Tuesday, 30 December 2008

Happy New Year ?

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.

Saturday, 29 November 2008

Local Authorities should look after their SMEs

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.

Sunday, 23 November 2008

15% VAT?

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!

Sunday, 9 November 2008

Impacts of major centres

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.

Thursday, 16 October 2008

High Street difficulties - observations

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.

Friday, 26 September 2008

Myth busting or myth making?

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.

Friday, 19 September 2008

Climate Change

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?

Saturday, 13 September 2008

The wisdom of Conran

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.

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

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.

Wednesday, 10 September 2008

Recession coming - let's plan for it

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.

Thursday, 4 September 2008


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.

Wednesday, 3 September 2008

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.

Tuesday, 12 August 2008

Bad news for Oxford - or is it really?

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.

Friday, 8 August 2008

Boris Johnson has hit a chord!

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

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.

Monday, 21 July 2008

Conservative Small Shops Commission

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.

Friday, 18 July 2008

Praise for Sheffield

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.

Tuesday, 15 July 2008

PPS6 Consultation and what Councils need to remember!

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.

Wednesday, 25 June 2008

Advantage in recruitment and retention

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.

Monday, 23 June 2008

Re-running the problems of the 1970s

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.

Sunday, 22 June 2008

Tough times for consumers as well as retailers

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

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.

Wednesday, 11 June 2008

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?

Tuesday, 10 June 2008

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

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 :
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!

Thursday, 29 May 2008

E-mail banking scams

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

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.

Thursday, 22 May 2008

Are we prepared?

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:


an extract:
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:

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.

Friday, 16 May 2008

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

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.

Tuesday, 6 May 2008

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!

Friday, 25 April 2008

Business Rates - 2010 revaluations

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.

Friday, 18 April 2008

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!

Monday, 7 April 2008

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?

Thursday, 3 April 2008

Bad tidings as April gets underway

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)

Tuesday, 18 March 2008

Time for Government and Landlords to think!

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.

Monday, 17 March 2008

Tesco un-nerved?

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.

Tuesday, 11 March 2008

Downturn in retailing - an opportunity?

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

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

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

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

Monday, 3 March 2008

New Rules for Trading

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.

Friday, 29 February 2008

Plastic Bags - Is the PM right?

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?