Be careful out there – the intricate web is also a jungle.

January 27th, 2012

internet scamHere’s a warning to those who operate e-commerce sites.

Now, a big advantage of operating a website is the ability to offer your products throughout the world for no extra cost.  The worldwide acceptance of credit cards now gives the customer the ability to transfer funds across continents to make purchases, not available locally.

A very successful site I work  with esellit.com had an enquiry from the Seychelles for Boat Winches. After receiving a reply, the ‘customer’ opted to purchase 50 of a model costing over £50 – an order in excess of £2,500. The fact that Mr Seal Waller did not request the ‘best price’ or a discount already started to cast a few doubts but, hey, the product was a bargain (as most of the items on the site) so maybe he didn’t need a discount  on top of the keen price

The next step was for Mr Seal Waller to request we contact his shipping agent Mr James Coleman for a quote.

Remarkably a quote of $1950 GBP was received. Whether it was meant to be dollars or pounds it was an incredible quote to send a 600 Kg pallet by air from London the Seychelles. However, the caveat was that we would be their client and needed prepayment before they would collect the pallet.

So now a scam is becoming clear.

Mr Seal Waller will make payment for the goods + shipping. We would then pay the shipper and then a few days later the credit card transaction would be reversed as it was stolen/fraudulent. They will not pick up the goods but you would still be out of pocket for 2 grand!

A search on the internet revealed the name Mr James Coleman being used as a pseudonym for the old Nigerian 419 scam back in 2001. That’s where you receive a letter  saying that you’d been highly recommended as an honest and reliable man and they needed your bank details so they could transfer many millions of $ and you would receive 20% for your trouble (and many variations thereof). They would then need an Advance Fee to facilitate (bribe the officials) the transfer. When they received ‘the fee’ that would be the last you hear of them

OK, maybe this scammer is not too bright but please be aware that there’s an element out to rob you whether you have a physical or an on-line shop.

  • Ensure you have the best fraud protection systems in place.
  • Are you protected if the shipping address is different to the billing address?
  • Do you take PayPal? If so are you fully compliant with their seller protection scheme?
  • Do you ‘bend the rules’ to offer the best customer service leaving you open to charge-backs?
  • Be doubly careful if the customer telephones as they’d rather not purchase through the site checkout.

Remember if something seems too easy/good to be true – maybe it isn’t.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.esellit.com
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

The rise of the £1 shop (and we mean rent!)

November 7th, 2011

Boarded shopsThe Financial Times has an article today regarding the increase in the number of High Street shops being offered on a £1 rental. Recent changes to Business Rates means that landlords are responsible for paying them even if the shop remains empty, so better to avoid the expense even in if means (almost) no rental income.

There is lot of resentment about the Business Rates tax. Although based on the rental value of the premises (typically 40%), it is revised only every 5 years and then increases with inflation. Retailers can expect a 5.6% increase next April at a time when traders are struggling to even maintain their sales.

Currys and PC World owner, Dixons admits that it is paying a nominal £1  rent on a ‘small handful’ of it’s shops, Card Factory has also confirmed that it is paying ‘Business Rates only’ on a few of it units.

Although Card Factory are still expanding in the High Street, many well known names such as The Arcadia Group, Mothercare, Thorntons as well as Dixons are walking away at the expiry of their High Street leases in favour of trading from Shopping Centres, Retail Parks and, of course, developing their on-line sales.

My previous article ‘Recession or Evolution‘ touched on the changing face of the High Street and local councils need to adapt their policies, such as change of use, to recognise this and avoid the destruction of town centres.

Until that time comes, perhaps your business is suited for the High Street and if paying ‘Business Rates only’ makes it cost effective to expand (even on a short lease) then now may be the right time to start negotiating.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.esellit.com
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Recession or evolution?

October 19th, 2011

Costa CoffeeIt’s an odd thing this downturn/recession/slowdown. There are plenty of retailers who are suffering but many who are thriving.

The experts predicted that the public would cut out the unnecessary expenditure from their budget such as the £2 Latte. Well, surprise surprise, Costa announced like for like sales up 6.7% this week (total sales up 23.3% and underlying profits a whopping 41.8%) and meanwhile a medium Latte is now £2.45.

Ah, say the experts, we’ve cut down on the expensive luxuries and kept the little treats. Perhaps it’s just that Costa (although it pains me to say it) have got it right. They provide a good cup of coffee in a pleasant environment, comfortable for meeting with friends, working on your laptop or just a guilty pleasure.

