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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What you get

CVAs, distress and the slippery slope

Yesterday it was Monsoon. The day before, Office is apparently also considering a CVA. In recent weeks Arcadia “successfully” persuaded its landlords to keep the life support machines on for longer. Philip Green then told landlords via the Today programme that Arcadia hadn’t been anywhere near close to going under. However, this does sound close to him telling them they have been legged over. How many of them already knew this is a moot point. What is clear however, is that a successful CVA vote is in no way a vote of confidence in whichever retailer we may be talking about. It reflects the plummeting confidence landlords have in their own offering – retail property is no longer the licence to print money it once was. Supply greatly exceeds demand.

For retailers, this distress we are seeing is just the beginning. Indeed, CVAs, pre-packs and other lifelines are ensuring the turmoil will last longer and be more damaging. Stakeholders are demonstrating an extraordinary appetite for denial. One of the striking aspects of this current narrative of distress and restructuring is that it only ever applies to costs. Too many  retailers believe that if they lower their costs, everything will be fine. It won’t.

Preventing market forces exerting natural selection is like ignoring the root causes of an illness and simply treating the symptoms. Will lower rents make Arcadia’s brands better able to reverse market share declines? Will they allow Monsoon to move away from its highly stylised branding and create a totally different, relevant handwriting? Without focusing on the key problems – weak propositions, weak brands with too many options – they are certain to get worse. The clock is ticking.

We are seeing unprecedented turmoil across the industry. So far, the reaction has been mostly panic, with little coherent thinking. The success record of CVAs is awful. I see no sign of that changing at all.

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

Riding the retail recession

It’s been great to see an uptick in consumer demand over the past 6 weeks or so. This follows a torrid period since midway through last year. 2018 softened as the year unfolded. Christmas really was as bad as feared and the industry entered 2019 with far less cash than it wanted, and in many cases, needed.

This reality has been reflected in growing distress, with casualties of one form or another up year on year. Admins, pre-packs, CVAs and programmes to reduce staff and stores have become the staple diet of retail news. Throw in some M&A that is much more corporate than strategically coherent and chaos seems to describe today’s retail landscape.

So the recent better figures have been especially welcome. Many may be sucked into thinking that the worst is over and “normal” service has resumed. We are still very much in the woods of very soft demand, oversuppy a cautious consumer all too ready to delay, and often postpone, purchasing.

Last years “beast from the east” made for some spectacularly weak comps. Very moderate demand looked like strong growth on the back some wonderful Spring weather. The timing of Easter coming later also boosted spending. Don’t be fooled. Underlying structural weakness cannot be solved with a few weeks of better sales figures which cannot be sustained. This remains a chronically oversupplied industry and only large-scale closures can deliver the much-needed reset of supply and demand. Until then, we will continue to see the results of deteriorating trading economics.

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

Retail is not good enough at retailing

Fifteen years ago, online retail sales were more or less zero. Today they are worth almost £70 billion. Far from making room to accommodate the new channel, total floorspace has actually increased a little over the period. Meanwhile, online has progressively cannibalised that footage rather than create new demand. And this cycle continues – online continues to suck business out of stores and add capacity.

Not surprisingly, this has impacted trading economics although it has taken time to really hit. Now we are seeing the implications begin play out in the shape of distress. Admins, CVAs, job cuts etc have become the staples of retail news flow. And most of the narrative around these events and indeed, around the broader industry discourse, focuses on onerous costs and particularly, property. It is certainly true that rental levels are totally unsustainable. Even without going into a process of some kind, retailers are looking to negotiate rental reductions wherever they can.

While rising costs and property prices are undoubtedly pressing issues,  the reality is they are symptoms of a more fundamental issue that goes to the very heart of retail today. Retail is simply not good enough at retailing aka selling. After generations of demand growth in a physically immature industry, we now have saturation in what is to all intents and purposes, a retail recession. Too many players with too much capacity. And this is increasingly exposing deficiencies in so many retail business models.

Reducing costs and rents is important but admins, CVAs, changes in ownership etc are all tinkering at the margins. In themselves, they will not make the business a better retailer. And this is an existential challenge. Unless the word restructure starts to be applied to the top line, not just the cost line, these sticking plasters have zero chance of curing the patient.

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

JLP – partners first

This morning’s results from the Partnership were very much as expected. Smart management of expectations should mean that most stakeholders knew what to expect. And the pivotal stakeholders for the Partnership are the partners. Its founder John Spedan Lewis laid down his philosophy nearly 100 years ago. There was much he could not possibly foresee but the Partnership has bust a gut to adhere to his principles ever since. In most respects, his philosophy has been a massive asset. It’s why it not merely different but superior to the majority of its competitors.

At the heart of the Partnership are the partners themselves, Spedan believed that if the business could achieve the happiness of partners, much of the rest would follow. Getting a 3% bonus looks awful when compared with the 20% of 2008. However, this is an unrealistic perspective. In reality the company will never again be able to pay a bonus of that kind. One of the few things we can be certain about is that retail is becoming a progressively less profitable element in the distribution chain. Indeed, many players in that chain are in the throws of a slow, painful death – they no longer pass the test of economic viability.

It is increasingly pointless to judge retail businesses against their own historical performance. None will emerge in good shape. In this long drawn out, painful period the key is to outperform your peer group. That is the only meaningful context and using that fundamental criterion, JLP’s numbers today are OK. Of course they could be better, but probably not much.

The business faces huge challenges. At the heart of these is price and price position. Both brands are middle market players. They both SHOULD be more expensive than those pitched below them. Only one player in any market can be cheapest at any time. The imperative for the ones above is to justify their higher prices through added value. And in JLP’s case, much of this is about partners. John Lewis and Waitrose have a genuine edge in service. Investing in defending and enhancing that edge is 100% right.

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

M&S and Ocado – suspending belief

This week’s announcement from M&S and Ocado was just the latest in a series of major moves in food retailing. Quite a number of these seem, to me at least, to have been driven more by external considerations than internal ones. This latest development is great for Ocado and its quest to be a tech business rather than a retailer. For Marks, it’s much harder to see the rationale. People rightly say that online grocery is growing faster than physical. But why would you want to chase unprofitable sales, thus diluting your already very low margin food business?

M&S was very keen to highlight the fantastic opportunities it would unlock. Better buying terms through higher volumes. Enabling core M&S clothing customers who want to buy food online the chance to buy M&S, instead shopping elsewhere. Adding Ocado own brand product into M&S stores, creating an entry level offering. However, will lost Waitrose customers be matched or exceeded by gained M&S ones? And in stores, a wider offer will not be easily accommodated in existing footprints. M&S already has long-standing weak food availability, and adding SKUs will pose significant operational challenges in what will remain by far the most important part of the business.

The two parties announced that had the JV been trading for the past year it would have posted sales of £1.5bn and EBITDA of £34m. There was no detail behind this but given that we were also told Waitrose represented 25% of Ocado sales revenue, have they simply assumed M&S will substitute all of Waitrose business ie sales of £367m?

In recent times M&S leadership has emphasised its commitment to building a serious online retail business by adopting the phrase “digital first” to reflect ranging decisions across its clothing will be driven by online. Today, it talked about the same approach in food. I find this worrying. With online clothing sales at just under 19% and M&S/Ocado food (assuming Waitrose’ sales levels as a base) at 6%, this seems like the tail wagging the dog. Indeed, by profit the numbers for physical retail would be vastly more dominant still.

The stock market has marked Marks’ shares down by 12.5%. The dividend cut of 40% on what was once one of the true “blue chip stocks” is symbolic of a company moving away from what used to be its core values.  I share the market’s scepticism.

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


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