yet we hear that the fuel drivers have settled at 14% in their claim. The Governor of the Bank of England has stated clearly that the country is heading into a period of rising inflation and hints that the Monetary Policy Committee is likely to recommend raising interest rates to compensate for the predicted 4% inflation.

Gordon Brown, the Prime Minister, is attending a summit called to discuss the high and rising global cost of oil. It is unlikely that he will be able to make much difference given the conflicting pressures and constraints that exist in the world markets and in individual producing countries, but it makes for a positive press that the PM is standing up for the country. The real problem is that these rising prices must impact upon all parts of the supply chain and will directly affect consumers with higher prices at the retail pumps, indirectly by the costs of transporting goods to the High Street shops and those associated with manufacturing those goods.

The combination of these pressures is bound to exacerbate the already toughening trading conditions; so can SME retailers be optimistic about the future? Of course they can, retailers must be optimistic above all things. The economy will move through cycles and the current cycle, though likely to be really tough, will end. The wise retailer will allow for the changing conditions in their planning and will ensure that they are entirely fixed upon the changing needs of the consumer. It might seem obvious that they will spend less - they'll be less to spend all round, but whether consumers buy fewer products, buy less often or a combination of these strategies will depend on a range of factors - too many to rehearse here, but the wise retailers mentioned before will be trying very hard to understand the buying habits of their particular customer sector and will change their own marketing habits to suit. Let us pity those larger retailers who have non-retailing shareholders that demand continuous growth and rising profit - when things are really tough, prepare the ground for future growth but be content with holding ground and retaining a reasonable profit.

Tesco under cover

2008-06-22T16:52:00.005+01:00

The Sunday Telegraph has today published a piece about an unusual tactic being employed by Tesco in making a planning application for a store in Barnstaple in Devon.

Apparently the application was formally made in the name of a local retailer called Brian Ford, a business that they have taken over and have represented as the true identity of the applicant. My interest was piqued not simply because it begs the question as to why Tesco felt the need to conceal their identity but also because, in the Telegraph piece it suggests that, other retailers have complained that Tesco has acted in an "underhand" manner. That begs the question about whether they are more upset that Tesco stole a march on them in Barnstaple or that Tesco had thought of the wheeze first.

What I would hope is that the planning authority in Barnstaple consider the need for the town to have a new 80,000 sq ft supermarket and the potential impact that it might have on the trading environment of real local traders and the long term choice available to consumers.

Internet - the death of shops?

2008-06-11T13:22:00.004+01:00

Mark Chirnside (Chief Executive Officer at Ukash) makes some interesting observations in a piece that he has written for the Retail Bulletin today. He reminds us of the forecasts in the 1990s, at the commencement of the dot.com boom, that many believed that the end of the high street shop was coming shortly. Some of us never did believe it but there is strong evidence, according to what Mark Chirnside is saying that some of the largest store groups were completely wrapped up in this Wilsonian 'heat of the technological revolution' thinking.

The technology certainly arrived in a truly revolutionary manner and there is no denying that a substantial amount of retail trade is carried out online but, as Mark Chirnside comments, there remains a substantial cross-section of the population who are not on-line; I would go further and say that other factors are also at play in this scenario - with the current development in the mortgage lending in the UK where a growing number are moving into negative equity and a further number being subjected to repossession, the worries about personal credit will inevitably drive down the ardour for spending on-line. In fact I can foresee a small but measurable upturn in the use of cash, which goes against the trends of the past decade, and which proves tricky to those wishing to make use of the on-line bargains that Chirnside uses in his argument.

The piece which prompted this blog was primarily about on-line useage and the fact that Sainsbury's have had to acknowledge that having trumpeted about having only on-line job applications have now had to make a concession and install terminals for making these applications in stores. It does however, also raise the issue about growth in on-line trading and how this might pan out during this current retail down-turn. We know from past experience and current turnover eports from the retail press that the value food sector with retailers such as Lidl are performing at a higher than previous level and that the premier brands are not growing their turnover at the same levels as before. It seems to me to be reasonable (without a shred of empirical evidence to support it) to assume that these factors will be reflected in consumer attitudes and spending on-line as much as appears to be happening in physical shops. Does this signal the end of dot.com trading? Of course not, but here in the UK the sophistication of the population is often underestimated, the customer will respond to whichever channel they have access to, that they have confidence in and which does what any retail activity must do - to provide the right goods at the right time at the right price and in a customer friendly manner.

Personal experience of on-line shopping has provided me with prima facie evidence that at least one major on-line retailer is absolutely hopeless in providing the sort post-sales after care that a physical shop is able to do. OK! So that's another issue for another blog at another time. For the moment I must lock myself away in a darkened room to ponder how I am to get this message out to all those folk who are currently not on-line - I wonder if Sainsbury's will give access to my readers through their in-store terminals?

Tough times - let's not allow training to be the victim!

2008-06-10T15:09:00.005+01:00

The signs of a retail downturn are very much in evidence now and, as will happen in any period of downturn in the trading cycle, businesses will be looking for ways in which to reduce costs. It is an unfortunate fact that very often training budgets are amongst the first to be cut back as these are regarded by some as 'soft' budgets and not productive. This is, of course, a real mistake.

The one aspect of any cyclical downturn is that there will be an upturn along in a while. The businesses that will be best placed to not merely survive but to prosper are those whose planning takes that aspect into consideration. The ways to prosperity are many, but the essential ingredients in retailing are cost control, informed range planning, low stock holdings to meet short-term needs and the best trained and motivated staff available to sell the product.