Meanwhile Argos, a supposed bellwether of the retail trade suffered a 9% drop in sales in the last quarter. Well, I have news for you Mr Home Retail Group, perhaps life has turned a circle and bit you back. 10 years ago they were the scourge of traditional retailers who resented customers looking at their products using the advice and knowledge of the salesmen and then going to Argos who could sell it cheaper as they had no qualified personnel or expensive retail space given over to displaying products. Just a large warehouse and a counter where the cashiers knowledge of the item was whether it was collection point A, B C or D. The internet, mate, has turned the tables.

Meanwhile the electronic and white goods retailers are having a torrid time. Dixons sales down 10%, Comet owners allegedly offering up to £200m to a white knight to take it off their hands and Best Buy looking to retreat back to the USA with it’s tail between it’s legs.

It is cited that there are few new, must-have products to make the consumer part with their cash. Well yes, maybe, but also every time I replace my laptop (usually after 3 years) the price has dropped another £200 or so (unless you’re an Apple lover). So they need to keep selling more laptops every year just to stand still. Also, reliability has increased, particularly on white goods. How often do you need to replace your washing machine or tumble drier and fridges only seem to get bought when you move house. I’m not sure these retailers would be faring any better even if the economy was in good shape.

It’s all doom and gloom in the High Street with the number of boarded up shops. But is that due to the economy or just the fact that councils have been increasing business rates, putting up the cost of street parking (233% in my area) and employing more vigilant parking wardens eager to write out tickets. It’s far more pleasant to drive to a shopping centre with easy (often free) parking, temperature controlled environment and a vast selection of shops and restaurants (and Costas!).

Perhaps it’s just the natural order of life and a Darwinian evolution is more responsible for the retail turmoil than the recession?

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.esellit.com
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Location-based Mobile Coupons

October 19th, 2011

Location-based Mobile CouponsLocation-based mobile coupons are starting to make headway in the UK.

If you are not aware of the concept, your mobile phones GPS monitors your current location and will send you coupons for products/services nearby. For example, you could be walking passed Starbucks and ‘ping’, you receive a voucher on your phone for 20% off a cappuccino.  You’re in a store looking at the shirts and ‘ping’ – buy 2 get one free. The promoters claim that it’s a win-win situation. You get a discounted coffee and Starbucks make an extra sale (as you were walking passed anyway) or you got a discount on 3 shirts and the shop made extra sales.

But is it necessarily a win-win situation? Perhaps you were going to Starbucks anyway but just picking up a newspaper first or had planned to buy 2 shirts and now you had been gifted a 3rd.

There can be no doubt that smartphones are fairly ubiquitous and their users moving from the initial gimmick apps to using them intelligently to save time, effort and money.  This, as with many new developments, has taken off in the land of Marketeers, US and a recent survey showed:-

  • 76.4 percent browse or look for a product or service on their smartphone or tablet
  • 75.0 percent use their device to locate a store or store hours
  • 48.9 percent research specific products
  • 45.7 percent read customer reviews
  • 42.2 percent have used their smartphone or tablet as a coupon (scanning a bar code, showing a text to a cashier, etc.)
  • 39.7 percent have made a purchase directly on a mobile device
  • 36.2 percent have scanned a QR code

02 Media recently launched Priority Moments, a daily deal program offered exclusively through mobile differing from Groupon as they claim ‘ it’s based off an app that recognizes location, Priority Moments offers our customers unique experiences in their preferred location that can then be redeemed in-store with the mobile device’.

So, is it a win-win situation or is it just giving discounts (and bottom line profit) away unnecessarily?

Well, like all marketing it’s try it in a small way, analyse the  results, tweaking, try in a bigger way, analyse, tweak again and then roll it out.

One thing’s for sure, discounts, coupons, incentives are part of modern retailing and you have to find the route that works for you.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.esellit.com
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Groupon – business saviour or killer?

April 13th, 2011

UK retail sales suffer the biggest fall for at least 16 years according to the Retail Consortium and KPMG. UK retail sales figures for March 2011 fell by 3.5% on a like-for-like basis compare to March 2010. It is the worst drop recorded since the Retail Sales Monitor was launched in 1995.

So you may be thinking to sign up with Groupon or one of their clones to boost sales. A word of advice – DON’T!

