Geoff's View - August 2008

22.08.2008

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 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!

‹ Back

Contact us on +44 01494 474740

A very useful way of keeping up to date with what's going on in retail.

Charles Denton
Property Director
Retail Consultancy