FSP Retail Blog

Don't Panic Captain Mainwaring!

There have been several hysteria-inducing reports released in the press over the last few weeks. About certain high streets being at risk of demise, sales feeling the pinch because of swine flu (!!) and discounting reaching dangerous levels. Most of this is old news and the rest hyperbole, so a bit of real perspective should be applied to make sense of it all.

Several industry journals have been quoting a recent report by PricewaterhouseCooper, claiming that 90% of retailers are currently ‘on sale’. While this may be true, it is not enough to simply use this figure as a shock tactic, for in actual fact, the proportion of retailers “on sale” compared to those trading at full price remains mostly unchanged from last year.

Using Global Retail’s Compshop trading stance trend figures, it is clear that although levels are slightly ahead of 2007 and 2008, the number of retailers currently discounting is by no means anymore ‘dangerous’ than in previous years. (See fig 1).  

Moreover, it is clear that retailing plays to seasonal trends, and that although long-term discounting can do more harm than good, it is natural for retailers to clear stock with end of season sales – as traditionally seen throughout July (see fig 2).

Whether heavy discounting will continue unbroken through to 2010 remains to be seen, however there is little to be gained from speculation – especially when past trends suggest the opposite. So let’s wait and see what happens before running to our panic stations; we may be pleasantly surprised.

Fig 1

Fig 2

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Home, Clone or Ghost Town

The BRC this week issued their report, 21st Century High Streets: A Vision for our Town Centres, which, in its introduction states “Good retailing is all about great products supported by great people giving great service. It’s down to retailers to provide all of that for their customers. It’s something British retailers, large and small, excel in. But to trade profitably we need customers, drawn in by a pleasant, safe and accessible High Street offer”.  Sensible.  Indeed the whole report is essentially common sense, but someone needs to drive the message home.

It’s something FSP has been banging on about for some time.  Regular readers of Geoff’s View in SnapShop Monthly (repeated as a news item here), will know that FSP would like to see town centres having their own identity, based around the needs and expectations of their catchment population.  Indeed, a year ago, Geoff said “the prospect for town centre retailing is not for a difficult period, but for a sea-change. There will be a permanent diminution of its market share unless the offering in town centres is made more attractive to shoppers”. Indeed, we want towns to feel like home, not a clone of every other one up and down the country.  We expect the government to do their bit, as Geoff argues in A Paradigm Shift for Town Centre Retailing, and we agree with the BRC in assigning responsibilities to Local Authorities, Regional Development Agencies and the Retailers themselves, but what about the property owners, whether institutional, private or local authority?  The relationship between the in-town Shopping Centre and the High Street is inevitably competiitve but the competition can either be healthy and constuctive or destructive when the legitimacy of the other’s role is denied.

Curiously the BRC’s 20 key recommendations fail to mention landlords, except in connection with “The retail mix must complement the public perception of the High Street’s identity”.  This is indeed a challenge for landlords whose chief concern is their bottom line.  Too often the time horizon is short term and a global overview of the state of the local town centre is not something that is often considered relevant.  For the long term health of their investment, it should be a consideration as should be their involvement in the other 19 key recommendations.

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Reserve, Collect and Spend a Little More

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The New Retailing Landscape

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The fog of war

Analogies between business and warfare can be over-done. Perhaps in the realm of intelligence there is a parallel. Both business leaders and generals need to adapt strategy in the light of “events”. But how do they know which events, what changes are significant? The military, it has been said, is always preparing to fight the last war, not the present. Too often, intelligence systems fail to monitor what is strategically most significant.

It is difficult to be unaware of dramas, such as the current Credit Crunch. Such events throw up immediate challenges. However, they should not be allowed to mask more significant long-term strategic threats. As Steven Covey points out, in Seven Habits of Highly Effective People, the urgent should not be allowed to drive out the important.

There is a strategic threat to the current pattern of UK retailing. It has gone largely unrecognised, and when noticed, it has been seriously misunderstood.

Evidence over the last five years from the NSLSP (National Survey of Local Shopping Patterns) shows a gradual erosion of market share for the major UK retail locations. The annual losses have been modest, perhaps 1.5% a year, but they have been persistent, widespread and largely un-noticed.

The press has recently run a story that the increase in petrol prices has reduced the number of shopper visits to out-of-town shopping locations. This is seriously misleading on several fronts:
The press has recently run a story that the increase in petrol prices has reduced the number of shopper visits to out-of-town shopping locations.  This is seriously misleading on several fronts:

• The data was based on visits to regional shopping centres. Out-of-town retailing more generally refers to stores on retail parks. It is the growth of sales though retail parks, and through grocery stores that are also largely out-of-town, that mainly account for the decline of town centre sales
• The implicit assumption that shoppers drive further to regional out-of-town shopping centres than to those in-town is erroneous
• This is not, as the NSLSP data show, a recent phenomenon

Thus, while a significant change has been identified, it has been misunderstood and incorrect inferences have been drawn. In the possibly apocryphal story of the boiling frogs, it is the very gradual, small changes in temperature that ultimately prove fatal. You have been warned!

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