Groupon and their ilk, for those not familiar with the concept, sign up members to offer them their daily ‘deals’, usually at a local or city level. Their members buy the deals and are given the vouchers to redeem at the retailer, restaurant or local business. Groupon will then pay the retailer less their commission (often as high as 50% + c.c. costs) usually in 3 tranches over the lifetime of the offer.

What’s wrong with that you may think? You get a lot of new customers and sell a lot more of your products/services.

Well lets consider what you actually get.

Firstly, many groupon members will only buy when they get a discount or a voucher. They believe that if you can offer a discount of 30% then you were making too much in the first place and will never contemplate returning unless they get another coupon. They will not spend more than necessary. For example if they bought a £25 voucher for £10, don’t expect them to use it against a £50 purchase. They will spend £25 to the penny.

Secondly, you will upset your existing loyal customers who are prepared to pay the full price or worse still, some of your customers are Groupon members and end up getting discounts on what they were prepared to pay full price for (and may consider you a discount store in future).

Thirdly, you may not be able to cope with redeeming the vouchers causing trouble with the purchasers and Groupon. For example Groupon sold over 1000 1/2 price massages and the parlour  would need to work flat out for 3 months redeeming them and would not even be able to service their regular full paying customers.

Let’s take me as an example. I am and have always been a Gap customer. They’ve always been good for jeans and the basics etc. However, over the last year or so they’ve had 30% off 2 week promotions every 3 months or so. I’m not daft, so I wait for the next promotion to do my shopping (and looking at the queues at the tills, so do many others)

Never forget that if you drop your margins from 50% to 40% you need to increase your sales by 25% just to stand still! Even more if you need to take on additional staff to deal with it.

Once you start on the slippery slope of promotions/vouchers outside normal sale periods it’s very difficult to get back your credibility.

OK, you weighed it all up and you still want to go ahead and give Groupon a try? Then, think carefully about the terms and conditions you will offer.

1. Set expiry date
2. Redeem in quiet periods?  Monday to Thursday – not available Bank Holidays?
3. New customers only? Good for new business but alienate existing customers?
4. Limited number of vouchers? – First 400 only for example.
5. Only 1 or unlimited vouchers per customer? Do you want regular customers buying a years supply?
6. What can it include? Does 1/2 price meal include drinks or just food?
7. Can it be redeemed against anything or do you want to exclude gift vouchers for example?
8. Can it be tailored to be used against slow moving lines and exclude fast sellers?
9. If you have more than one outlet can you offer it for the poorer performing outlets only?
10. Refer to paragraph 2 – DON’T

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

5 Steps to safeguard your business

April 1st, 2011

With the wave of UK Retail bad news coming in of dropping sales and business closures it’s perhaps time to remind ourselves of some areas to focus on.

1. Concentrate on what is within our control

We can’t do anything about the economy, high unemployment or the weather so focus your energies on what is within your control. What can be done to increase your sales and/or margins? How can you reduce your buying costs or overheads?

2. Revisit and, if necessary, revise your Business Plan

Hopefully we all have a business plan but circumstances change and they often need to be ‘tweaked’. Do you have an ultimate goal and a route  to get there? Is the strategy still valid given the 2011 trading conditions? Do you have a friend, mentor or business expert who can look over your plan and challenge you on each and every aspect of it to make sure your expectations are realistic?

3. Look hard at the selling prices

We all want to make sure the prices are competitive but some prices could be increased to compensate for the ‘loss leaders’. For example, there is very little margin to be made selling Apple products but the money is made on the accessories. The consumer that wants the latest iPhone/iPod with will spend  £14.99 a on cover which costs only £1-2 to buy in. Are they any add-ons that you sell where you can boost your margins?

4.  Improve your Staff Training

You need to maximise the sales from your customer footfall so make sure your staff are the best. Instigate on-going  product knowledge training to ensure your staff are ready and able to offer the customer the full information required for them to make the correct purchase. Train the staff to not only have the ability to maximise sales but to minimise losses. Let them be constantly aware of potential threats to stock losses and damages. A polite good morning to customers who enter will show potential thieves (let’s not pussy foot around calling them shop lifters etc.) that you are aware of their presence and it may be better for them to visit an outlet where the staff don’t appear to be in control of their surroundings.

