More hard times in store for our struggling shops
Barratts, Priceless, La Senza, D2 Jeans, Past Times: is there no end to the blood-letting on the High Street, asks Donald C McFetridge
Published 26/01/2012 | 08:00
Retailers generally look forward to the month of December; the month in which most of them perform best in the run-up to Christmas.
This past year was no different, except for the fact that many of them were looking forward to December with a mixture of hope (that it would be a good trading period) and fear (that it could turn out to be one of the worst on record).
January, on the other hand, is a month to which traders do not generally look forward. As these days we appear to have sales year-round, the January sales of yore are no longer the money-spinner they once were.
Guerrilla marketing campaigns, early promotional activities and heavy discounting from mid-November 2011 on meant the traditional surge in post-Christmas sales did not, in many cases, materialise.
Sure, there were some notable exceptions, but there were also many sets of dismal trading figures and the newspapers have been choc-a-bloc with articles about the catastrophic casualties on our disappearing High Streets.
In the past, independent retailers were regarded as the most vulnerable. Now that pattern is changing.
It would appear that independent retailers who concentrated on getting their product mix, price-point and service-levels correct fared better than expected, although that was definitely not the case for everyone in the independent retail marketplace.
While some leading retailers like John Lewis - a bellwether of the retail world - produced excellent trading statistics and Waitrose outperformed other supermarket groups, Tesco did not fare nearly as well as expected.
Who would have thought that their once never-failing insurance policy of heavily extending their non-food side of the business could have turned out to cause them such great damage?
As I predicted in November, there were winners and there were losers.
Nothing new there, then. Except that there were more casualties than even I had anticipated.
It was the end of the road for chains like D2 Jeans, Barratts, Priceless, Peacocks, La Senza and Past Times.
Yet Peacocks, for instance, had reported an increase in like-for-like sales in the previous year.
One of the principal problems with the retail sector is that it is over-extended - both at the bank and in terms of the number of stores many of these retailers operate. Peacocks is a prime example of this paradigm.
PriceWaterhouseCoopers recently published research which indicated that it is only necessary to have a maximum of 75 stores in order to be able to reach 80% of the British population within a 20-minute drive-time. Why then do so many of these larger chains feel the need to keep opening new outlets and over-extending the number of stores in their portfolios?
Surely one would expect that they would have learned a lesson or two from Next, which got into the same situation to the extent that they eventually cannibalised their own market and had to radically rationalise operations.
Sophisticated retailers need to realise that the marketplace has changed.
And it has changed irrevocably. In past recessions, consumer behaviour and spending patterns radically changed and this one is no different.
However, I predict that, when we see the end of this one, consumers will be slow to revert to their previous behaviour of spend, spend, spend.
Canny consumers have learned how to live on less, with less and for less.
Retail opportunities on the High Street these days are limited. There is no need for many of these large multinational chains to have the number of stores they currently have.
Many will hope that, when we reach the end of this month, things will start to improve and that there will be less bad news about our High Street. Not so. This year is going to continue to be very difficult and challenging - both for retailers and for consumers.
I predict that, during 2012, we will continue to see further store rationalisation.
We simply have to if some of the leading names hope to remain on the retail landscape for decades to come. To imagine that we will continue to have the High Street as it is today in 10 or 20 years' time is sheer folly.
It would be wrong to point the finger at online retailing, or at more out-of-town retail developments, as the root cause of the problem on our High Streets.
It would be more honest to point out that, while consumers pay lip-service to the High Street, many are not patronising it and that's part of the reason it's disappearing.
A word of advice for retailers - even those who don't think of themselves as vulnerable - never before has it been so important to treat your customers well and not just serve, but delight them.
Can you remember the last time you were delighted in a shop?
As I write this, I ask myself the same question and I truthfully find it difficult to recollect any such experience in the past six months.
One discerning consumer recently pointed out that "... it's not what they're selling, or the fact that it's too dear; they're simply closing their own shops - even the owners - because of the way they (mis)treat their customers."
Sadly, I was not as taken aback, as I should have been, because I knew exactly what he meant.
T S Eliot contended that April was the "cruellest month"; I suggest that, this year, January could take that honour. Let's hope there are kinder months in store.