Macclesfield 25th January 2013-01-21
Talk by Bill Grimsey
Goodevening
Councillor Michael Jones leader of Cheshire East Council recently wrote a letter in your local Newspaper claiming that everyone agrees that Macclesfield is at a crossroad.
He claims that the crossroad is an option where, and I quote; ‘one way leads to managed decline, shop closures and the centre becoming a retail and community wasteland. where residents spend less than six per cent in their own town.
And the other way, he says, is an opportunity of a lifetime’.
Well is it the opportunity of a lifetime or is it in fact just going to create another clone town in Britain much like any other with Debenhams and other large national corporate brands occupying what will be an architectural eye sore in a town that has such a wonderful heritage and history.
And what guarantee have you that these retailers will survive and prosper into the future?
Councillor Jones may well be right about Macclesfield being at a crossroad.
A decision point where straight on is to do nothing and to the right is Debenhams and a monotonous clone town no different to any other town.
But a crossroad has a left turn as well and I have come here tonight to lift the lid on that Option
But before I attempt to do that……..who am I…..and what qualifications do I have to address you on the subject. Who is this guy from London daring to come to Cheshire to talk or even offer advice to you the townspeople of Macclesfield as to what the future might hold for your town.
Well….as you have heard my name is Bill Grimsey and I have been a retailer for my entire career spanning forty five years.
I grew up in a very different world starting in a place with pounds, shillings and pence…….when supermarkets were small and there were more than twenty different facias across Britain……..today we have just four names, five if you include Watrose, that control in excess of seventy five per cent of the food and household sales across Britain.
I have witnessed and been a part of remarkable changes in technology, logistics, distribution, store size, store design, store layouts and marketing messages.
I became a Director of my first company at just thirty two years of age and went on to become:
the New Store Development Director of Tesco in the eighties
the CEO of Hong Kong’s premier supermarket company in the early nineties
I recued Wickes from total financial collapse from a fraud in 96 selling it in 2000
I was the CEO of the Iceland Group from 2001 for 4 years again rescuing it from financial ruin.
Finally I was the CEO and latterly Chairman of Focus DIY ltd rescuing it from certain administration in 2007 but unfortunately we were unable to save the organisation and it went into administration and closed in 2011
Last year I published a book called Sold Out lifting the lid on who really killed the High Street and it’s not who you think!
Today I speak on the subject from a semi-retired position seeking no commercial gain just offering a passion and knowledge about the subject to stimulate debate.
I believe that you don’t know where you stand today or where you might go in the future if you don’t understand the past.
Unlike Lord Sugar who recently said when advertising the young apprentice TV show: “I’ve seen it all, I’ve done it all and I know it all”……….I would rather say: “I’ve seen a lot, I’ve done a lot, I know quite a bit but I still have a lot to learn.
So let’s examine some of the facts and issues facing retailers and town centres today and try and put them into some context relating to the challenges facing Macclesfield.
Monotonous metropolis, clone town Britain or ghost town Britain, call it what you like, the indisputable truth is British towns and cities are losing their identity and dying off. Independent stores that were once vital to the fabric of towns are disappearing at the rate of fifty shops a week.
Some towns have as many as twenty four per cent of their shops empty. Boarded up High Streets are already leading to a marked increase in crime and anti-social behaviour.
Over the past few decades literally thousands of independent stores have disappeared. At the same time some of the UKs best known retail chains have vanished. In fact there is a veritable A to Z of the “disappeared” starting with Athena, Bejam, C&A, Dillons right through to Unwins, Victoria Wine, Woolworths, YHA Adventure Shops and Zales.
Many were, in their time, innovative and exciting, yet all died in the end.
Last year their number on “retail boot hill” increased with JJB Sports, Clinton Cards and Comet joining them. This year is barely a month old and alreadyHMV, Jessops and
Blockbuster have all gone bust. Six national chains in the space of twelve months andall of them had or have a connection with Macclesfield.
What confidence can you have that Debenhams, Top Shop or any other of the large corporate national retailers will be around tomorrow to give you, what Councillor Jones would have you believe, is the opportunity of a life time.
We are in a position today where pundits, campaigners, academics and the media are agonising over what is happening to our shops. Arguments rage about whether our supermarkets have become too powerful, prices too high or too low and whether we have too much or too little choice.