5. Maximise your marketing

Yes, money is tight and nobody likes to spend money on advertising but marketing can take many forms and, with the internet, can be done  cheaply but effectively. It costs nothing except time to access your database and send emails when new ranges are in or there are special promotions. Have you got a Facebook page and Twitter account alongside your website? Put on events in the shop to create a buzz. Last Saturday a sports shop client had the cricketer Mark Ramprakash attend, paid for by the supplier who sponsors him. He reckoned that he made new customers not just from the cricketing fans but 50% were from fans of Strictly Come Dancing.

Let’s take the time to take a good hard look at your business to ensure it’s in great shape for 2011 and beyond.

High Street sales go ‘off the rails’

March 14th, 2011

I was intrigued by two very different reports last week

A new report commissioned by Kelkoo, reveals that 2011 will see a squeeze on UK retail spending as household disposable incomes fall by 1.5%. Although overall consumer retail spending is expected to increase by 1% year-on-year, this is due to rising inflation, and underlying retail sales volumes are forecast to contract in 2011.

Regional retail spending forecasts for 2011 reveal a North-South divide, with consumers in London and the South East set to spend up to 2.5% more this year, in stark contrast to a 2% fall predicted in the North East.

Chris Simpson, Marketing Director of Kelkoo, comments: “Retailers certainly have their work cut out this year as disposable incomes are hit by austerity measures and consumers tighten their belts to weather the storm. The ever increasing cost of living is hitting the entire country with varying degrees of severity, alongside rising unemployment and increasing numbers of vacant shop units.

Meanwhile Network Rail disclosed that their retail figures out performed the High Street.

Station sales results for September to December 2010 showed a 5.02% growth on a like-for-like basis, compared to the same time the previous year.

In the same period high street sales, as reported by the British Retail Consortium, grew by just 0.40%.

Network Rail’s head of retail Gavin McKechnie said: “Whilst the high street shivers in the cold economic climate, rail passenger journey numbers remain high at 1.3bn a year – the highest number for 70 years. Retailers at our stations benefit from these high passenger numbers and from an upmarket demographic who are keen on impulse shopping. We have overhauled our retail offering by working closely with our partners to maximise value for them and us.

This has resulted in greater choice and quality for passengers and shoppers.”

Last year Network Rail unveiled plans for 75,000 sq. ft. of new space at stations marking the start of a new era for station retail.

OK, so what does this tell us?

Well the North-South divide is no great surprise, especially as unemployment  is predicted to hit 10.7% in the North East compared to 6.5% in the South East.

However, we must bear in mind that London sales are distorted somewhat by the sales of top end luxury items where the clientèle are not as affected by the downturn and which also acts as a ‘honey pot’ for wealthy overseas tourists and residents, not to mention the Bankers who are now back to getting their 7 figure bonuses.

The Network Rails figures are quite interesting.

There’s no doubt that great strides have been made in developing the station’s retail space and it tends to be a very pleasant shopping experience nowadays. Rail travel has been a great success over recent years as, despite higher than inflation fare rises, passenger numbers have significantly increased. This has substantially improved the footfall but may I be cynical and also suggest that the rail delays (particularly during the snow disruption) may have also given passengers more time to shop?

Whatever the reason(s) it is one of the few success stories in sea of retail doom and gloom.

Could your retail enterprise benefit from taking space off Network Rail?

Morrisons, On-Line Shopping and the High Street

February 15th, 2011

A couple of news items caught my eye today. Firstly Supermarket giant Morrisons bought Kiddicare for £70m and 1 in 7 high street shops were vacant at the end of 2010.

Morrisons is paying a sum which is almost twice the figure of Kiddicare’s last-years  £37.5m turnover! Morrisons are one of the few major retailers still not to benefit from an e-commerce site. It is, therefore, thought that Morrisons’ rationale for the purchase is to get hold of the technology and management expertise in order to provide the Supermarket’s push into non-food items and on-line sales. Certainly, as a business, they are paying well over the odds.

There is a precedent  for this strategy when 10 years ago this month, John Lewis paid £2.8m for Buy.com only for it to close the operation 1 year later after integrating the technology into JohnLewis.com. The website is now considered once of the best on-line shopping experiences and very profitable, accounting  for 20% of J.L.’s turnover.

Morrisons have been very slow to adopt an on-line policy but now the new Chief Executive, Dalton Philips is in place we can expect an acceleration in the bid for a greater share of non-food and internet sales.

