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?

Flooding - does it worry you?

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

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

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

Friday, 22 February 2008

WEEE regulations

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

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

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

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

Tuesday, 19 February 2008

EU Assembly disagrees with the Competition Commission

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

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

Sunday, 17 February 2008

Retail Think Tank gets it right

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

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

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

Friday, 15 February 2008

Competition Commission Report

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

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

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

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

The Phoenix of Camden?

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

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

Monday, 11 February 2008

Camden Market

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

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

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

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

Applause for the Royal Borough

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

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

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

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

Well done, the Royal Borough!

Another one bites the dust

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

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

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

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

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

Friday, 1 February 2008

Lessons to learn

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

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

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