If you think that you might benefit from an analysis of the training needs of your business, did you know that you can get free advice and possibly get free training provision? Contact your local Business Link - use this link to track down your local business Link :
http://www.businesslink.gov.uk/bdotg/action/directorysearch
When you contact them ask them for all the advice that they have to offer and also have them put you in touch with local Skills Brokers.

Retailing does not have a good investment record in training, although this has been improving, and now more and more opportunities exist to upskill the workforce - which includes you!

E-mail banking scams

2008-05-29T13:43:00.004+01:00

Welbeck has just forwarded an e-mail to Barclays Bank Internet Security department - it was received this morning and was headed with a poorly scanned image of Barclays logo and name and requested that we should follow a link in which we could confirm our banking details.

This is not a new scam, but even though the banks regularly warn about them people still seem to fall foul of them - because they look official (in this case with a nice little copyright Barclays 2008 at the bottom - neat touch, adds authenticity!).

Welbeck cannot imagine that a worldly wise SME owner will fall for this, but it is as well to ensure that if you have entrusted the answering of mails to others, particularly others with access to bank account details, are also fully aware that these are scams and not to be responded to.

Keep your details to yourself, the banks will NEVER send a message asking for confirmation of your account details. They will not ask for any private information except for password information to give you access to your accounts and services -so remember NEVER to give anyone else your passwords either, and change them periodically!

Discounters appear to be winning - a warning on discounts

2008-05-29T13:28:00.005+01:00

The news in Retail Week is that the discounters in the food sector, including Lidl and Netto, may be gaining market share from Sainsbury and Tesco as a result of changing spend patterns arising from the pressure being applied to their customers purses.

Welbeck has often mentioned warnings about discounting, which needs clarification here. Discounting where it is the basis of the business plan and the supply chain is properly managed such as is the case with models such as Lidl et al is good business, and is paying off for them currently - they will always gain edge in recessionary periods - but the important thing for small retailers who are tempted to emulate these larger players is that it is the basis for their business plan and they do manage their supply chain. SME retailers can't just offer large discounts without first considering how this is to be financed and what it is trying to achieve.

The advice from Welbeck is clear - if the margins can be retained, then discount away, if not, then ensure that the period of discounting is limited and the reason for discounting is catered for in the discounting structure.

Are we prepared?

2008-05-22T16:25:00.003+01:00

I wonder if the title of the draft Queen's speech document published by the government this month is not without irony? It has been entitled "Preparing Britain for the Future", and was launched by the Prime Minister and the Leader of the House of Commons earlier in May; ignoring the first ridiculous thought that occurred to me, that it is as well that the government is preparing us for our future rather than for our past, but I let that one slide past.

Instead I was struck by the thought that given recent election results and the fact that there are signs that certain groups have spotted what they believe might be weakness in our nation's leadership and are circling ready to feed upon its carcass - it did fleetingly occur to me that this government might not have much of a future to lead us into - even as I write this the results for the Crewe and Nantwich by-election are anticipated. But that is not my real worry, no my real concern is about our preparedness to respond to the govenrment's request for feedback.

This draft document is peppered with items upon which the government is asking for our opinion, and tells us of other matters upon which our opinion had already been sought. I wonder how many small businesses are aware of this opportunity to feed directly into the government's thinking - very very few that I have spoken to were aware of it. However, a number of large organisations have already made comments and are publicly saying as much, but there are several proposed bills that will impact directly upon the small businesses who might be out of the loop.

My advice is to follow these links:
www.hm-treasury.gov.uk/documents/financial_services/financial_stability_framework.cfm

www.hm-treasury.gov.uk/budget/budget_08/documents/bud_bud08_saving.cfm

an extract:
Consultation
Business rate supplements: a White Paper (October 2007)
followed extensive public debate on this subject, and the measures in it will not be subject to further consultation before the Bill is introduced. However, the Government will be consulting on the detail of implementing the scheme through secondary legislation and guidance, for example arrangements for votes on supplements where required and defining "economic development". In the meantime any suggestions on detailed implementation of the policy set out in the White Paper should be sent to contactus@communities.gov.uk.

For many of the issues in the paper:
www.commonsleader.gov.uk/draftprogramme.

Go to the 10 Downing Street and Parliament web-sites and read the whole document - if, like me, you have difficulties finding the paper try the Northern ireland Office site - it's all there. Very well informed are the folk of Northern Ireland.

Remember that these consultations may lead to regulation that will affect your business - act now or miss the opportunity.

More shops in jeopardy? Consequences of charging rates on empty properties.

2008-05-16T05:54:00.004+01:00

I have recently completed some research in a town centre that is a major shopping destination and have been hit by the number of empty shops on the periphery of the core retail area. It was clear that they had not all become vacant for the same reasons - town centres are complex organisms so that was reasonable; but they are all now subject to the new regulations and are therefore subject to national non-domestic rates, which are now payable even if the property is empty.

I have to wonder if the introduction of this measure will be yet another with unintended consequences for the government, especially given the unfortunate timing with the retail downturn associated with the global credit crunch and its knock-on effects.

