Retail pain continues with the news that Mothercare is to close a third of its 373 UK stores.
JJB Sports has just announced losses 0f £181.4 million for the year to 30 January 2011, three times the previous year’s loss of £68.6 million. In response they plan to close 89 of their 247 stores over the next two years to reverse their fortunes.
And HMV has just had to sell Waterstone’s for £53 million to pay down some of its £170 million of debt. In addition, they propose to close 40 stores amid continued decline in the sale of DVD, down by 15% in the 17 weeks up to 30th April.
Oddbin’s too, has gone like most other wine retail chains, having appointed administrators following its failed attempt to agree a restructuring plan with creditors, which was rejected by HMRC.
Plainly there is a major earthquake taking place on the High Street, and it is not all about cutbacks in consumer spending, although reduction of discretionary spending is likely to have played a part in the high street retailers’ troubles.
More importantly is that retail purchasing is changing. In addition to spending less, consumers are becoming sharper shoppers by looking elsewhere, not just in the High Street. They are visiting dedicated retail parks combining shopping and leisure to offer an experience, entertainment and convenience in one place.
In addition consumers are increasing their online spending, not just books and DVDs but groceries, clothing, hardware and much more.
This second generation of internet use is contributing to the decline of the High Street. Consumer purchasing behaviour is changing, not only through cutting out the middle man such as retailers, but also for services such as recruitment, travel and leisure, and even professional services like legal, accounting and financial advice. All of these are moving out of the High Street.
The government has recently asked Mary ‘Queen of Shops’ Portas to take a look at the country’s High Streets and come up with suggestions for rescuing them, clearly hoping to find a way of rejuvenating this part of the UK economy.
What Ms Portas will conclude remains to be seen but she may well conclude that the competition from shopping and leisure centres with their easy access via car and public transport is too much.
If so, the chances are that she will suggest that the High Street can survive but only if it offers something different. Places like the Lanes in Brighton or Bicester Village will continue to attract visitors prepared to travel but most high streets cater for local customers. They need to support local requirements and recognise that the major supermarkets have moved into town to hoover up.
Locals still like to buy from local shops that provide a personal service, ideally selling local produce such as farm-sourced. This ought to support retailers like the grocer who lets you taste a piece of cheese before you buy, independent butchers who will advise, trim or even marinate meat and local bakers. Pubs, restaurants and cafes that cater for families, young people, the elderly all play their part in supporting community, even the self-help run library. But for the High Street to avoid further decline, everyone needs to work together and this will require leadership.
A business rescue consultant, says: “retail turnarounds in a recession tend to involve brutal cuts to drastically reduce the number of stores, engaging with staff who are key to improving the customer experience, a search for a ‘wow’ factor or at least products that will generate excitement and a long period of market research to analyse options for resuming growth. Successful turnarounds normally evolve as very different retail models, repositioned stores, motivated staff, a different product offering, new channels and a much improved image”.
You never know, the High Street may be once again be a place where shopping is an enjoyable experience, but what will it look like?
Copyright (c) 2011 Alison Withers