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.