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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The future of retail

The future of retail is now. Survival and prosperity will be governed by whether, and how well, retail engages with these critical issues. Business models need rebuilding. Cost cutting alone is buying time. Retailers will have to invest to be fit for purpose, so costs will need to increase. Those without the vision and courage to meet these challenges head on are living on borrowed time.

I got together with Kalpesh Tanna, specialist retail and hospitality lawyer, to map out the critical issues. We will be arranging a small closed forum for a detailed discussion of these themes in due course.

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

Locked down and pent up

The big day in retail has finally arrived. For an industry which relies on the numbers generated from daily trading to inform actions, today will have been full of mixed messages. But the overriding one will be that this will be a long and painful road back to anything that might resemble equilibrium.

Experiences of lockdown have varied hugely, and so too will be recovery. Some have been desperate to go leisure shopping while others will take lots of coaxing and reassurance before entering the fray. A consensus of the CEOs I have spoken to were expecting c50% of normal footfall today. My feeling is that few will have achieved that. Many of the stores I have checked out had far more staff than shoppers, and queues were extremely rare.

Clearly, the industry is desperate to reopen and there is certainly a feeling today that a major step forward has been taken. However, no one should be in any doubt about the economic consequences of Covid-19 which will only now begin to unfold. Even at 50% footfall, no apparel retailer can make any money at all and are likely to generate very material losses. While transaction values are likely to be higher, that will not compensate for fewer transactions.

Moving to 1 metre distancing would certainly shift the economic dial but modestly, and not enough to turn those losses into profits. This is especially so when much higher returns are factored in, the result of limited access to changing rooms. On the cost side, delivering staff and customer safety will have increased costs. The end of the “cost holiday” enjoyed triggered by opening (having to pay staff, landlords and suppliers) sets a return to normal costs alongside a return of materially less than normal footfall.

Anyone relying on consumers to rescue our economy must be living on a different planet. The public has survived several months going without all sorts of non-essential products and services. Persuading them back, with growing uncertainty around employment and remaining uncertainty around health, will be a monumental task.

Accelerated retail

As we edge towards reopening much of UK non-food retailing it is worth preparing some warnings. The first few days will feature queues of people flocking to stores up and down the country. Talk of sales records will abound. And the relief will be palpable. We all desperately need to feel that normality is around the corner.  But no one should mistake relaxation with a return to where we were. Nor mistake early behaviour with anything that might be sustainable.

While social distancing remains central to staff and customer welfare it will be virtually impossible to trade non-food stores profitably. There will be much lower footfall. Even if average spend rises, it will be unable to compensate for fewer transactions. Costs will be higher from the need to manage footfall inside and externally, and installing safeguarding equipment, screens, sanitisers, cleaning etc instore. The reality of these new trading economics will be set against the gradual end of the very significant “cost holiday” over the recent past. Once retailers have to pay their staff, landlords and suppliers again, viability going forward needs to be judged against lower revenues, a very painful prospect.

The coming 12-18 months will be very hard to read. Against the background of a deep recession, UK retail is set to become much more polarised. Online will be much bigger than it was, growing share from 30% pre-Covid to a little over 40%. This will itself massively increase physical cost of sales and the need to shut physical capacity (already chronic pre-crisis) will be greatly magnified. A much bigger online market will make retail as a whole even more price driven than it already is. And it will act to push margins down further.

This rather apocalyptic outlook will certainly spell the end for many retailers no longer fit for purpose. But it certainly does not mean the end of successful retail businesses. Those retailers who came into this crisis strong will be the winners longer term. Those with clear offers and focused leadership, able to be self-challenging and truly embrace change, not just talk about it, will make good returns.

Much of what happens over the coming months will be misleading. Reading between the lines will be essential. Covid-19 has removed lots of seats around the table and when the music stops, many will be left standing. A leaner, fitter for purpose retail industry will emerge with more room for the winners to thrive.

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



Range editing for retail recovery

Retail entered this crisis in bad shape. The industry was bloated with too many stores, too many websites and oversized ranges. The inevitable consequence was deteriorating trading economics. Restarting will be slow and phased. But when the phasing is complete the dust eventually settles, we will have a materially smaller non-food sector.

Many will not make it but being just a survivor will not be enough. The constant threat of extinction is likely to ensure the leadership team’s eye is more on costs than the imperative, revenue. Revenue should determine what costs are in any business. It defines what is needed, what can and what cannot be cut, and where investment is required. And getting this right is about addressing core customers above all others.

Becoming progressively bloated is the result of decades chasing growth at any price. Many need to jettison the fat: far fewer stores, smaller footprints and the central, pivotal issues – edited ranges. This must be demand-driven and is the heart of any retail business – your core customer and what they want and expect to buy from you.

Looking at the state of the retail nation pre-Corona identifies the winners once the dust has settled. They are businesses that entered this period financially strong with distinctive offers like Primark, Selfridges, Costco, TKMaxx, Reiss, B&M, Home Bargains and Hotel Chocolate. All have very clear customer focus which in turn determines ranging. They have resisted the lure of expanding their offers to attract a wider customer base and generate incremental sales. They understand these incremental sales would adversely impact stock turn, inventory carrying costs, availability, and lead to higher mark downs, all hitting margins.

Whatever your current SKU count, you cannot afford slow-moving items your peripheral customers might want. Ignore your peripheral customers and start giving your core customers the attention they deserve. This is the business that your future depends on. Understanding what they want must drive range editing built around the key price points in each product segment.

Choice is not a function of quantity, but of relevance. The tyranny of too much choice is bad for your customers and your financials. A core part of customer engagement is them trusting the retailer to make the initial choices for them. This is a fundamental prerequisite of success in the emerging market.


** Optimising range editing must be evidence based. I support retailers and stakeholders in areas like this, and with strategic advice. If you think I can help, drop me a line –

The trouble with retail real estate

Hammerson sells a bunch of retail assets at a massive discount and cuts its dividend. This reflects a massive systemic issue that doesn’t just face landlords, nor indeed retailers. It pervades our economy across the board. A central issue at the heart of the debt crisis was the role of credit agencies. Being the arbiter of risk on behalf of the very businesses they relied upon for their revenues was a blindingly obvious conflict, bound to end in tears. That system and its conflicted relationships remains unchanged.

Exactly the same situation prevails in property. Professional valuations are made by companies wholly dependent on those property owners for their revenues. This is guaranteed to cause fundamental problems, but almost everyone is in denial. In UK retail, over the past 15 years or more we have seen online increase its share of non-food sales from zero to 30%. Over this same period, total physical selling space has actually increased, albeit more from earlier than recently. Meanwhile, online share growth may have slowed but it’s still just over 10% pa.

The key point here is that UK retail capacity growth is far outstripping our very sluggish or virtually non-existent sales growth. This is the central cause of retail distress. Chronic oversupply. The overwhelming majority of retailers have far too many stores, and most are far too big. Oversupply must mean that real estate is worth far less than it was. But this has barely impacted balance sheets.

Inflated values are used to justify bank support and investment cases across the board. The traditional measure of covenant is now totally redundant but still relied upon, with what will be increasingly disastrous consequences. Landlords, banks and investors continue to use outmoded valuation methods and ignore real trading economics and the brand equity of retail businesses. All this is just beginning to catch up with the various players. It’s going to be extremely painful – denial always is.

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