In search of a “baddie” to blame the spotlight falls most frequently onto supermarket giants such as Tesco, Asda Walmart, Sainsburys and the like. Not content with dominating the market for groceries with a powerful combination of giant out-of-town centres and High St convenience chains such as Tesco Express and Sainsbury’s Local, a strategy which has decimated the number of butchers, greengrocers and bakers in our towns, the supermarkets now sell all the non-food things we used to buy on the High St too. Books, clothes, home-wares, electrical goods and toys can all be popped into your trolley with the weekly shop.
The Supermarkets are even now honing in on specialist services and opening up opticians, dental surgeries and medical centres.
Whatever your view on this…….that it is convenient or downright destructive……what is clear, things are only going one way.
Widespread concern about what is happening to our High Streets has led to successive investigations and official reports in recent years. Supermarkets have borne the brunt of the criticism, but numerous other contributing factors have also been uncovered to try and explain the relentless downward spiral of decline.
Top of the list are the growth of out of town shopping malls, crippling town centre parking charges, an outdated and unfair property rental system and now the rapid developments in technology which mean people can shop on line or even via their mobile phones.
In fact the growth in in on line sales before Christmas was remarkable and in the three weeks leading up to Christmas a tablet computer was sold every four seconds in the UK. My five year old grand daughter asked me to buy her an I pad for Christmas. John Lewis and Debenhams both reported excellent Christmas sales driven by a switch from store sales to sales on-line.
I predict that the pace of this change will accelerate and that in five years time more than fifty per-cent of non-food shopping will be done on-line. This trend is already posing a serious threat to the out-of-town shopping parks built in the nineties and early noughties.
Ironically many of these shopping parks will suffer the same decline as their retail cousin the High Street, the very same streets that they damaged so much. Tumble weed parks as I call them will become a very real issue across Britain in the next decade.
We all have to recognise that things are changing and that there is now “An Amazon” in the room. Two weeks before Christmas Amazon declared that they sold more e books than hard copy books for the first time in their history. The question is: What future does Waterstones have with an outdated model against this trend?
Although retailers failing to recognise and respond to changing trends are in a great way culpable for the situation in which we find ourselves today…………this is by no means the full picture. There is also the rather uncomfortable truth that you and me as consumers have played no small part in what has developed.
The truth is, our values and life styles have changed and are continuing to change so much that no matter how hard we try the British High Street cannot be saved as a retail destination. Sad though it seems we simply don’t visit it any more in sufficient numbers to make it commercially viable for retailers.
In years to come the Big Mall culture will grip Britain……and I mean BIG ones like the Trafford Centre, Liverpool One, Westfields each side of London and new ones being built in Leeds and Croydon. These attractions will provide a whole day out for people for shopping, entertainment, eating and socialising. These BIG Malls will be complimented by a nation of on-line shoppers using smart mobile devices to make their purchases.
Against this background, the big sixty four thousand dollar question is………………Do we really need more retail space of the nature being proposed in Macclesfield?
Let’s look backwards for a moment and understand what causes big national retailers to fail and close down and we can see two clear reasons;
The first is the failure to keep pace with changes in customer trends and technology. Even mighty retailers from the past such as Woolworths failed to provide customers with what they wanted and collapsed overtaken by a store like Wilkinsons a general store with great value. HMV is another most recent case where the product has been trumped by technologyand the retailer failed to be a part of that new world.
The second is a cancer that penetrated the retail sector and other business sectors in the early nineties known as Private Equity and the leveraged buy out model. It works something like this…………………. Buy a retailer, fill it with as much debt as you can, remove the assets which were generally freehold property assets to a separate property company and rent them back to the retailer, reduce the costs aggressively usually by taking out people and improve the short term profits of the retail company and then sell it.
It is called slipping and flipping in the business and many of our recent retail casualties have succumbed to this treatment ending in failure. Focus DIY was just such a company that I saved from administration in 2007 as it could not finance the amount of debt that it had from this treatment. Despite reducing the debt considerably the economic conditions from 2008 and the subsequent lower sales meant that Focus could not finance its new lower level of debt and collapsed in 2011.
