FSP Retail Blog

Don't Panic Captain Mainwaring!

Posted At : 27 July 2009 17:58

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

Posted At : 23 July 2009 23:47

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

Posted At : 16 June 2009 11:49

I see David Wild has noted that “Reserve & Collect success drives 90% growth in multi-channel revenue” when announcing the Halfords preliminary results last week.  What he means is that Halfords are making a killing out of people who can’t be bothered to go and look around the shop, or, more likely, are savvy enough to know that time spent in a fruitless search around the shop is time lost from more worthwhile pursuits.  Halfords have tapped into the very sound idea that people can surf for their goods from the comfort of their own home, then pop in to collect when they’re out and about anyway.  This saves on the delivery charge for the customer, but has the benefit that these customers are brought into the store anyway, offering Halfords the opportunity to persuade them to part with more cash whilst they’re there.  Looks like a win:win to me.
 
But, with Verdict announcing that “online spending is growing by £2.4 billion in 2009” and “e-Retail is proving to be a star performer in the recession”, where does this leave the average store and the already much-trampled retail property business?
 
As FSP knows, through extensive research in the retail world, people don’t just shop because they need something.  Those that do, who are driven by efficiency, will be the first to make their shopping event even more efficient by use of the internet and such initiatives as “Reserve & Collect”.  But, what about the others? There are those who are driven by the purchase itself and those who see it as a social event.  With the desire to find something with which they will be really pleased, the purchase driven consumer will still hunt around the shops.  Whilst the leisure driven consumer is unlikely to see web-browsing as adding to their enjoyment.  For them, shopping is a well-crafted hobby, irrespective of the resulting purchase.
 
Whether you’re a retailer, a shopping centre owner or involved in town centre planning, you have to know your catchment and then target your stores or product to reach those who want to get out and shop.

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The New Retailing Landscape

Posted At : 26 September 2008 14:55

Those of you out there who receive SnapShop Monthly will see from my leader that reasonable economic performance in the UK (until recently!) has not been reflected in retail and I wonder why. Although there are possible social and psychological explanations, at FSP we believe the valid explanation is an industrial one. This is where the future retailing landscape is being shaped by the rapid expansion of online retailing, the increasing sales of non-food through grocery outlets and the increasing number of retail parks trading with Open A1 retailers.
 
This isn’t to downplay the psychological and social explanations. which see on the one hand consumers being spooked by the media-fed anticipation of recession, and on the other the consumer being more savvy, fed up with fashions and technology which cannot keep up with their own pace of change and, in any case, older, wiser and more interested in life experiences than acquiring “stuff”

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The fog of war

Posted At : 22 February 2008 15:14

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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