Talking Tesco (Again)

It has been quite a few weeks for Tesco, currently ending in the positive column.  The recent interim results showed quite a lot of commercial progress and the intended restoration of the dividend cheered the City considerably.  The trials of the recent past have been put behind it in trading terms and performance seems to have stabilised and then improved.  There remains a degree of fragility to this and it is a work-in-progress with strong competition and adverse consumer sentiment winds.  But it is a change from the dark days of the not too recent past.

These dark days have been having some sunshine focused on them in the shape of the trial of former Tesco executives around the rather large accounting hole in the company accounts a few years ago.  It is not clear yet how this will play out (and the trial is ongoing and could be for some time), but some of the statements and actions do not show the company in a positive light.  The extent to which this is individual actions or the culture expected, remains to be seen.  For Tesco it is not a pretty sight, made worse by a case of unfair dismissal being brought by a sacked executive, who was not subsequently prosecuted.

What has been much more to their liking however was the, to many, surprise announcement that the Competition and Markets Authority (CMA) are minded to allow the Tesco acquisition of Booker.  Their provisional findings are that there will be no ‘substantial lessening of competition’ in the UK.  The general surprise when the merger/takeover announcement was made is now matched by their provisional findings.  Representations can still be made, but on the surface and current evidence, the deal will happen (though at least one major shareholder remains against the deal on price grounds).

There has been both a sense of incredulity and inevitability about this.  The incredulity comes from the CMA reasoning and its ‘previous’ in blocking local markets/impacts and other mergers etc. e.g. local convenience stores and opticians at a hyper local level.  Yet Tesco with c30% of the food market can be allowed to obtain greater control of more of the market.  The inevitability stems from both a feeling of unwillingness to intervene at such a macro level and from the ‘domino’ effect on NISA (who voted to be taken over by the Co-op), Costcutter and so on.  The desire to ‘do a Tesco’ and get into wholesaling has expanded as the deal became more likely.  If you can’t beat ‘em, then…….

The CMA seems to be concluding there are lots of competitive opportunities and post-merger nothing much will change.  I can accept the former in that there is competition, but the latter is naive. Some Booker supported retailers are pleased about the deal as they feel they will get much keener prices and better support; others though see this as lessening competition in the medium term as independent retailers and other contractual chains will struggle to compete and stay open. The control the new entity will have in the convenience market will be a powerful weapon to further grow and it is hard to see what will oppose it.

A final Tesco thought, but not from these shores.  On my recent trip to Singapore, I visited a new (3 day open) NTUC FairPrice store.  Within it was a delineated Tesco section as shown below.  On investigating further it seems that this deal with NTUC goes beyond the example I saw, covering online product sales (via FairPrice and HonestBee) and an in-store Finest concession in the Bukit Timah store – as shown in the piece from the Straits Times.  Examples of the more innovative thinking that has begun to be seen across the company – and could be coming to a Booker store near you soon.

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Posted in Accounting, Booker, CMA, Competition, Competition and Markets Authority, Convenience stores, Finest, Food Retailing, International Retailing, Local Retailers, Market Shares, NTUC FairPrice, Profits, Retail Change, Retailers, Singapore, Suppliers, Tesco, Wholesaling | Tagged , , , , , , , , , , , , | Leave a comment

Perth – Past, Present, Future

Perth PPF

Last week I ventured north to the ‘Fair City’ of Perth for a presentation at a Scottish Civic Trust and Perth Civic Trust evening event on the theme of Perth: Past, Present and Future.  I had been given the task of looking to the future and especially in the context of retailing and what those in Perth seem to view as the problems they face.  Basically an outsider pontificating about an unknown future – no pressure them!

The evening should really have started with a chorus of Happy Birthday, as both the Scottish Civic Trust (and Perth Civic Trust) and the University of Stirling are celebrating their/our 50th Anniversaries.  1967 was indeed a fine year.  I could not help musing that if Stirling had not beaten Perth in the competition for the new University for Scotland, then I could have been presenting as a professor from the University of Perth.

