The High Street is a mirror image of the UK Economy
As we enter spring and say goodbye to winter it is a good time to reflect on the first two grizzly months of 2013 for retailers and the UK economy. The Christmas lights were still up when the shutters came down on some household names; Jessops, HMV, Blockbuster and then shortly afterwards Republic threw in the towel. For the three immediately after Christmas their timing reflects the cynical nature of secured creditors pulling the plug when the tills are full of cash. Such deliberate cynical planning can expose management teams and we trust that these were not such cases.
Within days into the year the focus fell onto the Christmas results with winners and losers reporting sales performance figures. Whichever way the figures were analysed the general consensus was that it was a poor Christmas reflecting; declining household disposable income, consumer confidence and the general outlook of an economy bumping along the bottom failing to grow. John Lewis shone like a beacon in the mist reporting record sales figures and a marked increase in sales of products sold on-line.
In the three weeks leading up to Christmas a tablet computer was reportedly sold every four seconds in the UK. My grand daughter, who is just five years of age, asked for an i-pad for Christmas and within seconds of unwrapping it under the tree she was proficient in using the device. What hope the High Street when she grows up to be a consumer?
With the snow falling in January the media turned the spotlight onto the High Street and the now infamous Portas pilot towns following the publication of the government backed Portas Review published in December 2011. BBC breakfast started the ball rolling with a visit to one of the better performing examples in Bristol, whilst a recent report suggests that very little of the money allocated to these projects has been spent. What little has been spent has sometimes been on short term gimmicks like a huge blow up Peppa Pig to attract crowds. Whatever your view, the one thing this report has achieved is to raise the profile of the plight of our town centres as well as a channel 4 TV programme for Mary to be aired shortly.
We had hardly got into February when the horse meat in burgers and ready meals scandal hit the news. Phil Clarke, the boss of Tesco, promised his customers that, in future, what it says on the packet will be what’s in the packet, Owen Paterson, the Environment Secretary, started a probe into his own department and Malcolm Walker, the boss at Iceland, pointed the blame at local authorities for being obsessed with price for school and hospital meals. Great leaders recognise that, when something goes wrong, they must take control, accept responsibility and put in place action plans that put things right. They do not attempt to point the finger in another direction and pretend it is not their fault. Thankfully for the retail industry Phil Clarke at Tesco appears to be doing just that.
Throughout this period and historically perhaps we should examine what impact we have as consumers on all of this. After all we flocked to the out of town shopping parks when they grew up in the 90s because of convenience. We lapped up the chance to remove the seasons from our fresh foods brought about by the sophisticated supply chains of the supermarkets meaning we could have new potatoes, French beans, strawberries etc, all year round. Now we are moving towards on-line shopping and congregating in huge shopping malls threatening the out of town shopping parks that killed their retail cousin the High Street.
The disappointing thing about the Portas Review is that it failed to highlight the structural changes impacting the sector as can be demonstrated by eight major national retail chains going bust since publication; Peacocks, Clinton Cards, JJB Sports, Comet, Jessops, HMV, Blockbuster and Republics. One thing is for sure the Government is not showing any signs of changing course with economic policies firmly entrenched into austerity actions despite enough evidence to demonstrate that it is simply not working. The High Street dilemma is a mirror image of the UK economy and cannot be solved by saving our way to prosperity or through gimmicks and TV shows. In fact if the medicine is not working the worse thing you can do is apply more of the same. As a comedian once quipped: “ My Dad always said that the best medicine when you are ill is laughter and I nearly died laughing with diphtheria!!”
It is not long before we put our clocks forward and spring into British Summer Time. However, the warmer weather and longer evenings are not going to hide the fact that 2013 has started badly and will go on to be be a very tough year for all businesses, retailers and the UK economy unless we can start to grow. For retailers they face the double whammy of falling sales driven by the economic performance and a change in channel to on-line leaving them with two much capital intensive expensive space. When supply exceeds demand prices will fall and with them profits. Expect more new arrivals on retail boot hill. Although negativity has no place in any team, great teams face reality and change their game plan accordingly to avoid losing and win the game. With David Cameron visiting Keighley in West Yorkshire he would have seen for himself a high street in decay. It is almost past time for our leaders to change course so let’s hope that the news that UKIP got second place last week in Eastliegh is a wake up call for a change.
Bill Grimsey is the ex CEO of Wickes, Iceland, Focus DIY, Author of Sold Out; Who really killed the High Street and has a web site; www.vanishinghighstreet.com
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