The purpose of the change in the regulations was clearly to force landlords to make their properties available to rent, presumably expecting market forces to set prices that would attract tenants even in the most unglamourous of locations. This may well have been true before the onset on this latest cyclical downturn but the current market is seeing reductions in retail space and less capital available from traditional lending sources for new businesses. It must, therefore, be reasonable to anticipate that the landlords with spare capacity will simply not be able to let because of a lack of potential tenants. This must then present the landlords, particularly those in peripheral areas, with a dilemma - do they stoically march on in an exceptionally unpredictable market and be saddled with ever rising business rates to pay, or do they sell?

If these properties are sold, it is likely that they will be to developers, and these developers are unlikely to develop retail. Consequently we will see the further retraction of traditional retail areas and the potential for more food deserts in areas of urban deprivation. I think it is time for HM Treasury and the planners at central and local government levels to appreciate that the ideas intended by this measure simply will not be realised in the current economic climate, and it is more likely that they will promote long-term consequences of reducing space for new business for when the up-turn begins.

OFT draws a line

2008-05-06T12:26:00.005+01:00

I have been amazed at the news in the Retail Bulletin over this last weekend (4 May); they report that Mr John Fingleton, the Chief Executive of the Office of Fair Trading has "accused consumers of being 'schizophrenic' as he attempted to draw a line under the argument that supermarkets were responsible for the closure of local shops", he went on "if shops are closing it is because people don't go and shop in them, and that's not our problem..."

Oh dear, oh dear! We do seem to have made very muddy waters with these arguments about small shops in the food sector, not helped by well intentioned campaigns by lobbying groups who take a fact - distort it, and then feed it back in as testimony. But Dear Mr Fingleton, it is your job - a highly paid job, paid for from our taxes; including the small retailers' - to get behind these stories and to ensure that all aspects of fair competition are exposed, analysed, commented upon and wherever necessary acted upon. It seems to me that Mr Fingleton and Mr Peter Freeman (Chair of the Competition Commission inquiry) have together been in receipt of masses of evidence, claim and counter-claim; it seems also to me that sufficient amounts of this evidence have indicated the real possibility of trading tactics which if they were being carried out by small retailers without the same degree of the power of influence as others in the market place, then they would, by the end of May 2008, probably be liable to prosecution under the Consumer Protection from Unfair Trading Regulations 2008.

The furore over the loss of independent food shops is not merely a case of choice by consumers; in reality it is a range of issues, of which it has to be admitted, some are brought about by the smaller retailers themselves. Smaller retailers do need, so often, to smarten up their acts - but they might argue that almost any strategy they employ to do so would involve expense, and their margins are severely under pressure already; but that is another story. This blog is focussed on unfair trading. It is impossible that the OFT and the Competition Commission inquiry did not receive any plausible evidence of unfair trading - good grief, it is still being provided by the large players themselves. Is it not the case that Wal-Mart ASDA has put forward evidence of wrong-doing so to be able to claim immunity from prosecution themselves, just this week? Did the inquiry discover this when they were sitting? Does this not in itself present evidence that at least one firm was less than forthcoming during the enquiry? Is it not the case that if you do not ask the precise and explicit question of these firms then you will receive imprecise and inexplicit responses?

Dear Mr Fingleton, instead of merely taking the stance that 'if consumers do not shop in a particular place that this is evidence of real choice' try looking at the supply chain dominance using methods of investigation that do not disadvantage to the supplier, try seeking explanations about the impacts of planning policy and how the SME retailer is disadvantaged in terms of place. Try to look at imbalance in the power of influence that exist at local level, at regional levels and most of all at national level between the players . Most of all remember, what is true today of the food stores is rapidly becoming true also of other sectors and that no matter how tedious you imagine this story is ... it is going to be with us for a good while yet!

Business Rates - 2010 revaluations

2008-04-25T17:17:00.003+01:00

I wonder how many businesses realise that the Valuations Office Agency are starting the process of establishing the rateable values of for the 2010 valuations list for Business Rates. It will be the rents that businesses are paying now that will be used as the basis for the rateable values in two years time.

It must be said that this is the normal cycle for the agency, but isn't it just about right that just at the moment when landlords are likely to be easing rents to retain tenants that the current rents will be enshrined for five years as the basis for taxation. It will be interesting to see how the rateable values in 2010 compare to the rentals at that time - if the rentals fall then it will be worth challenging the valuations. It will be particularly necessary for retailers who, if Sir Stuart Rose is correct, will be at the height of a period of depression and suffering revenue slumps. It does make you wonder if this system is either fair or practical as a tax raising system.

Green speaks great sense!

2008-04-18T10:50:00.003+01:00

As a champion of SME retailing it is not often that you will find me agreeing wholeheartedly with Sir Philip Green, but in a piece written by Glynn Davies in the Retail Bulletin he gives advice about keeping ahead in the world of retail. His advice is as pertinent to a smaller operator as it is to one at his level of operations.

Speaking at the World Retail Congress in Barcelona he is quoted “Far too many people are driving down the price route but there will need to be differentiation...with newness and speed to market. Be competitive but also offer something different. To get people to shop in your stores you need to have something different.”

I have said as much in these blogs in earlier postings - it is essential in the economic climate that is developing that margins are maintained - clearly you need to be competitive, but that can be achieved by having that unique sales proposition rather than simply by being cheapest. It is often overlooked in SMEs that retail marketing is not simply advertising and merchandising it is about researching the product, securing a solid supply chain with mutual benefits and ensuring that the product on offer is a 'must have'; It is about having motivated people who understand the product on the shop floor interacting with the customers; it is about value for money, not about cheapness!