Three presentations were made (including mine) and then a good hour or so of discussion and questions.

The introductory presentation (the Past) was by Professor David Munro who covered 800 years of Perth history in 10 minutes.  Broad in scope and erudite in nature, as benefits a former Director of the Royal Scottish Geographical Society, David developed a theme of the development of the streetscape and morphology of Perth and its special characteristics.

Second up was the Depute Chief Executive of Perth and Kinross Council, Jim Valentine tackling the Present.  Normally at events like this, council officers get a rough time, but in his coverage of the Perth Present, Jim laid out a realistic framework for considering the council situation and some of the ideas already in place to improve the city.  Inevitably the City Hall proposals got a mention.

My contribution was meant to be focused on retailing and Perth and I did get there in the end.  The overheads are available for download here.  Crystal ball gazing in retailing is a mug’s game, especially to an audience who know the place concerned better than you do.  So I opted for the safe ground of a narrative about why towns and cities matter, retail change generally and then some specific (outsider) considerations for Perth.  What struck me as I showed some of the Local Data Company data was that the historical influences David Munro talked about, were still so evident in the present day and will shape the future.

Perth LDC

Local Data Company Map and Dashboard for Perth – full details about this dashboard or equivalents for any town/centre available from the Local Data Company

The discussion was open and frank and only occasionally drifted over to the perennials of car parking and rates.  The main focus was on people – as it should be – and the need for more people living in the centre and the realism or challenge of the Council’s ambition for population growth, in terms of facilities, employment and capacity.

From my point of view I was not just opting for a safe evening by being more complementary than not about Perth and its future.  Many of the problems Perth faces (in retailing and central streets) are not unique and indeed the data (from for example our Understanding Scottish Places website) shows Perth is doing well/better than say Dundee or Stirling.  In retail terms it has one of the highest proportions of independent retailers and is comparatively diverse (as shown in our 2016 Retail Summit).  The pessimism of some in the audience is for me misplaced.  Perth has major assets and is using them.  The plans for the future are positive and the place is pulling together.  Yes, challenges of accommodating change abound and will continue, but there is a sound basis for the future.  It was an enjoyable and in the end positive evening and the three presentations dovetailed well given we’d not discussed them in advance.

 

McEwans

McEwans Department Store in Perth  – soon to reopen as Beales first Scottish store

Posted in Architecture, Buildings, Closure, Consumer Change, Consumers, High Streets, Historic Shops, History, Independents, Online Retailing, Perth, Places, Public Realm, Reinvention, Retail Planning, Scotland's Town and High Streets, Shopfronts, Store Closures, Streets, Streetscapes, Town Centre Living, Town Centres, Understanding Scottish Places, Urban History | Tagged , , , , , , , , , , | 2 Comments

Singapore’s Scary Monsters

Back in the warmth of Singapore for our graduation and alumni events and associated student and other meetings, and there seemed to be only one question people had for me; what could be done about Singapore’s ailing retail sector?  On the surface there seemed little wrong – lots of people around – but beneath this, things may be a little scary.

Singapore is not a large place and its connectivity has expanded rapidly over recent decades, with more MRT and other lines on the way.  The raising of quality and quantity in heartland malls and local shopping have decentralised retailing both for locals and for some tourists.  There is also a lot – and I mean a lot – of retail space, more of it empty than before. Rent is high and the economy is doing less well than it has in the past. E-commerce is growing from a low base.

A day visiting Orchard Road quickly makes the point.  Mall after mall, all upgraded, all chasing the same tourist spend and all with the same retailers (and French, Korean, Japanese et al  pastry shops which have exploded) rather numbs the mind.  Yes they differ in design and scale, but the function – and the functions within them – are identical.  The REIT phenomena has made venues almost interchangeable and despite the crowds it is hard to take positives across all the malls.  Empty space is more obvious (not just on Orchard) and according to reports is at a record high.  With high prices and such ‘sameness’ no wonder retailers are struggling.  Over shopped, over priced and for Singaporeans better deals ‘over there’.

