This week's retail news 'you may have missed'......
At mdj2, we’re passionate about retail and always looking to share our news, views and insights. With so much information out there, we wanted to share just a small selection of retail news headlines from last week that we found interesting…??
Shops in England to see business rates bill drop by more than 50%
Retailers in England will see their annual business rates bill drop by an average 55% from today (1 April), according to new analysis.
The average shop’s bill will fall from ￡8,172 in 2022/23 to ￡3,678 in 2023/24, according to retail estate advisors Altus Group.
The reduction is the result of a 10% drop in the average shop’s rateable value combined with measures in the Chancellor’s?autumn statement?to freeze the business rates multiplier and increase the relief discount from 50% to 75%.
Restaurants, hotels and?pubs, which benefited from the same measures in the autumn statement, would see their bills drop by an average 52%, 64% and 58% respectively, according to Altus Group.
However, large portfolio holders would see less benefit on average thanks to a cap on the 75% discount of ￡110,000 per business, the real estate advisory said.
Despite the shrinking tax bills, Altus Group said the 10% reduction in rateable values did not go far enough. The drop should represent the fall in rental values between April 2017 and April 2021, which was in fact greater than 10%, according to Altus Group VP Chris Blundell.
“Whilst the revaluation and the 2022 autumn statement is undoubtedly good news for the retail sector overall, our view is that the market on the valuation date was far worse than these new values suggest,” Blundell said.
“Many ratepayers, especially those large operators excluded from the relief scheme by virtue of the cash cap, will want to consider challenging their new rateable values.”
Not all retailers are winners from the revaluation, with the rateable value of food stores of between 8,000 sq ft and 27,000 sq ft – the kind favoured by?discounters?Lidl?and?Aldi?– set to rise by between 5% and 10%.?Traditional supermarkets are among the biggest winners, with rateable values of hypermarkets and superstores over 27,000 sq ft dropping by about 15%.
The analysis also reveals regional variation. While 280 of the 346 local authority areas in England and Wales will see the rateable value for the retail sector fall, four council areas will see no overall change and 62 will see a rise.
Retailers in Dartford will make the biggest gains, with the rateable value of 900 shops dropping an average 38.2%.
The biggest losers are those in Purbeck in Dorset, where the rateable value of 380 shops will climb 19.7%.
“While most local authority areas are coming out ahead, the retail sector in others will see significant rises,” said an Altus Group report.
Areas likely to take a hit include those within commuting distance of London likely to be hit, “possibly as a result of changed shopping patterns during the pandemic”, it said.
Earlier this week,?Tesco Group CEO Ken Murphy called for further business rates reform. “The current system places a huge burden on shops of all sizes, putting thousands of?high street?jobs at risk and stifling investment into new stores, particularly in the most deprived areas of the country,” Murphy told the Retail Week Live conference in London.
“Let’s make the bill sustainable for a start,” he said. “It starts with freezing the tax rate. This would reduce the upwards pressure on the?cost of living?for retailers of all sizes who pay this tax.”
Next buys Cath Kidston brand for ￡8.5m with remaining UK stores to close
Next has bought the Cath Kidston brand name for ￡8.5m, after the vintage-inspired British retailer fell into administration for the second time in two years.
It is understood that about 125 jobs are at risk as administrators from PricewaterhouseCoopers are set close the four UK Cath Kidston stores – in London, Ashford, Cheshire Oaks and York – once stock is sold off. The brand’s website is also being licensed back to the administrators for 12 weeks.
The acquisition marks the latest step by Next to add to its brand portfolio, which already includes the rights to distribute US fashion chains Gap and?Victoria’s Secret?in the UK, while?fashion brand Joules?and online furnishings specialist?Made.com were also bought out of administration?by Next.
The clothing and homewares retailer is using its expertise in online marketing and distribution to help ailing brands maintain a presence in the UK. It is also using some of these brands to fill spare space in its high street stores while broadening their appeal to a wider audience.
