Archive for the ‘The Retail View’ Category

On-line Fashion Battle gets Fiercer

Monday, October 4th, 2010

You can’t help but have noticed the advertising push from eBay for their ‘Fashion Outlet’  – there seem to be adverts everywhere you go and in all the magazines you read. You may be thinking that eBay has always sold fashion and what’s new about the ‘Fashion Outlet’.

Well,  eBay  realised that fashion was their best selling category and decided that they wanted an even bigger share. They set up a new ‘tab’ on the top menu between ‘categories’ and ‘motors’ and set about signing up some of the top names in Fashion. They have already aquired over 50 brands on the site including Superdry, Diesel, Nike, Top Shop etc.

Each brand can design their own outlet so, apart from the eBay logo at the top, it feels as if you’re on the brand’s own site . Now, all of these Brands have their own website so initially eBay Fashion Outlet was used to dispose of terminal stock (ends of ranges, returns, sale stock etc) but increasingly Brands are  harnessing the power of the 17m monthly visitors to introduce new stock, trial ranges and even (in the case of Karen Millen) eBay exclusive ranges.

For the Brands there is the added benefit of linking from their eBay site to their own website (and vice versa) so increasing traffic and cross sales. Another beneficial side effect is the ability to list on other eBay sites around the world giving the opportunity of testing the market overseas. If a Brand finds that they are getting good sales from for example if may feel more confident doing their own German website version or even setting up retail outlets there.

It’s hard to fight against the power Britain’s third most visited website (after Google and Microsoft) and given the fact that the average user spends 2-3 hours on the site eBay is UK’s most ‘viewed’.

It has also been announced that ASOS, probably Britain’s most visited stand-alone fashion website, is to launch it’s own ‘Marketplace’. This will enable individuals/designers/ wholesalers/retailers to offer their own products to ASOS’s 3m subscribers and 7m unique visitors per month.

These 2 sites are going to become even more dominant forces in the on-line fashion market for Christmas and beyond.

eBay Fashion Outlet

ASOS Marketplace (holding page)

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

2011 and beyond part 2

Monday, September 27th, 2010

The cotton and production shortages of the previous blog takes me to an article in The Sunday Times asking if this spells the end of the £5 dress. It started with a story of Lorna Kenyon and her friends taking the ‘Primark Cocktail Challenge’. This involved buying a cocktail at Claridges (around £17 + tip) and buying an outfit in Primark, Oxford Street, for the same price or less. At the time it was not difficult to pick up a dress, shoes and clutch bag for less than £20.

However, add into the mix the VAT change to 20% in January and retailers are not going to be able to absorb all the increases. The consensus seems to be that retailers will try keep their basics at the same level, either by reducing margins or cutting out details on the products, and try to get it back on the higher margin items. For example if you can keep a basic item at £9.95 the public may still perceive the retailer as ‘value for money’ and be more accepting of a fashion item increase from £24.95 to £29.95.

I’m reminded of a story of a friend who needed to go to a DIY store for a ‘sink plunger’. Any idea how much they cost? No neither did he, as you buy them once every 10 years or so and forget what the last one cost. Was it £1.95, £4.95 or £9.95? Whatever it was, he needed it and was going to buy it. He wasn’t even going to bother going to other DIY stores to price check. Incidentally the prices here  are between £1.46- £17.98.

The point is that, the customer does not know your purchase price, so don’t slavishly apply set mark-ups to all products but apply intelligent pricing for Spring 2011. Just be careful to factor into your gross margins that you will be likely to sell a lot more of the basics at £9.95 than the fashion items at £29.95.

I bet you wish you’d paid more attention in maths lessons now!!!

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

2011 and beyond part 1

Monday, September 27th, 2010

The boom years for retailers are over for the foreseeable future according to the Next Chief Executive, Lord (Simon) Wolfson.

He expects growth of between 2-5% and given that Next also warns that a shortage of manufacturing capacity and a rise in the price of cotton will push up the price of its clothes next year between 5 and 8%, we are looking at unit sales to reduce.

Next are also looking to buy back 4 – 5% of it’s own shares every year as they feel that this will offer a better return to shareholders than expansion. Let’s think about this – they are admitting that the increase in turnover (and profit) achieved by taking more retail space in the next few years will not increase the value of shares as much as giving the money back to shareholders wishing to sell.