And it is not only the tourist strip of Orchard Road that has this feel. The newest mall I saw was barely open, but the redeveloped SingPost center in Paya Lebar looked the same as so many others (although it is now twice the size after redevelopment). More locally focused perhaps and stuffed with food and beverage (now 30-50% of most malls) it was new, but in so many ways, old. I fear that this blandness and sameness has reached a tipping point and the vacant spaces are silent testimony to a massive and scary structural problem.

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Another small instance of this is the adjacencies in some malls. The two photos below are from Marina Bay Sands (another with gaps) and from Ion Orchard. Fancy a Steinway with your Lego? Or keep your kids quiet with Ferrari junior (why?) while you have your teeth fixed? I am not sure I see the thinking here.

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In my entire visit I only found one shop example that fought against the blandness.  In Ion Orchard, I came across Samsara by Gentle Monster.  Now I am not the target market, being neither on trend nor Korean influenced, but Gentle Monster did make me stop and look.  Is at a shop or an art installation?

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Gentle Monster is a Korean designer sunglasses business which has grown rapidly in the last few years.  Its reputation is of generating quirky flagship stores and a celebrity following.  Singapore is the latest Asian store but there are stockists in Europe (Harvey Nichols in London).  Supposedly based around Nietzsche’s “Thus spoke Zarathustra”, the Singapore store is a bizarre (my term) set of ‘rooms’ with moving art installations (see montage below) and sunglasses in showcases.  It is quite a lot of space for a few sunglasses and I wonder about sales vs costs, but it certainly is a flagship statement.  The staff were engaging and wanting people to explore the store and seemed pleased to show it off. Their current website has a good explanation of the thinking behind the store and the displays in motion.

Experience and experimental retailing has been often claimed as the way forward and Singapore malls have space in spades to play with.  But can this experience be made to pay, consistently?  Gentle Monster is an interesting one-off but will it go stale quickly or will imitations make it lose its difference?  Either way, there is going to have to be a lot more innovation and smart thinking to sort out the space and demand equation in many malls in Singapore (and elsewhere).

Posted in Adjacencies, Art, Brands, Corporate branding, Customer engagement, Design, Experiential, Flagship, Food and Beverage, Gentle Monster, Korea, Malls, Online Retailing, Retailers, Retailing, Shopping Centres, Singapore, Space, Vacancies | Tagged , , , , , , , , , , , | 1 Comment

Time Out in Lisbon: Part Two

Following on from my personal wander around Lisbon and the Mercado da Ribeira (Part One), and on the day after my keynote presentation on retail, consumption and urban governance (the overheads are here), the conference had its own ambulation around the city, focusing on the Avenida da Liberdade and the Chiado.

The Avenida is the grand boulevard heart of Lisbon and is a 19th century installation.  The place to be seen and to see, it is in the grand tradition of such boulevards or avenues in Europe.  As Lisbon moved up from the waterfront and the older core and Chiado, so the Avenida took on an enhanced role for living and playing.

Today’s Avenida is very different to its original conception, with sometimes grander buildings, certainly more traffic and a renewed focus as the place for luxury retailing.  As the visuals below show, it is in part a calm space, in part a busy road.  Grand buildings remain, but interspersed with more modern monstrosities.  What were the planners (and architects) thinking?  Luxury retailers abound, bit so too do the new ‘luxury’ fashion for the popular market.  An Avenue of flagships.

The second part of the walk covered the older heart of Lisbon and especially the Chiado.  Affected by fire and other disasters it continues to undergo change but is a vibrant tourist and to an extent local heart, full of stores, shops, restaurants, squares and generally places to interact.  It feels much more personable and for people, than the Avenida, which was more for ostentatious display.