BSSA Summer school bursaries

2008-04-07T13:53:00.005+01:00

This prestigious school has a fine reputation and those whom I have met who have attended over the years have all been fully signed up to the real advantages that they have gained from their attendance. In my experience the kind of subjects covered are best understood in the residential environment of the Summer school - a real hot-bed of creative thinking and learning.

What is not always recognised is that owner-managers are just as eligible for the busaries that Skillsmart (the sector skills council for retail) award as anyone. So rather than wait for the guys from House of Fraser, Debenhams or other 'names' to swamp the school, why not apply yourself? The problems of the smaller retailer and the skills that they learn can add an interesting and valued contribution to the whole experience - and, of course, the smaller retailer can gain benefit from learning what they do in the bigger stores too!

I see, from reading the Retail Bulletin, that the bursaries are now available; so what's stopping you?

Bad tidings as April gets underway

2008-04-03T13:15:00.004+01:00

This blog has been with-held until a decent period had past since the 1st April - just in case anyone confused this worrying message with a form of black humour. Sadly, it is the real thing...

Katie Kilgallen, writing in the 'Retail Week' about the latest ICM poll to be published reflecting the mood of the consumer in the High street. She reports that "Of the 1,050 consumers surveyed, two thirds believe economic turmoil will increase over the next 12 months. Nearly a third fear for their jobs and 42 per cent feel they have less to spend."

Yes, it is only a small sample, yes it might well be that the particular locations of these people would mean that their view of the world is unlike anything experienced in your High street; but all that does not mean that it is not a reality. Retailers, especially SME retailers, are resourceful and optimisitc creatures usually - but it is those who are pragmatic and plan for resilience against the draughts of recession who are most likely to remain in business.

Of course, these things also offer a glimmer of opportunity too! The flexibility of the SME can really score in times of recession - remember not to buy too much stock and keep a weather eye out for the changes in the market demands and re-stock in small quantities of those things that are selling. Don't discount more than is absolutely essential and trade on quality service and quality product - but at a reasonable price that compares well within the normal market range. Above all, maintain profit levels, reduce costs and ensure that your customer service is second to none! (Remember to train your staff effectively too ... the subject of another blog, I can just feel it coming on)

Time for Government and Landlords to think!

2008-03-18T13:33:00.005Z

The Finance Secretary in the US Administration has warned of grim times ahead in the US economy; Tesco has ordered cost cutting measures; Pre-Easter sales are being unfavourably compared year on year - there do seem to be a number of reasons for all retailers to be intensely aware of their costs.

For smaller retailers the largest costs tend to be staff and property - staffing in SMEs is generally at a higher level (number of staff against pound for pound spent in store) than in larger organisations so this might seem to be an easy step to take in reducing costs - except that in smaller units, a single member of staff is a significant percentage of the whole and can make the difference between making sales, having security, or even just trading for a whole week with adequate cover. Legislation now dictates the maximum number of hours to be worked as well as the minimum pay for that work; this doubles the pressure upon SMEs to limit the number of jobs available for the very people that Government is trying to protect - and it is a case that either the SMEs do impose these limits or else there will be no jobs at all in that sector, something that will do the least well paid members of society absolutely no good at all.

The issues relating to occupancy costs are legend and need not be rehearsed here, but an interesting observation has been reported by Jennifer Creevy in 'Retail Week' and commented upon in an editorial; she reported comments made by William Landale the CEO of Lombok, a furnishing retailer. He is reputed to have said "I hate Landlords"; and can't we all sympathise with Mr Landale for that heart-felt utterance? Of course, Mr Landale was probably not actually sticking pins into a doll version of any particular individual landlord when he was being quoted. Mr Landale was actually commenting that landlords seem to be oblivious to the trading environment of their tenants, and there not being any established mechanism for rents reflecting the levels of trade actually being achieved.

Retail Speak believes that this is a situation that has to be resolved - as the trading conditions deteriorate in this cycle, it would be sensible for agreement to be reached where rental agreements are linked to trade levels - it could offer a fair return for landlords, a more realistic base for the retailers to build their businesses from and level the playing field for the game between the larger and smaller players in what is currently an uneven place indeed.

Tesco un-nerved?

2008-03-17T01:27:00.005Z

Goldman Sachs have recommended that investors sell Tesco shares - a move which will probably cause ripples throughout the stock market, especially in the retail sector. Tesco's themselves are reported to be surprised at the note; but should they be?

Certainly there are signs that this, the largest of all UK retailers has been rattled, else why, for instance, would it wish to resort to law to protect its name both here and abroad. The reports from Thailand show how Tesco are sueing two individuals, one of them a former MP and secretary-general of the Thai Chamber of Commerce is being sued for £16 million; his offence it seems was to make speeches that Tesco disapproved of concerning the expansion plans that they have for Thailand and the effect that it would have on the small businesses in their local economy. It is true that both defendants have admitted that they mistakenly suggested that 37% of Tesco's revenues were derived from that country, but surely that cannot have been a good enough reason to issue a writ. Perhaps it was that the speech, Tesco's are reported to claim, insisted that profits of Tesco Lotus are not re-invested in Thailand?

