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Shopping around for a new retail model

November 7, 2019

 

It’s mostly grim news on the retail front again. Big names are reporting lower profits and outright losses as the trend away from walk-in sales continues.

 

As you’ve probably read, Mothercare is to close all of its 79 UK stores and its online business with the potential loss of 2,800 jobs. Administrators were called in earlier this week.

 

Strangely, the action does not include profitable overseas operations. This comprises more than 1,000 franchise stores in over 40 countries.

 

Meanwhile Marks & Spencer has revealed a further decline in fashion sales. The news follows an admission that a turnaround plan is 18 months behind schedule.

 

Clothing and home goods remain in the doldrums for the retailer who also cited “supply chain issues” - which analysts have decoded as “Brexit worries abroad”.

 

It has to be said though that the same uncertainty principle doesn’t seem to apply in overall sales. Indeed, data compiled by the British Retail Consortium and others showed retail sales rose 0.6 per cent in value compared with October 2018. This is the fastest annual growth rate since April. 

 

Of course, suppliers are always under pressure in one way or another. Fashion retailer Joules has reportedly asked wholesalers to cough up a discount to help mitigate the effect of new US tariffs coming into effect soon. You have to admire their optimism.

 

Time was that among the options to be considered by a struggling retail business was whether you could invest your way out of trouble and into new markets. No more though.

 

Most of the major trading outfits are controlled at board level by major financial institutions. These people are not particularly interested in stuff like better stock control and marketing new lines.

 

They have one sole concern and that is ensuring prompt and regular repayment of interest on loans used to finance past billion-pound acquisitions. 

 

The BHS debacle in which tycoon Phillip Green sold off his interests in now-defunct British Home Stores to an ex-racing driver for £1 shows the extent to which the retail sector is more about dodging a bullet than making effective decisions over what happens on the shop-floor.

 

With this kind unaccountable entrepreneurship, it’s little wonder that towns and cities need to look at alternatives to big brand retail from now on.

 

There’s a tendency by banks to look down their noses at the local High Street – presumably that’s why they’re closing so many branches there. Yet it would be wrong to think that smaller-scale trading is all about niche and bespoke stuff.

 

One school of thought says that better cohesion between what smaller retailers have to offer customers and a more market-aware approach by council planners could significantly help boost local prosperity – which is where it counts most.

 

Late last year, the Federation of Small Businesses published a series of well-researched regional strategies aimed at making it simpler and a lot less costly to run a small retail business in both rural or urban locations.

 

I can’t think of a better time than a general election to get this on the agenda.

 

 

 

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