Out of town v Town centres

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.

Red Tape woes for SMEs

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.

Internet - the death of shops?

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?

OFT draws a line

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!

Green speaks great sense!

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

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?