It does seem like a sledgehammer to crack a nut - but then Tesco does seem to have had over six years of problems in Thailand, along with Carrefour, Boots and a number of others. Perhaps their nerve is a bit frayed or perhaps it is wrong in Tesco's eyes to have a different world-view and a different economic model than that favoured by Tesco. Thailand has been selected by Tesco to be their third largest national market - the Thai's are being most unco-operative and disobliging not to mention ungrateful to their would-be benefactors. Not that the Thai debacle is their only foray into legal territory - it seems that a company that the CEO of Tesco has described as being a charitable organisation is doing a strangely uncharitable act by proposing to undercut Tesco's prices to its customers and Tesco have threatened to report Ocado to the Advertising Standards Authority; heaven forfend! Tesco would surely never stoop to such measures as undercutting prices to develop a market? Ethicalcorp.com reported last July that Tesco Lotus had entered the school uniform market in Thailand with prices averaging some 20-30% less than the local market was displaying - I wonder if they could be sued for such practices?

Perhaps the charitable company, Ocado, will be forgiven for not understanding the rules of the game. In the Times (October 4 2006) Tesco claimed that . “We are confident Tesco has brought a lot of benefit to Thai consumers" and presumably they believe this because of the low prices that they attract consumers with; does the same principle not equally apply to consumers in the UK? Perhaps there is another underlying reason for all these jittery nerves?

Is there a nervous reaction to the poor performance of the new venture in the US? Is there a jitter or two because of the non-food performance in the UK? Perhaps the fact that the good burgesses of St Alban's are voting in their local press about whether the local town centre really needs another large Tesco store (the count is in on Tuesday and it's not looking good for Big T); I wonder how they feel about the couple in Solihull who have vowed never to shop at Tesco ever again because of a fiasco, where the couple ordered groceries and after non-delivery were promised a refund - and that was to take over a week to arrive! It could be none of these things, it could be that the leader of the Liberal Democrats, Nick Clegg, according to the Guardian (March 13 2008), is scandalised about the development of eleborate corporate structures for Tesco based in the Cayman Islands to save millions of pounds in stamp duty. It might even be that they are jittery because banking analysts are saying that with rising food prices the profits of food groups are going to be seriously squeezed - the chief economist at Lloyds TSB, Trevor Williams, is reported to have said that if inflation rises above 2.5% then Tesco will be in real trouble. It has to be recorded here that Tesco has an explanation for each of these little issues, whether their explanation is any more or less valid than the originator's claims is a matter for others to decide.

Tesco have a 30% share of the UK food market and above 30% in Thailand, I wonder why it is that they are quite so un-nerved by small retailer competition and the opinions of people who are trying to champion the cause of SME retailers? It makes interesting reading, but what does the future hold? It may be that the solidity of these mega-retailers that local authorities set so much store by are not quite as safe as was imagined. I speculate that with the worsening global credit situation, the rise in food and fuel prices accelerating the inflation rate in the UK and the predicted squeeze on profits that one probable outcome would be the closure of poorly performing stores in the UK. Which stores would be targetted - those which are in areas populated by the lowest income groups because they will not attract a high enough revenue or create a demand for a wide enough range of products. In short the stores that would be the first to go, would be those where the lcoal businesses have long since been forced out - the creation of new food deserts in our urban centres.

Downturn in retailing - an opportunity?

2008-03-11T11:52:00.003Z

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.

New Rules for Trading

2008-03-03T19:14:00.004Z

I wonder if the Consumer Affairs Minister, Gareth Thomas, realises the ambiguity of the press release that has today been issued by the Department for Business, Enterprise and Regulatory Reform (BERR)? It is entitled "Unfair Selling Rules Laid in Parliament", which I have to admit made me question whether the intention was to describe 'rules about unfair selling' or 'unfair rules about selling'.

Doubtless, I would have been less suspicious of such a message had I been aware of the identity of the 'business' whom it claims was consulted during the process of drawing up the rules, or perhaps, the proposed rules had been published too. I realise that Parliament has a right to vet any new rules likely to be imposed on an unsuspecting public, but in this case the rules (Consumer Protection Regulations or CPRs) are due to come into effect on May 26 2008 and this is appears to be undue haste if they rules require changes in operational matters by retailers.

The press release suggests that such things as the bogus 'closing down sale' are targetted, which I am sure will be seen by many as a good thing - however, the fact that some retailers have been able to trade this apparently unscrupulous way was because of the ineffectiveness of the enforcement agencies to enforce existing legislation - why will new regulation help, unless it is entirely ambiguous and open to a very illiberal interpretation by enforcers? Surely it would be better to clarify the existing law in Part III of the Consumer Protection Act 1987 and derivative regulations such as Statutory Instrument 2005 No. 2705 (The Consumer Protection (Code of Practice for Traders on Price Indications) Approval Order 2005).

More regulation may well lead to more confusion - in the minds of consumers as much as in the minds of retailers.

Plastic Bags - Is the PM right?

2008-02-29T19:11:00.004Z

Gordon Brown believes that the moves within the retail industry to reduce the use of plastic bags are not achieving their goals speedily enough. This, in the week that M&S have announced that they intend to charge shoppers 5p per bag, raises questions in my mind.

