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.

If you want to know more, please get in touch.

What you get

Monthly Archives: November 2018

John Lewis, Black Friday and virtual reality

This morning’s numbers from John Lewis department stores are very positive. After weeks of weak numbers, Black Friday seems to have been good for the Partnership. And the 2017 comps were very demanding too. But no one should start extrapolating to the wider market and thinking Black Friday (BF) was a raging success. Across the retail market for now, beware claims of apparent trading success. They are likely to be a form of virtual reality.

Analysing Black Friday independent of Christmas is a luxury only non-retailers can indulge in. The two are inextricably bound together. Christmas trading patterns in UK retail have changed materially since this most crazy of all US imports has kicked in. Sucking business out of December and into mid-November will obviously impact fundamentally trade over the Festive Season.

Then there are returns. A significant proportion of BF sales will be returned. This is only starting to happen this week, and it will continue. I do not believe any sensible evaluation of BF trading can be made until Christmas returns have fed through too, and the whole period can be seen. And then we into the season of Christmas Trading Statements, and we all know how imaginative they can be!

So while we can say well done to John Lewis for this week’s number, they should be treated with huge caution and not over thought. Across the retail market for now, beware claims of apparent trading success. They are likely to be a form of virtual reality.

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

Black Friday … and last Christmas?

As another Black Friday looms and the run in to Christmas beyond, we can already say that 2018 has been the toughest retail year anyone can remember. First, Black Friday. This is a promotion whose effectiveness is questionable even in the USA. But at least in the US it has a little logic, following Thanksgiving  with retail needing to get people spending again. Meanwhile, Christmas in the USA is traditionally a much less significant retail spending spike than here. Here, it comes along just as retailers need to start promoting their Christmas offers. It merely sucks spending forward at discounted prices, and therefore lower margins.

The UK adoption of Black Friday has been lemming-like. Do retailers discount regular stock and take the margin hit? Or do they buy special product (almost always lower margin and lower quality) and take the brand reputation hit? Stronger players have resisted it altogether and many that have succumbed have tried to limit the damage. However, retail is a business profoundly sensitive to YoY trading. Pressure from investors and stakeholders to deliver last year’s performance at the very least is intense. Right now is a great example of exactly that. The past 2/3 weeks trade have been awful – mild weather has hit business and a number of retailers who decided to opt out of Black Friday are already looking at cash flow and feeling the pressure. Some are having a last minute of mind, while others are wavering.

Then there is Christmas. In 35 years I have never known a Christmas trading period out of step with the preceding months. I said at the outset, this year has been the most challenging we have seen. Festive trading in 2017 and 2016 were both relatively positive, so the comps are quite demanding. As usual, many Christmas Trading Statements will be an exercise of selective reporting, economy with the truth and downright misleading, more so in non-foods than foods. But as ever, Christmas will not be cancelled. Earnings growth is finally starting to percolate through and will help mitigate growing political gloom and uncertainty. Weak sterling and fierce competition mean price inflation is trending down in both food and non-foods. I’m expecting both wings of the retail market to deliver spending growth around the 2.5% mark. So not a disaster but not enough to rescue the growing number of weaker players finding the intensity of trade and pace of change too quick.

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

Sign up today for exclusive access to world-leading expertise in the retail sector.