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One pleasant discovery walking around was the continuing presence – though sometimes precarious – of old historical shops, including their interiors. This included apparently the world’s oldest bookstore, and possibly the world’s smallest glove shop. The slide show above and below shows external pictures of some of these and the modern re-use of some grand facades by current attractions, for example H&M and Apple.

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The final stop of the day was an exhibition – Shops with a Story to Tell – which was another pleasant surprise.  This historical shops exhibition both mourned those that had been lost and celebrated in pictures, stories and artifacts those that remain.  Quite a few of these had been seen on the walking tour, but here their stories were told and modern photograpahs used to express their continuing value.  A few of the pieces are shown below which showcase the interiors of some of the shops seen earlier.

The exhibition was interesting – especially for someone who loves old shops and places which seek to preserve them and their business.  But, it perhaps was a little too ‘flat’, comprising the same approach to all the subjects.  The opportunity to integrate the story of shops, places and Lisbon, and to reflect on the present and the value history brings, was a little missed.

In one thing though the exhibition was a great success.  At the exit there was no gift shop (sorry, Banksy) but rather a collection of postcards with images used in the exhibition.  On the back of each card was text giving opening dates, operating hours, addresses and directions to the shop, plus a map of those other historical stores nearby.  In that way you could construct your own walking tour to the real things.  A flavour of the imagery is presented below.

 

Wouldn’t it be good if we could we do the same for say Edinburgh or Glasgow or even smaller cities such as Perth or Stirling, or have we lost too much?

Posted in Academics, Architecture, Brands, Buildings, Consumer Lifestyle, High Streets, Historic Shops, History, Lisbon, Localisation, Places, Public Realm, Regeneration, Reinvention, Resilience, Retail Change, Retail History, Retailing, Shopfronts, Streets, Streetscapes, Tourism, Town Centres, Urban History | Tagged , , , , , , , , | Leave a comment

Time Out in Lisbon: Part One

It has been some time since I was in Lisbon and thus it was a pleasure to receive an invite to present a keynote to a conference on retail, consumption and urban governance, especially in early autumn, which is slightly more palatable in Portugal than in Scotland.

Being essentially a geography conference, there was a retail place/study trip, more of which in a future post on Part Two of this visit.  On the first day I had a free afternoon and asked my hosts what to see (that wasn’t already on the study tour).  Their suggestion was the Mercado da Ribeira, a 2014 regeneration scheme, at the waterfront, and which had proved a huge tourist attraction.

The Mercado building is the old (late 19th century) market hall for Lisbon.  A food market occupies one part of the regenerated site.  In the continuing saga of recent trips it was shut when I visited.

The main hall in the complex is occupied by/branded as Time Out Market Lisboa.  This is really a glorified food hall/court but identified as distinct by the Time Out branding.  The first of its kind in the world, it is a Time Out ‘curation’ of the best in Portuguese food and drink; ‘if it’s good it goes in the magazine.  If it’s great it goes on to the Market’.

Now I can not assess the quality or the price of the offer (it all looked great), but it was buzzing when I was there.  Most seemed to be tourists and I have read claims of between 2.1 and 3.4 million visitors per annum.  The main component was food, but there were stalls with ‘Portuguese Life’ (what’s the Portuguese for hygge?) and craft themes.  Events and displays also feature at set times.  The slide show below presents some of the look and feel of the refurbishment and the space.

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The interest for me was at least two fold.  The brand extension by Time Out is fascinating.  I am not sure of the detail of their involvement, especially financially, but it seems to be adding a ‘kite mark’ of quality or authenticity, borrowing from the magazine.  Secondly, the curation of a Portuguese food authenticity reminded me again of Eataly.  This seemed closer to the Eataly ethos than my Singaporean, Japanese example.  I still yearn for our Scottish version!  Whilst I recognise that not all will react positively to such concepts – citing the commodification of food culture, the lack of ‘real’ authenticity and the hyper-reality presented, there is something interesting here.  In Scotland anything that stoked interest in our food, would be in my view, a good thing.

