Retail administrations: Landlords throw Toys out of pram
Storm Emma has brought predictable chaos to our crumbling infrastructure this week. But it’s retail that continues to take a proper beasting from all the economic, technological and cultural upheaval we continue to see.
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While shops shout about rates and rent, many firms simply haven’t evolved. Bad business will always fail. Where ministers to step in is to fix the bad policy decisions that kill companies. Poor, short term thinking is exacerbating the problems many retailers are facing in being outgunned by online stores. Yet no one is prepared to act.
Brands left behind: Why?
1. Failure to evolve
Big box stores like Maplin and Toys ‘R Us – who have gone under this week shedding 300 stores and over 5,000 staff - have been left behind because they don’t compete with the prices and choice available online. This is what caused HMV to shut stores. Being stuck in the eighties was the death knell for BHS and I think it could also put M&S at risk. Stores need to have a clear identify and have something unique about then. M&S’s fashion has been off the mark for years. Whereas you can buy posh nosh in Waitrose and simple eats in Aldi and Lidl, Marks is playng catch up in a low margin arena.
2. Failure to compete
Other failures like Phones4U and more recently Byron have been the result of flooded markets. We’ve all mocked high streets packed with coffee, phone and betting shops. This over supply of shops – driven often by investors keen to jump on bandwagons – is now seeing the tables turned. Byron, for example, had THREE stores just in central Manchester. It’s madness.
3. Failure to adapt to online
The success stories are companies who have evolved to either embrace – or ignore – the web. Some have a dual offering between web and physical stores. Those firms know how to effectively manage their supply chain and are able to harvest the right data on their customers. Others like Primark and Lidl don’t offer online shopping - accepting that there’s less profit in for discounters.
Who’s next?
Betting shops: Rules restricting dodgy fixed-odds need to come in. And if they actually restrict this it will call time on hundreds of betting shops that are the scourge of many high streets.
Casual dining: Jamie’s Italian, Strada and Byron are all on the rack. Investors have over-estimated how many spag bols or ￡20 burgers people want. Meanwhile, stalwarts like McDonalds have successfully reinvented themselves time and again.
Pubs: Health conscious millenials are drinking less while the housing crisis means converted pubs are worth barrel loads more as apartments. Many pubs haven’t evolved to embrace music or comedy as they could have, meaning an increasing number face a bleak future.
What does the Chancellor need to do??
He needs to rip up business rates and start again. It’s become nothing more than stealth tax on business. While it brings in an amazing ￡28 BILLION a year – it’s slowly killing business by representing the biggest fixed cost they have. It’s a property tax that is a levy on ambition. Worse, high street shops are unfairly taxed compared to online only firms. Warehouses in cheaper locations have none of the same burden. The tax shouldn’t be equal but we need a sensible discussion on how we redistribute value and make things fairer.
To debate or discuss any of this stuff please contact Andrew Teacher, Managing Director at Blackstock Consulting on +44 203 137 6361