What is interesting and highly significant is that Next has publicly put a time horizon of at least three to five years for this period of lower retail growth – and is adjusting its business strategy on that basis. Given that they are probably one of the most professional and consistent performers over the last 2 decades and Lord Wolfson is a Tory peer and advisor to the Government the advice cannot be ignored.

So, what are your plans for the term of this Government?

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Empty shops on the increase

Friday, September 17th, 2010

The number of empty shops is still increasing albeit at a slower pace. The amount has risen from just over 12% at the end of last year to 13% (or nearly 1 in 7) at the end of June 2010.

However, it will come as no surprise that the situation is far worse in the North than the South. For example Altrincham, Blackpool and Dewsbury have around 30% of retail units currently empty.  Another telling fact is that of the 400 medium sized shopping centres studied,  73 showed signs of improvement however all but 1 (Grantham) of these were in the South.

What can be done about these empty High Streets and shopping centres?  I believe that the planning councils need to take a more flexible view of usages. Yes, it would be nice for the High Street  to have all the traditional A1 trading units but the reality is that the population visits Tescos for their groceries, meat, fish, fruit and veg. They visit the shopping centres  to buy their new outfits and the Retail Parks for their White Goods.

So, if the likes of Costa Coffee and Starbucks, Nandos and Pizza Express want to come into the High Street and can make it vibrant once more then surely it’s better to allow change of use than sitting like King Canute trying to turn back the tide of change.

Interestingly, the Scottish Council of Paisley has had the foresight to not only  agree to ‘discounters’ coming in but have actively welcomed them so that the town centre has become a hub of activity for bargain hunters. It might not be ‘pretty’ but it’s popular and they collect the full Business Rates!

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

The Retail Doctor’s Guide to Growing Your Business

Wednesday, July 28th, 2010

Retail DoctorI was sent this book the other day from Bob Phibbs, well known in the USA as ‘The Retail Doctor’. As the name implies, he is approached by ‘sick’ retailers to ‘diagnose, treat and cure’ them to full recovery, very much like our own Mary (Queen of Shops) Portas.

Anyway, his latest book ‘Guide to Growing Your Business’ is is now available  and a very good read it is.  It is set out with very simple to understand suggestions along with real life examples and ends each chapter with simple action bullet points.

The chapters are split into clear sections including, financials, store layout, employees, selling, training, e-commerce etc. There is probably little in there which most professional retailers don’t know or appreciate but it’s always good to be reminded of many of the basics and look at your operations from an ‘outsiders’ viewpoint.

For example, many retailers are product or trading led and often don’t pay enough attention to the financials. Bob understands this and gives suggestions for key reports you should look at each week. He suggests getting print outs emailed to you of:-

1. Average sale per day – how much each customer spends
2. Number of sales – customer count
3. Weekly sales by category – top and bottom 5 establish trends
4. Weekly sales by person – how much each each employee makes you
5 . Year over year by week – comparing to previous years
6. Year over Year to date – running total for the year (will strip out changes to Easter dates for example)
7. Number of units per transaction – how your staff are upselling add-ons
8. Number of voids – a good alert to theft by staff

Now these figures will not take any more than an hour a week to analyse  but will give you excellent insight to trends to take action on. Rather than asking your manager general questions such as ‘why are sales down’ you can be more specific such as ‘why do sales drop when Vicki is working’?

As I’ve mentioned, it is a very easy to understand book with  simple step by step guides and at £13.99 or less will save/make you money even if you only take on board 1 or 2 of the suggestions.

You can buy it from £7.25 here

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Tesco’s F&F Clothing Brand seeking West End shop

Friday, July 9th, 2010

It’s been revealed today that Tesco has been actively looking around London’s West End for a Flagship store of  6,000+ sq ft for it’s F&F clothing brand.

The  ‘value’ clothing market is estimated to be worth £9.3 bn in the UK and Tesco lies in 5th place behind Primark, (Asda’s) George, T K Maxx and New Look with a market share of around 10.4%, not a position Tesco is generally happy with.