In googling around the concept, I did note that Time Out are planning more of the same in other cities and countries.  It will be interesting to see how these go.  They had planned a London edition to open in 2016 near Shoreditch.  In March 2017 this was refused planning permission on impact grounds.  So, currently you have to go to Lisbon to see one – that is not a hardship!

Part Two will look at the Avenida de Liberdade, the Chiado and historical shops of Lisbon.

Posted in Academics, Architecture, Brands, Eataly, Emporium Shokuhin, Food and Beverage, Food Court, Food Tourism, Gastronomy, Historic Shops, History, Lisbon, Markets, Places, Regeneration, Retailers, Scotland Food and Drink, Singapore, Time Out, Tourism | Tagged , , , , , , , , , , , | 1 Comment

Are Retailers Social Engineers?

A few months ago, we published our report for Food Standards Scotland (FSS) entitled “Identifying and Understanding the Factors that can Transform the Retail Environment to Enable Healthier Purchasing by Consumers”.  The report and various summaries along with our brief commentary on it can be found on this blog here.

Reaction to the report can be best described as polarised, both directly to our face and in emails and social media.  There was a lot of support from health professionals and it has been described as thought-provoking and challenging.  Retailers and retailer bodies also found it challenging, but with a different slant, more often (though not always) casting it as misguided and disappointing.

One of the hopes from FSS and ourselves was that if nothing else the report opened up a debate.  And it was in that spirit that I presented the report to the Scottish Grocers Federation Parliamentary Cross Party Group on Independent Convenience Stores.  This Cross Party Group is proving a very worthwhile forum for debates on retail issues and is testimony to the renewed energy, desire, ambition and forward thinking of the Scottish Grocers Federation.  A full committee room listened politely to me, didn’t throw too much and engaged in the debate.

My overheads can be found here.  Not surprisingly the questioning and commentary on this was robust and challenging, but always fair, polite and recognising that diet and health in Scotland remain a big issue and a government priority.  The role of retailers in this is also recognised widely; the questions being over how best to improve diet and health and how other sectors fit into the equation.  As our report is at pains to point out, focusing on food retailers/shops alone and ignoring other food consumption sites and digital opportunities to purchase is not sustainable.  It runs the risk of damaging the very communities policy is seeking to help.

For me, the last question from the group crystallized some of the issues: ‘why do you want retailers to be social engineers?’ The point being made was that asking retailers to focus on health cast them in this role, and it is one they are not suited for.  So restricting unhealthy in-store ‘activities’ and rebalancing towards healthy is social engineering. It is a slightly different version of the ‘nanny state’ argument.

One of the key points in the report is that consumers are being asked to adopt individual responsibility in an inherently unfair context.  With the overwhelming balance of stimuli at the point of decision being towards unhealthy consumption, how can a consumer exhibit personal responsibility, at the point of purchase/consumption?  To that extent, my response to the question is that retailers are already social engineers, but are doing it unwittingly.  More exposure and questioning of the practices undertaken will make this more obvious.

We all agreed on one point though.  This ‘social engineering’ (if it is that) is also practised in sectors beyond retailing and in many cases is embedded in the whole consumption eco-system.  Unlike food retail shops, such other situations (cinemas, coffee shops, pubs, fast food and other restaurants) are actively focusing on super-sizing and upselling.  So you really need that bucket of popcorn in the cinema that is twice your body weight don’t you?  And staff are often rewarded for such ‘additional’ sales.

More positively, the Scottish Grocer’s Federation has for a number of years done a lot of work in Healthy Living and their efforts are underpinning the Healthcare Retail Standard. If you are unaware of the SGF’s positive efforts on Healthy Living then check out their work here.  This is one activity that could do with some super-sizing.

Thanks again to Scottish Grocers Federation for the platform and debate they provided. Their next Cross Party Group is on the proposed uncontroversial (not!) Deposit Return Scheme (DRS). The Scottish Grocers Federation view can be accessed here.