The steady increase in empty High Street shops is not unconnected to the above.  There have been many reasons for the decline of the High Street and the growth of the major Supermarkets, usually sited in retail parks is one of them. As well as fulfilling the role of butcher, greengrocer, fruiterer, fishmonger, flower shop and bakery, the larger ones provide banking, insurance, music, audio visual, travel agent, bookshop, stationers, phone shop, computing, restaurant, coffee shop, dry cleaning and even a doctors surgery. They have become their own High Streets which they ultimately control.

They can be no going back on this, the consumer enjoys the one-stop shopping experience in a nice clean, temperature controlled environment with plenty of free parking.

Many councils have hastened the High Street exodus  with their refusal to sanction changes of use, the exorbitant parking charges and over zealous parking wardens intent on increasing the councils income.  The High Street’s which are surviving and thriving have become leisure areas for food and drinks with cafes featuring outside tables, restaurants, trendy bars and milk shake vendors. They offer pampering with hairdressers , tanning shops, nail bars and facials.  They still include the traditional banks, building societies, estate agents and financial services along with newsagents and a late night convenience store.  Maybe there can be the discount book stores and charity shops and, I know this is contentious, they should allow more Adult Gaming Centres (Arcades) and Bookmakers.  After all, since the smoking ban they are no longer the ‘seedy dives’ of the past.

Probably the High Streets will never again become  ‘destination’ shopping  but can continue to be a pleasant way to walk down and while away a few hours.

Blood on the High Street

January 3rd, 2011

The City is bracing itself for retailers announcements of Christmas trading and they’re not likely to make pretty reading.

The snow and severe weather conditions made a significant dent in sales in the run up to Christmas but although many retailers may have made up sales in the final week it was often at the expense of margins. Nick Hood, from the restructuring firm Begbies Traynor, asks “whatever happened to the old management truth of ‘top line is vanity, bottom line is sanity’ to their discounted sales model. The reality is that everyone, even the big players, will come out of Christmas with reduced profits”

It wont be much better for the on-line retailers either.  2 weeks before Christmas the carriers were refusing to take any further parcels to Scotland and some parts of the North of England as they had such a backlog. They can also expect a significant amount of returns as many parcels shipped in good time still didn’t make it to their destination for Christmas day.

Industry experts expect that like for like sales will be down between 5% and 10%.  However there are some well known retailers who, it is expected, will fare even worse. CD, DVD, book and computer game retailers such as HMV and Game are expected to see an increase in sales erosion to the on-line retailers.  JJB has staved off bankruptcy again with an emergency fund-raising just before Christmas of £31.5m and is expected to have that ‘topped up’ to £50m this month.

Even the supermarkets are not immune as it is feared that, 2009  market winner, Morrisons has suffered a reversal of fortune in 2010.

The danger is that those retailers who struggled in 2010 will be wiped out with the VAT/NI increases and reduced disposable income as redundancies, pay restraint and increased taxes kick in in 2011.

However, on a positive not, those that do survive this year will be well placed to take advantage of less competition,  the availability of cheaper and more flexible retail space, more ‘deals’ from suppliers and little upward pressure on wages.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Google to join the on-line Fashion battle?

November 15th, 2010

Following on from my last article On-line Fashion Battle gets Fiercer it is strongly rumoured that Google is about to enter fight for a share of the fashion market.

This could explain why the search company is planning a big bash in New York on Wednesday night with retailers, designers and other fashion industry insiders, titled ‘High Tech Fuses With High Fashion’

A Google spokeswoman said, “We are hosting an exclusive fashion party to celebrate our partners. We don’t have further details to share.”

It is thought that Google will be entering the on-line fashion retail arena, helped by the technology and know-how it gained with the acquisition of visual search technology company Like.com in August.

A site called Boutiques.com has already been registered by Like.com which is currently password protected.

It is believed that it will let users create and share their own personalised online store by showcasing their style preferences and favourite brands and allowing visitors to click through to a brand’s online store or a retailer who sells the product. Visitors will not be able to make a transaction on the online boutiques themselves.

This is line with earlier reports (WSJ) that Google is poised to upgrade its’ shopping site Google Product Search to compete more fiercely with the likes of Amazon and eBay.

If so, the launch of a fashion-specific comparison shopping site pits Google squarely against eBay and given Google’s powerful reach and funding it’s something that needs to be taken seriously.

Given the recent launch of eBay ‘Fashion Outlet’ and  the immanent launch of ASOS Marketplace this can only be good news for the on-line shopper but could be another nail in the coffin for smaller independent high-street fashion retailer.

eBay Fashion Outlet

ASOS Marketplace (holding page)

Boutiques.com

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2