The F&F  (formerly Florence and Fred) brand has grown fast over the last few years with expansion into several sub-brands such as F&F Trends, F&F Couture, F&F Petite and F&F True (larger sizes) along with developing it’s internet presence. It even boasts it’s own celebrity with, the former model, Caprice as one of the designers.

It’s debatable whether Tesco can make the economics of a prime high street site square with selling similar products in it’s (much cheaper) supermarkets located in Retail Parks. You would expect Tesco to have done their sums but the equally professional Asda spent nearly 5 years trying to make their stand-alone George shops profitable before finally closing the 11 sites in 2008.

It may be an interesting year on the Retail front with a number of overseas chains, such as Victoria’s Secrets, Forever 21 and Vera Moda looking to take advantage of the cheap pound and (temporary?) availability of some prime retail sites after the shock of the last 18 months.

We may see a different High street in the next few years to what we are used to.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Survive and Prosper

Monday, June 7th, 2010

What’s been happening over the last week? Over the general economic doom and gloom has been a raft of good figures from Britain’s retailers.

John Lewis continued their good start to the year by last week claiming that Fashion sales were 30% up on the same week last year.

Laura Ashley revealed a like-for-like sales rise of 5.3% in the 17 weeks to May 29.

New Look defied the recession to post a 17.7% hike in profits to £163m for the year to March 27.

Womenswear retailer East returned to profit in the year to January 31 and is planning to open further stores and concessions.

Peter Simon and his family shared a recession- defying dividend of £14m as Monsoon reported an eightfold increase in profits, from £3.96m  to £32.96m and plan to open 140 stores in the next 12 months.

All Saints has put British fashion firmly on the global map after it racked up sales of nearly $1m (£680,000) in its first week of trading on New York’s iconic shopping thoroughfare Broadway.

So is the recession over? Are people spending like ‘there’s no tomorrow’ on  clothes again?

Clearly not as retail sales this year have been broadly flat and in real terms negative taking into account the VAT increase and inflation. But perhaps the ‘fall out’ in the High Street has now stabilised. According to Deloitte, in the first 3 months of this year, the number of retail companies going into administration fell to 44, compared with 124 in the first quarter of 2009 – representing a four-year low and a drop of 65%.

We have said goodbye to Morgan, Officers Club, Faith Shoes, Woolworths, Adams, USC, QS, Envy, Principals, MK One and Ethel Austin to name but a few. Some of the shops have been sold, some bought out of Administration but in the main they’ve left a void on the High Street with the sales being picked up by the survivors.

So it’s survival of the fittest! If you’ve got the required funding in place,  the right stock at a fair price and overheads under control you should be able to look forward to slow but steady recovery with a bigger slice of the smaller cake.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Plan for Growth

Monday, May 17th, 2010

We now have a new Government in the UK and a coalition at that.  There’s no doubt that the next few years are going to be hard with the expected tax and VAT increases along with a reduction in spending within the Public Sector.  However, on the positive side, there’s probably more certainty in the markets and, whilst it’s going to be tough, the signs are that there will be a slow but steady improvement in the economy.

So, have you planned for growth? Maybe you have found yourself a niche that has successfully got you through the massacre on the High Street? Then now might be the time to be looking to expand.

I’m indebted to Colin Thomson of Cavendish for reminding me of some good tips on planning for growth.

Firstly, know what it means for you, your family, your staff and your company. You are probably going to have to put in the extra hours of work with less holidays and increasing stress.  Your attention may be more in demand as it could lead you to being in the ‘spotlight’ within the industry as the boss of a successful growth  company. Are you prepared for all this?

You are? OK, lets get started.

1. Budgets and Plans – Obviously, you need to sit down and prepare the figures. Be rigorous in the detail, producing contingency plans with best and worst scenarios. Sound out the experts as they have a wealth of experience with successes and failures. Plan in as much detail as you can as the additional effort will be well worth it.

2. Finance –  Get the full backing of your funders. Make sure the Banks and other sources of finance are prepared to support you.  Ensure you have more funds available than you plan to need and additional back up arrangements should one or more funders pull out. Keep on top of this, regularly updating cash flows and keeping funders informed during the expansion.

3. Staff – Ensure that you have the support of your staff and have the right people who will be up to the job. Some staff’s abilities will grow with the company but others may not be up to it. Look to hire people for the specification of what the job will be, not what it is now. If they are good they will help you get there.

