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This morning’s news of the takeover of Intu by Hammerson is very positive. I have been warning of the inevitable consequences of relentless capacity expansion for well over 10 years and found the real estate side of the retail industry the slowest to understand. This deal involves two companies that get it and have the vision and courage to act.

Today, 23% of non-food sales already goes through online, a channel that has grown from zero in more less 15 years. In the bricks and mortar world, trading space has continued to expand, albeit at a progressively slowing rate. However, online has failed to materially make the spending cake bigger. With consumer spend in retail more or less flat, something has to give. The industry is seriously over-supplied, and getting more so by the month. The vast majority of retailers have too many stores and one way or another, this has to change.

I think this deal recognises reality and its implications. The enlarged company will be better able to take some tough decisions on editing capacity. It will also be better placed to deal with the implications of retailer distress that will characterise next year’s market. I expect to see more casualties, administrations and CVAs. The enlarged business will be much better placed to play a pro-active role in this reconfiguration of industry capacity.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

The company’s just announced shop-in-shop trial in the Surrey Quays Tesco is the biggest surprise since Next announced it would run a Black Friday promotion. The fact that both these initiatives are very small should not mask their significance.

This is the most challenging retail market we have ever seen and is THE defining time for the industry. The defining bit will take some years, but it has started. And no one is immune – everyone is feeling the pinch. Different companies deal with pressure very differently. Ironically, it is often the strongest who find it toughest because they are so unused to facing challenge. I think we are seeing this at Next.

Doing Black Friday is very out of character for a retailer that has prized price integrity so highly. In the most promotional market ever seen, they stood firm, only running sales to clear seasonal stock. It is hard to imagine what the business learned from a very limited trial and all in all, I wonder what the point was.

This latest trial is just as hard to fathom. The two retailers make strange bedfellows. Next has seen what Arcadia has done with Tesco and has determined that this is an attractive strategic opportunity. I admit to being shocked!! Given the underlying declining sales performance at Next stores one would have thought that opening more space didn’t rank high on their to do list.

Over the past 10 years or so, Tesco’s customer focus has narrowed. This is reflected in its ranging. The upper reaches of its “Best”offering have been generally pared and often , edited out altogether. They may have made for a better partner 10 years ago but now, I’m far less certain. Indeed, I’m far less certain that Next sits comfortably in any kind of supermarket at all.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

• Retailer participation in this year’s Black Friday was a whisker ahead of 2016

• Our YoY promo tracker mostly ran slightly below last year but converged yesterday
• Participation by sector was lowest in departments stores (70%), Jewellery (54%) and General Merchandise (60%)

• The YoY pattern has been very close all year so the run-in to Christmas is very clear
• Next week, promotional activity will fall but remain well above 50% of the industry, beginning to rise again by week 50

** A more detailed Paper analysing  at company level is available – email admin@richardtalksretail.co.uk for your copy

This morning’s news that Next is to finally run a Black Friday promotion is a big surprise, to me at least. It has taken the company years of sitting on the sidelines to make up its mind to join the fray. For years, the middle market of retail has been the most squeezed. And for years, Next has been standing out as the strongest of the major players. It has enjoyed the strongest brand, built on consistency of product and trust. A key symptom of that strength has been the way it has dealt with promotions and mark downs – short, sharp and very aggressive. And never ever muddying the waters by promoting outside its few key end of season points in the calendar.

So is this a huge vote of confidence in Black Friday from a hitherto skeptical retail winner? I don’t think so. My interpretation is that this decision says much more about the company than about the event. Simon Wolfson has in recent years sometimes been called gloomy and pessimistic. I know the feeling! But I think he’s been too optimistic. This slowdown in our economy as finally acknowledged in yesterday’s Autumn Statement has been obvious for a very long time. And at its heart is a slowdown in retail.

My view is that the retail market has been weakening progressively as 2017 has unfolded. Every retailer I know has a cash flow somewhere short of expectations. For some, the pressures are quite worrying. Next will not be one of them, but I suspect this is more to do with wanting to boost flagging sales than a sudden liking for the lemming-like melee that is Black Friday.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

I have been clear in my views of Black Friday. It’s crazy and for most retailers, it damages the brand and bottom line. For Amazon It’s a stick with which to beat much of the industry, and other predominantly online retailers can also benefit.  For most others though, PR departments work overtime to convince the outside world that it’s a great success.

Much of the trade would love to opt out but in this weakest of all retail markets, few have succeeded. M&S has transformed its promotional strategy this year and has already made its opt out clear. This week, we have found seven retailers who have already launched their Black Friday promotions – AO, Blacks, Currys PCWorld, Halfords, ShopDirect, Vodafone and Wiggle. In fact Halfords and Wiggle both got in first by launching last week. What is worth noting though is that none of these retailers had launched this time last year – perhaps a sign of the materially tighter market we are now seeing.

So what will Black Friday look like in 2017? Last year, 84% of non-food retailers took part. So far this year, promotions are tracking 2016 very closely and very slightly lower. I expect this pattern to translate into Black Friday with some of the stronger retail brands managing to opt out but most finding the fear of lost sales overwhelming.

With demand thin and consumer confidence brittle, Black Friday will essentially suck Christmas sales forward. This will ensure that most of UK retail will be on sale from early next week, right the way through until the New Year. So much for the Golden Quarter.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk