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Retail has always been a highly dynamic industry, intensely competitive and fighting for a share of the wider consumer spending pot. This is an industry used to dealing with a constant diet of change. However, the change we are seeing today is far more profound than anything the past has thrown up. We are now seeing by far the most challenging period in retail history. A reshaping of the industry’s structure and economics is unfolding, and most of the real change is yet to happen.

Richardtalksretail is focused on analysing this change, anticipating the implications, and mapping how the key players across the various sectors are dealing with it. The regular Blogs in this public section of the site are a taster of the much more detailed analysis and forecasts in the premium section, reserved for subscribers.

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Monthly Archives: June 2018

Reactive retailing

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.

** We support retailers and stakeholders with strategic advice. If you think we can help, drop me a line richard@richardtalksretail.co.uk

HoF CVA part 2

My initial Blog on this topic was posted on May 3rd. There I said if the CVA was successful, we’d soon know how much genuine belief the owners have in the future of the business. We now know the CVA will involve 31 store closures, and 10 rent reductions. So far, there is no sign of a Plan B – a plan designed to increase sales from a smaller but more robust core store estate. This is what will determine whether there is a viable future for HoF.

There is talk of new money coming in post CVA but given the black hole that is department store retailing, it looks like a drop in the ocean even if it does materialise. HoF has very little retail experience in its top leadership, most of which is very new to the industry as well as to the business itself. In this market, seasoned retail leaders are struggling to deal with increasing trading pressures. Having a response that is only financial (addresses costs but not sales) will fail eventually.

Will the CVA get voted through? Probably, but it would be very naïve for anyone to regard it as a vote of confidence in HoF’s prospects. The word “support” would be extremely loose. In any case, most of the voting creditors will be suppliers with arguably greater exposure and far less choice. HoF is telling us that it cannot any longer trade profitably in Central London (Oxford Street and Victoria), Birmingham, Edinburgh, Cardiff and Milton Keynes among others. It cannot find enough of its target customers here. This speaks volumes about its own level of confidence and about whatever plans it may have.

** We support retailers and stakeholders with strategic advice. If you think we can help, drop me a line richard@richardtalksretail.co.uk

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