The problems around HoF have finally woken people up to what has been clear for a very long time. Structural issues are not so difficult to forecast and everything that is now beginning to unfold has been predictable, at sector and company level.
The differences between being reactive and proactive are life and death. Many are papering over cracks when they need major surgery. And surgery cannot be about simply shutting some stores. This will not make a retailer better at retailing. And this is the non-negotiable pre-requisite of surviving what will be a period of turmoil lasting 3-5 years. Will HoF survive post CVA? There is nothing I can see that will increase its sales, even in a significantly smaller lower cost business.
Too many retail businesses have chased scale at any price. With a market flat at best, and costs and capacity expanding steadily, this additional scale is looking increasingly marginal. It is in stores (too many), footage (oversized units) and customers (proliferated ranges). And all this makes for weak retailing.
Trading pressure is impacting everyone, but not to the same degree. Retailers like Aldi, Primark, B&M, Selfridges, Ted Baker, Home Bargains, Asos and Zara are all trading very well, even if each is having to run faster. They all are 100% clear who they target and that knowledge defines everything they do. It sounds so simple and obvious, but it’s what most of the industry has lost sight of.
A report from Colliers this weekend says 11.6m square feet of retail space has been “lost” in administrations etc. I can forecast with total certainty that many times this figure will go over the coming years. Structural change is not hard to predict. In order to survive, retail leadership teams need to understand what is coming and plan accordingly. Reaction is far too late.
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