4. Product – Focus on your core business rather than getting side-tracked into other areas. You’re likely to have more success taking what you do well to other locations than trying to diversify ranges. For example, if you are a successful ladies fashion retailer your skills may not easily transfer into producing  menswear or children’s wear range. Also make sure that your suppliers are behind you and will continue their support. This means keeping up with your product requirements and setting appropriate credit limits.

5. Customers –  Stay close to your customers. Seems an obvious point but it’s surprising how often you can ‘take your eye off the ball’ during a period of change. It’s always a good idea to keep your customers informed of what’s happening – not only the good things but also when there are problems. They appreciate the updates and will reciprocate with loyalty.

There are many others things you need to consider such as marketing/advertising, staff rewards, facilities, changes to operational procedures etc. But if you can focus on the above points you will be most of the way there.

Good Luck
Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Acid Test, Margins and Open to Buy

Sunday, April 25th, 2010

Here’s a neat little site for those who get confused between their mark-ups and margins. It contains a list of all the retail formulae you will need with explanations. It will actually calculate the figures for you on-line if you’re lazy!

It’s called Retail Formulas – check it out here

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery

Are shopping centre’s going the way of the High Street?

Monday, April 5th, 2010

An odd thing seems to be happening on the other side of ‘the pond’.

After 40 years of retail expansion, 2010 seems to be the start of an ‘intentional’ contraction.

To quote Retail Wire:-

While mall-based apparel retailers in 2009 might have looked to outright close weaker stores, the current year is seeing many reducing the size of stores in a bid to improve store productivity. Is the trend toward smaller stores a positive or negative for mall-based apparel stores?

The CFO at Williams-Sonoma (The US largest home furnishing chain) announced that “they will continue to close additional stores in large multi-store markets.  Our strategy for store closings is to optimize our cost per square foot.  The goal is not closing stores per se.”  They have found that closing stores causes customers to use other stores or, more often, use the internet.  Over the next 3 years, 25% of their leases will be expiring.  Williams-Sonoma sees that as an opportunity to re-negotiate leases, relocate, or simply close the store.

According to research by the International Council of Shopping Centers, at the end of 2008, there were over 14 billion square feet (SF) of total retail selling space in America, 7 billion of which is in over 102,000 shopping centers of various sizes.  This translates into over 46 SF of total selling space and 23 SF of mall space for every man, woman, and child in America.  To put these numbers in context, in Europe, the equivalent numbers range from 1.1 SF (Italy) to 2.5 SF (UK) to 3.3 SF (Sweden).

OK, perhaps we need to put this into perspective.

We are a long way behind having the space saturation as the US but then, the UK’s cost per square foot , salaries and taxes are far in excess of theirs.

I know of a major Kitchen/Bathroom ‘shed’ retailer that decided to close one of their West London stores last year as takings had dropped and the store desperately needed updating/refurbishing. After closing, they found that 80% of the store’s turnover was added to the 2 other West London stores significantly increasing profitability. Therefore, they only lost 20% of takings but saved 100% of the overheads. They are actively looking at whether this ‘trick’ can be repeated elsewhere in the UK.

Where does this leave the independent retailer?

The benefits may be that the smaller retailer could pick up some extra business, that there would be no upward pressure on rents. Perhaps cheaper or better quality sales staff could be available or local suppliers more keen for your business.

But overall, I feel that this could have a very negative effect of the traditional retailer. We’ve already seen many High Street  shops boarded up and looking like ghost towns. Much as the large retailers are competition, they do draw customers into the shopping centres making them lively and inspiring customers to spend money. If the  centres go the same way as the High Streets it doesn’t bode well.

What plans to you need to put in place?

Do your research and try to get as much advance notice if major retailers are looking to close. If you can, ensure that your lease(s) have break clauses so you are not stuck with a long lease that you can’t get out of. Keep flexible and don’t sign any long term contracts. Lastly, build up your internet presence. It’s going to take up an increasingly larger share of consumer’s purchases. Although a relative late entrant to the on-line world John Lewis’s internet sales already make it bigger than their Oxford Street branch (with 20% of the costs).

As always, the smaller retailers advantage is their flexibility so ‘stay on your toes’.

Tony Heywood – Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery