Tuesday, 11 May 2010

Reporting Trade Figures

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

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

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

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

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

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

Sunday, 9 May 2010

Expert advice

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

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

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

The people have spoken

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

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

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

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

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

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

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

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