Do SME retailers have a view on the use of plastic bags? Do retailers understand the impact of plastic bags on the environment? Are there sensible cost-effective alternatives to plastic bags? Is the plastic bag issue the primary one that needs to be addressed or are there even more important issues about packaging in general, or even about the impact of certain products that are sold in the normal course of trading that might have at least as negative an impact on our environment as plastic bags? I realise that by asking these questions there is a danger of being distracted from the origin of Mr Brown's concerns but they are questions that are screaming out of my head as I read that Mr Brown fully intends to impose a tax on the use of plastic bags if the retailers are not more successful in reducing their use.

Personally, I know why they are a hazard, the plastics from which they are made, whilst constructed of basic elements, they are fabricated in a manner that disguises the elemental components to the natural decomposing processes that more traditional waste products undergo. I also recognise that plastic carriers are seen in all sorts of places having been wind-blown - shredded and caught up in trees and other places - which are an eye-sore. They are known to be the cause of distress and possibly death in a range of large mammals and perhaps other animal life. However, why is there no high level question raising about the plethora of chemical substances that we see on our television screens nightly in the guise of simple household cleaning products, for example. These are going into the sewer systems and I would be mightily suprised if natural enzymic or mechanical processes were able to deal effectively with the decomposing of them any more than plastic carrier bags. Is this not building up an environmental problem for the future?

Flooding - does it worry you?

2008-02-29T18:55:00.004Z

Well it might seem like a silly question but I have personal experience of the cost and grief that losing a business can have on your life, as well as those around you, when a flood invades your business space.

There are a quite a few different flood types, each with characteristics of their own, and it is very likely that your business is at risk from at least one of them, and probably from several. I mention this here because of a contingency planning tool-kit that is being produced especially for small to medium sized retail businesses by the sponsors of this blog space. Their work is demonstrating that SME retailers, because of their traditional locations, are much more likely to be based in flood plains and valleys than not - making them especially vulnerable to flooding from storm fed river flows, still more are in coastal resorts on low lying land. Given the nature of retailing and the investment into the ground floor and basement areas of the premises that retailers generally occupy - this increases their vulnerability to succumbing from the effects of flood.

With climate change affecting our weather systems in the way that that has been demonstrated for the past decade, it is astounding to me that more owners and managers do not make planning for flood events a more serious part of their routine. Take a look at http://www.welbeckretail.co.uk/ over the next few weeks; if you feel that you could do with a structured approach to this sort of contingency planning then let them know. I'm assured that you won't be charged for asking!

WEEE regulations

2008-02-22T16:04:00.006Z

For the past couple of weeks I have been reading various reports that a significant majority of SME businesses are unable to describe what the WEEE regulations are without prompting.

Hmmm! I have to ask myself why that might be; and whereas the reports that I have read seem to suggest that this means that these smaller businesses are missing out (which of course they will be!) they also seem to imply that it may be a fault of those smaller businesses for not being fully briefed.

Given that the government itself has come to acknowledge the burden of regulation on smaller businesses - in terms of assimilation, understanding as well as execution of the requirements - it seems to me that if only 1 in 8 SMEs are aware of the WEEE rgulations, then that is the fault of those who have produced the regulations and not the SMEs. I am minded of the old adage "the teacher has not taught until the pupil has learned".

Perhaps it would help if the nation were better served by national trade bodies for concise sectors - such as I mentioned in "The Alternative View" in this very blog on 27 January. Whatever the solution, it must not be placed upon the already burdened shoulders of small business.

EU Assembly disagrees with the Competition Commission

2008-02-19T21:38:00.004Z

Isn't that interesting? The Competition Commission's much hyped, and even more leaked, initial report on the grocery sector is put out into the public domain. Within days we have the European Union Assembly declaring that the main players in the Grocery sector are trading using methods that are non-competitive and of bullying farmers and other suppliers.

The assembly suggests that they are acting as 'gatekeepers' and controlling the access by the farmers and other suppliers to the half a billion consumers in Europe. I realise that the British Retail Consortium will be headlining in the morning rubbishing these claims, but as long as we have a weak competition investigation system with no real bite and a willingness to go beyond the access that has hitherto been accomplished, then their members will doubtless come out unscathed as usual.

Retail Think Tank gets it right

2008-02-17T19:56:00.003Z

Well it might seem a bit much a mere mortal pouring blessings on the words of the wise but I remember a conversation that I had with my then Managing Director; I warned that our then current policy of continually discounting heavily on specific ranges would have the effect of reducing our capability of responding robustly to changes in the market.

My warning was in about 1989 and related to the sports department in the department store in which I was then responsible for all operational matters. It was said in the context of the then wars that existed in the sports trade which saw a wholesale culling of many, especially SME, names that had previously existed on our high streets. As a consequence we stopped trying to play the game and identified niches that matched the rest of our business and traded on function and quality and especially on service. It remains a philosophy which is destined to win for SMEs.

It is true that there are many more complex economic problems facing SMEs, and the market dominance of fewer and fewer mega-retailers is a significant one, but it is still not impossible for SMEs to trade effectively and profitably if the retailer is absolutely clear about their market segment and their intended audience.

Competition Commission Report

2008-02-15T18:49:00.006Z

The Competition Commission, when it finally reported, was always likely to be unpopular with at least one of the many groups who feel that they have a stake in its decisions but one has to wonder whether today's statement was worth the wait.

I notice that the British Retail Consortium (BRC) has already asked the question, and it is difficult to disagree with their sentiment. Of course, the two principal sides in this argument will have different takes on the outcome - something along the lines of "stitch up" or "waste of time" is my guess.