However looking forward there will be a third reason why big national retailers will fail and it will be because they simply have too many shops. Retailers have two major costs that significantly impact their profits. One is people and the other is property costs. Retailers have been adding space at an alarming rate since the nineties and yet The British retail Consortium known as the BRC is predicting still more retail bankruptcies in 2013.
Despite this retailers are continuing to add more space……and at the same time …..and this is the big issue, virtual capacity is growing at a breakneck speed. One eminent food analyst has calculated that on-line shopping is now the equivalent to one million square feet of extra space, or roughly twenty big superstores, and still rising.
As sales migrate to on-line there is a serious risk that profits will fall as these sales are more expensive to service. Couple that with the fact that even more space is being added in the relatively inefficient convenience store sector as Tesco and Morrisons circle Blockbuster for sites like buzzards around a dead carcass and Sainsbury’s aims to open two new Locals a week this year profits will come under more pressure.
2013 could well be the year that we witness this third type of casualty brought about by over supply in the market. Where supply is greater than demand prices will fall and with them profits will tumble. In difficult economic times the propositions at the extremes usually do well as we saw from recent results from Waitrose at one end and Aldi at the other. Both recording record sales growths.
In the overcrowded middle ground Tesco Sainsbury and particularly Morrisons seem particularly vulnerable to profit warnings.
Added to this we have a Government persistently scoring spectacular own goals with the Pasty Tax, minimum pricing on alcohol and failing to see that even with some respite on rates the High Street is headed one way only. Yet they continue with the folly of the Portas Review investing small sums in pop up shops, PR exercises, gimmicks and TV shows.
Against this background one thing is for certain……2013 will see an increase in empty shops on the High Streets across Britain. Now is the time for everyone to concentrate their energy on working out new ways to use this empty space and restore it to being the heart of the community.
To make Macclesfield the best it can be will not be achieved by building something that very soon will not be required and end up much like any other town in Britain. In fact playing catch up to a bunch of lemmings is not a smart move…….in the end it will mean more and more closures in the rest of Macclesfield and is a flawed plan.
What will set Macclesfield apart is to define a vision for the future that is built on a firm understanding of how you got here and what the future holds. Let’s revisit the trends;
Technology…………….on-line shopping will grow and grow
Big Malls…….will dominate and Trafford Centre is just up the road
Monotonous Clone Towns doomed to fail
No constructive help from Government
Retailers have too much space already for the future
The question is against all this does Macclesfield really need more retail space? Councillor Jones is clear in his letter he says: “ this is an opportunity of a life time to create a town where people want to come and live and work and visit and where businesses thrive and prosper”
Against the background of the major structural changes I have just outlined are taking place in retailing today this is the most laughable statement I have ever heard. Come and live and work in Macclesfield; we have a Debenhams etc just like everyone else and our independent retailers are closing at a fast rate at the other end of town and by the way the building is a modern eye sore in a town stepped in history.
No Councillor Jones you are wrong. And the evidence points to a retail wasteland in Macclesfield if you build this development which for all the reasons I have stated will not be required in the future.
Communities that have their economic roots in the local community will thrive in tomorrow’s world. Giving profits from the community to national corporate retailers at the expense of the local traders is appalling and should be condemned.
Now is the time to demand that the Council support the Make it Macclesfield town team and get more local business people and residents to help deliver a future for Macclesfield with a vision based on the heritage of the town that has a uniqueness in it’s shops, entertainment and living areas. One that encourages local people to invest in the local economy and preserves the personality of Macclesfield. Build on the sterling work by the Make it Macclesfield Group.
Why not be more ambitious and create a jewel of a town in the North West. A town of boutique specialist stores, residential streets where shops used to be, with restaurants and entertainment that makes the heart of the town a centre of the local community. One that protects and preserves the appearance and personality of the town. Create something that can sit alongside the world of Big Malls and on-line shopping that is clearly the future.
Look at the crossroad that Councillor Jones described. Straight on is not an option more and more stores will close. Turning right is Debenhams and Monotonous Clone Town Britain and
still more and more shops will close. Or imagine that left turn and redefine the town as a centre for the local community, a centre for entertainment, a centre for living, and a centre that has a uniqueness in the variety of shops that can’t be found anywhere else. A town that sets Macclesfield apart from Clone Town Britain a town to be proud of.
Thank you
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