Zelf Hussain, joint administrator and partner at?PwC, said: “Cath Kidston is a well-loved lifestyle brand founded in 1993 and I am pleased to say that it has been bought by Next who will make sure it continues to flower under their ownership.
“The company has over recent years navigated through incredibly challenging market conditions including the pandemic restrictions, and most recently the decline in consumer spending driven by cost of living pressures and rising costs.”
Cath Kidston, known for its whimsical retro prints, once had 60 UK stores as well as franchise outlets around the world. It was bought by restructuring experts Hilco in July 2020 but was put on the market again earlier this year.
The brand’s eponymous founder, an interior designer who worked with celebrity decorator Nicky Haslam, opened her first store in London’s Notting Hill in 1993, selling decorated tea towels and bric-a-brac.
She sold her stake in the business some years ago, and the brand?previously called in administrators?in April 2020 as part of an attempted rescue deal by Hong Kong-based Baring Private Equity Asia.
More than 900 jobs were axed with immediate effect at that time.
Seasalt partners with Reskinned for resale platform
Seasalt is launching a resale platform in partnership with specialist Reskinned in a move to boost circularity in the industry.
From 2 April, shoppers will be able to buy pre-loved and repaired items from the brand that have been brought in by other customers.
This follows the launch of the its?take-back programme?last month where customers who returned pre-loved Seasalt clothing could receive up to ￡25 off their next purchase.
The scheme received over 2,000 items in the first six weeks, making the brand the 12th?most requested brand on the Reskinned resale platform.
Seasalt chief executive Paul Hayes said: “We’ve been overwhelmed by the incredible response from customers getting involved in the takeback initiative and are delighted to be able to launch the resale service so quickly.
“It’s so important to us, as a business, to do what we can to encourage circularity in our industry and the success to date is testimony to the quality of our Seasalt product.”
Reskinned co-founder Matt Hanrahan said: “At Reskinned, we’re opening up the pre-loved market to new shoppers. Customers love what we do and our drop models work, with products generally selling through within three days and a returns rate that is significantly below industry norms.”
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Tesco attempts to ease supplier concerns over fulfilment fee
Tesco is attempting to ease supplier concerns over its fulfilment fees proposals.
The?grocer‘s chief product officer Ashwin Prasad has apologised for some of the ways it dealt with the situation during a webinar.
However, Tesco has not withdrawn its plans and new details, which suggest that the cost to branded suppliers could be even higher than initially planned.
Prasad’s letter to suppliers earlier this month unveiled plans to introduce fees for suppliers using its online operations and Booker wholesale arm.
Tesco initially looked to bill branded suppliers 12p per unit and 5p for own-label suppliers, but it is now understood that this will “start” from 12p,?The Grocer?reported.
Information on its supplier portal led suppliers to believe the fees would come in as early as 13 March although Tesco later backtracked.
According to suppliers, Prasad blamed the demand on a technical error with its systems, but is not believed to have directly addressed a threat in the letter that suppliers could face range reviews if they failed to sign up.
“It was a very scripted message,” said one supplier on the webinar.
“But there was no attempt to pivot away.
“Tesco is still making the argument that online is growing, it’s expensive and that suppliers need to come on board to pay more of the cost.”
“The fact is if you’re a brand selling products with a high unit cost you may not consider a 12p fee too onerous, but for people selling products at ￡1 per unit or less this could effectively wipe out profits,” said a source.
Prasad “reinforced it was a voluntary scheme and there were no consequences” said the source, adding it was a “very important distinction”.
“They now need to stand by that because the original letter threatened to downsize people’s businesses.
“Suppliers also have to reject this as in Holborn, Leeds and Bradford – they will be watching.”
You can now borrow paddle boards, bikes, rackets and more at Decathlon’s sports rental service
In a bid to get more people taking up sport, Decathlon?is the first major retailer to launch rentals across all UK stores.?