I wonder how much taxpayers money has gone into reaching the conclusion that having found that some of the major food retailers were actually holding land-banks, that there was no reason to do anything. Will it cheer the small business communities across the nation to learn that ASDA have managed to obtain the outcome that they had wished for - by being allowed to open stores in towns which are Tesco dominated? This report was only released this afternoon at 4.30pm, so I suppose I should allow the contents to seep into the soul before venturing to comment further - but...

Did we not know most of the headline stuff from leaks during the past few weeks?

The Phoenix of Camden?

2008-02-15T18:47:00.003Z

Already it seems that the stall-holders and management of Camden market have made the bold steps to recovery with some of the stalls getting into trading mode already.

Well done Camden - let's hope for a full and speedy recovery!

Camden Market

2008-02-11T18:11:00.001Z

It was with real regret and sadness that I saw the news on television over this last weekend about the fire at Camden market.

What really astonished me was that, other than a comment from Boris Johnson MP (a hopeful in the upcoming Mayoral campaign in London), it was difficult to find any real comment on the disaster that must have occurred to a large number of small businesses. There was plenty of coverage of the damage to the neighbouring public house - but even with that coverage it didn't really focus on the damage to the business but merely introduced the idea that minor celebrities chose to drink there on occasions.

Camden market is iconic - it is not at all glamorous, but has stuck to its own particular marketing strategy with huge success over a large number of years. It is in an area that is not especially prosperous and brings in large numbers of people from across Greater London and way beyond to sample their special brand of market trading. What self-respecting twenty-first century hippy would not shop at Camden? This is a real example of where SME retailers make a visible difference to a locale.

Let us hope that the London Borough of Camden and the Greater London Authority, ensure that the many small businesses that are affected are supported during this period of disaster and that the market is able to begin trading again in the short term.

Applause for the Royal Borough

2008-02-11T17:39:00.001Z

It is true that they are not the only Royal Borough, not even within Greater London, but I have to say that Kensington and Chelsea Borough Council are winning my vote with their well considered ideas and views on retailing within their Borough.

There's is a borough with some significant retail related names - there's Harrods for one, and certainly London's antique capital - the Portobello Road, and what about Notting Hill and Kensington High Street. This borough, hemmed in by the City of Westminster in the east and Hammersmith and Fulham borough in the west, has a real feel for the need for market differentiation and diversification.

I would recommend that every planning authority with one or more retail hubs within its boundaries take heed of the report published by the Retail Commission set up by the Leader of the Council, chaired by the Mayor and including such luminaries as Sir Terence Conran. It makes recommendations to government to change the planning law; it makes recommendations to local authorities (especially its own!) and also to others with a vested interest in retail centres.

The Commission reported and, this is where the applause needs to start, not only was the Council brave enough to enable the Commission, but when it reported the Council went on to support the vast majority of its recommendations. There are too many to report here, but suffice to say that they recognise the needs of SMEs, they recognise the importance of SMEs to the local economy and, they recognise the need for market differentiation, even with adjacent centres.

Well done, the Royal Borough!

Another one bites the dust

2008-02-11T17:08:00.000Z

This week the news has arrived that another (this time a lesser known name) has bitten the dust. Elvi had 28 of its own stores and a larger number of concessions in well-known department stores; it specialised in fashion in larger sizes for women.

So, why is this noteworthy, hasn't the phenomena of closing High Street stores been mentioned on this blog very recently? Lisa Berwin has reported on the closure in 'Retail Week', a journal much favoured by Welbeck, and in her piece she cites that there had been a management buy-out, that a venture capitalist bought into the business in October 2006 and left just a few weeks ago. She comments on the likelihood that declining consumer confidence in the High Street was a major contributor to falling revenues; this associated with rising costs and ... well we can guess the rest.

This blog is an unmitigated supporter of small businesses in retail, and it will endeavour to draw lessons from things that go bang in the High Street, if only to act as a warning to others who might avoid such an eventuality; however, it is really quite sad to reflect on the losses that these headlines briefly touch upon - there is the undoubted grief to the management who will have been suddenly very exposed when the capital investors withdrew; there is the major calamity for the staff whose jobs will probably now be lost - at a time of increasing uncertainty; there are the minor shareholders, whose investment has evaporated; even , to a much lesser degree, there are the store directors who host the concessions who will now have a hole in their offer.

What can be drawn from all this? The usual warnings about maintaining cash-flows - keeping revenues up, and maintain costs within an affordable level as determined by those revenues. What about the role of the investment vehicles? Can we blame them for pulling out to protect their capital reserves - probably not; do they provide a service - on balance, they probably do - without these sorts of investment vehicles the small businesses of today would never stand a chance to become the larger companies of tomorrow in the rapidly moving environment of retailing in the UK and globally.

Should there be some questions asked in this case to determine whether the investors acted responsibly in this particular case - actually I think it should, and it should occur whenever venture capital or other significant investor becomes involved in any business. In the same way as banks and others lending to the public need to be more careful about lending, and the public about borrowing; so to do capital investment vehicles need to be commited to a period of security for the business into which they are investing, and the company management need to be realistic about everything that they do, and their expectations. I wonder, since I do not know, whether in this particular case a period of just 15 months was a realistic timeframe for the investment.

Lessons to learn

2008-02-01T16:20:00.000Z

The news is out that 'The Works' book shops chain has been placed in Administration by their bank. This is the latest of a number of High Street names that this has happened to in recent weeks and months. My immediate question is "are there any lessons to learn for small businesses"?