Posted in Community Grocer, Consumer Lifestyle, Consumers, Convenience stores, Cross Party Group, Deposit Return Scheme, Diet and Health, Food, Food Retailing, Food Standards, Health, Healthcare Retail Standard, Healthy Living, Independents, Local Retailers, Restaurants, Retail Change, Retailers, Scotland Food and Drink, Scottish Grocers Federation, Small Shops, Social Inequality, Social Justice, Sugar Tax, Waste | Tagged , , , , , , , , , , , , , | Leave a comment

The Barclay Review

A few weeks have now passed since the publication of the much anticipated Barclay Review of Non Domestic Rates in Scotland.  I was away at the time and did not get much sense of how it was received, though did note the headlines about private schools.  So, given rates has featured on this blog before, I thought I should have a read.  If you want to do likewise then it can be downloaded here.

A couple of points can be made at the outset.  Despite its length, it is well written and is a clear read.  It is not often you can say that about such reviews.  Secondly, it does rather go out of its way to point out its constraints (tax neutral, no re-opening of 2017 issues) and that many respondents wanted to either range outside its brief, or have a good moan (there’s a nice line about the hospitality industry crying ‘woe is me’ probably in their best Frankie Howard, but then being completely unable to come up with any ideas for solutions).

Barclay recommendations

The Review’s recommendations come in three areas.  First, reforms to support economic growth; secondly to improve the administration/experience; and thirdly to ensure the fairness (level playing field) of the system/process.  I won’t dwell in detail on this but do note the clarion call for improved clarity, consistency, transparency, modernisation etc. that pervades the recommendations.  This is to be welcomed, though the side-swipe at the assessors may have ruffled a few feathers.

From a retail and a town centre point of view there are a few key suggestions, and in my view one glaring omission.

The report illustrates clearly the huge burden on the retail sector that rates are.  Making the system better will help a little.  The Review of the Small Business Bonus Scheme is overdue and there is a very interesting point about learning from Northern Ireland and focusing such a scheme on town centre situations.  The suggested reduction of the large business supplement (and the nice nuance of renaming it the large property supplement) to equate to England will please some operators.  The extension of Fresh Start to town centres likewise will have some, probably limited effect, as will associated issues for empty properties.

Barclay money

But my real attention was caught by two particular points:

  • The ‘glaring omission’ I referred to earlier (though I accept this is an over-statement) is the way the whole digital issue is swept under the carpet/kicked down the road. The Review is adamant that a property tax remains appropriate but by doing so, under its constraints, ignores the digital ‘elephant’.  It is covered briefly in Annex C (Annexes are for issues beyond scope or rejected in the main) but it opts out of the problem by simply saying the Scottish Government should in time consider ‘how should the digital economy be taxed?’ and ‘how should they contribute to local services?’.  I just hope this is not too late for many bricks and mortar businesses.
  • The most interesting (and depending on your viewpoint, disturbing) point is perhaps made in paragraph 4.30. Here in the recommendation on town centres, it recognises that possible primary legislation could “enable councils to impose an additional levy on rates in certain limited circumstances”.  The circumstances the Review lays out include a supplement for out-of-town businesses or predominantly online businesses.  Such amounts raised would then be used in town centres locally.  If thought about fully, such proposals could begin to address a call made in this blog and elsewhere for better spatial policies to focus on town centres (e.g. rates, VAT).  I feel it has to go beyond the out-of-town retail operations and online distribution centres mentioned by the Review, in order to reflect the multifaceted reasons for shifting town centres performance.  But the basic idea is one that has to be trialled.

Barclay Road Map

Posted in Barclay Review, Buildings, Closure, Government, Internet, Legislation, Online Retailing, Policy, Property, Rates, Retailers, Scotland's Town and High Streets, Scottish Government, Small Business Bonus Scheme, Small Shops, Tax, Town Centres, Vacancies | Tagged , , , , , , , , | Leave a comment