The service will allow people to try out a new sport without the financial commitment of having to invest in all the gear first.
The?cost of living?crisis has impacted sport and fitness participation across the UK, as new research from?Decathlon?found that one in four Brits are keen to take up a new sport but the cost of doing so is holding them back.
Products included range from bikes and kayaks, to stand up paddle boards and tennis rackets.
Paddleboards and kayaks can be hired for ￡30 a day whilst tennis rackets are ￡10, with all rentals being 50% on the second day.
Take the items with you on a weekend staycation, or use as and when for low-commitment play.
At a time when finances are hard, Decathlon?Rentals aims to make sport more accessible.?
Items can be used for a fraction of the cost of buying – for example, eBikes available in the service cost ￡899.99 to buy, but can be rented for ￡45 a day.
Over ￡1million worth of products are included in the scheme.
Rentals can be ordered online and collected in store in as little as an hour and they can also be cancelled up to 24 hours in advance to allow for any weather changes.
It’s a flexible scheme designed to make trying sports easier, and take out the worry of having to store items if space is an issue too.
Sharon Poulter, rental leader at?Decathlon?UK,?said:?‘Despite having the appetite to try sports, committing to the cost of buying gear is one of the biggest barriers to people taking up something new.
‘Rentals gives customers across the UK the opportunity to overcome this challenge by discovering the joy of different activities at an affordable price and in a sustainable way.?
‘We are proud to be the first business to offer nationwide rentals and this is a positive step forward for sustainable sports retail.’
Premium brands are experiencing a growth in sales, CACI data shows
Research conducted by CACI, the consumer and location intelligence specialist, has revealed that despite the rise in cost-of-living, premium brands are experiencing a growth in sales. This suggests a greater focus on quality over quantity amongst consumers, as with in-store shopping outperforming online showcasing the value of retail experience.
Brand Dimensions – CACI’s new data platform which compares spend across 300 well-known brands representative of the UK market – shows that 35% of premium retailers saw sales growth when comparing December 2021 with the same month in 2022. This compares with 19% of premium brands showing a decline in sales. Brands such as Reiss, Snow+Rock, Patagonia, and Sunglass Hut all improved on last December while experiencing an average transaction value (ATV) of over ￡100, highlighting a correlation between quality and quantity.
The data points to a change in spending motivations, with a greater emphasis on not just price, but sustainability and ease of use. While Shein, one of the biggest fast fashion retailers in the market, has sighted significant growth, it has been outperformed by Vinted, the second-hand online marketplace. With the lowest ATV of all retailers measured in Brand Dimensions, at just over ￡10, there is a suggestion that its growth can be attributed to ease of buying and selling items and spur of the moment purchases, as much as a comparatively low price point.
CACI’s Brand Dimensions has also identified growth in in-store shopping, with more than two-thirds of retailers with over 60% of sales in store seeing an overall increase in performance. Meanwhile, brands operating mostly online have struggled to match 2021; 69% of these online-dominant retailers have had a sales decline.
Rachael Bedford, brand dimensions lead at CACI,?commented: “Through Brand Dimensions, we have been able to identify a range of interesting retail trends, that could well define the industry in 2023. Despite initial assumptions around where consumers were likely to spend their money, and the expectation of choosing brands, plenty of consumers are valuing quality over price, highlighting a shift in behaviour and spend.
“In terms of how people are choosing to spend their money, the in-store experience is clawing back territory lost to online, a shift accelerated by the pandemic. There are many factors to consider here, such as Royal Mail strikes reducing confidence in delivery times, particularly during the Christmas period. However, it does showcase the enduring power of physical retail, and only reinforces its importance and the need to keep evolving and improving the IRL experience.”
Profiling 300 of the UK’s biggest brands, as well as the latest emerging concepts across over 400 regions, Brand Dimensions?tracks the total monthly spend, the average transactional spend, and the balance of spend across online and offline channels, revealing how brands are performing and the share of spend they are taking from consumers.