The pundits reporting on the administration order blame a variety of issues that have led to this calamitous outcome for the company; terms like credit crunch, increased costs and others are cited - and these probably are real reasons for the firm finding itself in the position it has - but is that all there was to it? As a remaindering outlet, was there a problem with their range - could it compete effectively with the direct competition? As a heavy discounter - was the firm producing sufficient margin to meet their commitments? It is my belief that the answer to these last two questions was no (although I admit that I have no inside information); and these certainly are lessons that we might all benefit from learning.

A balance needs to be struck in all things and the specific needs of a particular shop's market will be the deciding factors that drive the decision making - or at least should be! Too great a range is costly to maintain and sometimes confusing to customers; too small a range or one which is not refreshed regularly will discourage returning customers - at least these are truths for shops who trade in regularly purchased goods. Using discounts to develop business is generally a good thing, whereas a need for regular or permanent heavy discounting is a symptom that something is wrong with the market or the traders' position within it.

New penalties for employing illegal workers

2008-01-31T12:49:00.001Z

Is this the latest example of regulation and red tape piled on to businesses to 'encourage' them to act as agents of the Government - where there own departments appear to be less than effective in enforcing their own regulation?

Criminal and civil penalties may be meted out after 29th February to employers who employ illegal workers. If any worker has not been granted permanent rights to work in the UK it becomes the employers' responsibility to check periodically on their continuing right to work, rather than simply carrying out an initial check at the outset.

The danger here, especially for smaller businesses whose systems may be less formal than larger organisations with specialist HR departments, is the possibility of falling foul of anti-discrimination law by making what might seem perfectly reasonable choices to avoid the new penalties.

Retail Development Bill

2008-01-30T21:18:00.000Z

It is good to see that Parliament is, at least, trying to address some of the issues that disadvantage smaller retail businesses. A private members bill proposed in the House of Lords by Lord Cotter entitled "Retail Development Bill" was moved on 22nd January.

It proposes a number of different measures which, to my eye, are unfortunately not aways consistent with the best interests of small retail businesses because of the potential for unintended consequences. There are, nonetheless, some good things contained within the bill and for that I applaud Lord Cotter's attempt at persuading Parliament to adopt them.

In part one the bill demands that 'relevant authorities' "must have regard to the need to support and promote the development of small retail business". Surely a statement that has to be supported, that is until the good work is watered down by "where the authority considers that such support would be in the best interests of the local community". It is a sad fact of life that given a choice local authorities will claim shortage of resources and turn to large businesses to provide an injection of investment; in so many cases this seems to have the effect of leaving small businesses dealing with a dynamic town centre that first moves away from where their investment lies and then watches as the local services are re-focused toward the new bright and large scale retail sites - leaving the SMEs in relative isolation from their traditional customer bases.

The bill does try to address this in some way by the creation of the 'Office of Retail Planning' (ORP); perhaps they would be able to ensure that the local authority was truly mindful of the needs of the local communities or their micro-economies. They would certainly be able to deal with 'land-banks' if section 9 were adopted, and the holders of the land-banks were unable to persuade the ORP that they really did intend to seek planning permission some time in the next year - no-one would think of putting forward a scheme that would never be accepted by any thinking planning committee - would they? Mind you, in defence of the bill there is a consultation clause in respect of what the bill defines as class three retailing applications which will embrace a significant area (up to five miles of the proposed development); but the smaller scale retailers opinion is likely to be subsumed within the opinion of the residential opinion, and the residential opinion is likely to be uninformed about the disbenefits to the local economy.

The attempt by this bill to distinguish between sizes of retailer, in order that the small ones are not disadvantaged by policy or other factors, is a brave one. The bill defines three classes of retailer and the class one group would be more protected - however, if the class one retailer expands, but wishes to stay where their business has developed they could be disadvantaged by the bill. It would be reasonable to argue that you cannot have it both ways, but the problem is not one of large or small retailers, rather the current problems, in my view at least, are about ownership and capital. A small business that grows to become a large business, but remains in local ownership, is of equal worth (proportionately) than its smaller neighbour to the local economy. A large business that parachutes in, where the capital flows are towards distant shareholders and institutions - even where their local manifestation is no larger than the large local business - is of significantly less value to the local economy. This bill does not acknowledge that fact, which is a shame and an oversight.

Personally I think the bill is flawed, but, and it is a big but - I believe that Lord Cotter's ideas will open debate and that is a good thing, and probably the best thing that a private members bill can hope for.

The alternative view

2008-01-27T19:14:00.000Z

It is time that the SME Retail population of the UK was truly represented by a single effective voice to enable it to respond with a generally more considered opinion to the policy makers. At present there are a plethora of organisations and trade associations who claim to be 'the' truly representative group - but are they?

Take the British Retail Consortium, for example; they claim to be the mouth-piece of all retailers, including SMEs - but it costs around £3000 to join their ranks. Yet they are extremely influential at the highest levels - that, by the way is not a criticism, simply an observation.

There are literally dozens of other organisations, yet many concentrate on particular product sectors - the cycle trade, bakers etc; then there are the more general SME organisations, within which the particular needs and problems of SME Retailers are subsumed. All of these organisations have their individual strengths, but none can really claim to be the true representatives of SME Retailers with their interests alone to be considered.