An Inquiry into Retail and Town Centres in Scotland

In January 2022 the Economy and Fair Work Committee of the Scottish Parliament began its preparation and work into its “Inquiry into Retail and Town Centres in Scotland”.  As this blog has covered before, I gave evidence to the Inquiry in March 2022 (my opening statement here, and the official record of the session here).  A number of other sessions with others and site visits took place through to the summer, with the report being published on 29th November 2022.

The report makes interesting, if perhaps not unsurprising reading.  It aligns very closely with both my evidence and “A New Future for Scotland’s Town Centres” and is supportive of the Town Centre Action Plan 2 (TCAP2) which has emerged from this work (see also my blog posts on these, here and here).  As would be expected there are areas of disagreement (amongst those giving evidence, the committee and with the issues themselves) but broadly this is a supportive report on the range of work underway.

My reading suggests a number of areas of particular focus and interest.

  1. A clearly supportive stance on town centres (and not solely for economic reasons) and a recognition of the challenges they face and the need to re-balance the costs and opportunities of town centres and out-of-town development.  Whilst some disagreements existed (taxation/charges, moratorium on out-of-town developments, the statutory place of town centres in National Planning Framework 4), the thrust is clear – we have to do better for our town centres.  A consistent theme around the problems of Non-Domestic Rates (NDR) was recognised by the committee.
  2. The committee does push the Scottish Government in a number of areas.  The need to align activities within government is made clear and at points a lack of clarity and responsibility is identified amongst organisations.  The need for clear funding for TCAP2 delivery is stated.  The recently established Retail Industry Leadership Group is welcomed but concerns are raised (perhaps prematurely as it is only getting started now) over its membership, coverage, knowledge and plan of delivery.  The committee pushes for detail in a number of places.
  3. There is a concern over tools and how to use them.  The decline in planning functions and resources is noted, as are the disagreements over the sufficiency or resources of existing approaches and tools.  For example, are Compulsory Purchase Orders not much used because they are not fit for purpose or because there are no resources to implement them? Much is also made of the difficulties of dealing with property ownership in town centres (and I will post more on this in my next post on this blog), both in terms of who to deal with, and how to get action.
  4. Finally there is the issue of e-commerce and online activities.  The lack of e-commerce take-up and support in Scotland is noted by the committee with a call for improvements in both targeted at smaller enterprises.  The issue of an online tax is mooted, and receives mixed reaction.  The key for me is not to see this as “simply” a re-balancing of the physical/digital spaces, but more as a reflection of the changed nature of the economy, and a necessary adjustment to the economic realities.

At almost a recommendation/conclusion a page, this is a detailed report.  It ploughs lines we know, and are working on, but it is good to see cross-party support for the direction and especially for the recognition that:

“the actions, focus and shifts to achieve the vision for Scotland’s towns are multi-faceted and will require to be owned and driven over successive Parliamentary sessions to reverse the decades-long decline”.

Posted in 20 Minute Neighbourhood, Barclay Review, BIDS, High Streets, Local Authorities, New Future for Scotland's Towns, Non-domestic rates, Out of Town, Place Based Investment Programme, Place Principle, Retail Change, Retail Strategy, Retailers, Retailing, Scotland's Town and High Streets, Scotland's Towns Partnership, Scottish Government, Scottish Retailing, Tax, Town Centre Action Plan, town centre first, Town Centre Living, Town Centre Review, Town Centres, Towns | Tagged , , , , , , , , , , , , , , , , | 1 Comment

Out-of-Town Retailing: National Planning Framework (NPF) 4 and Stirling (again)

The 8th November saw the publication of the revised National Planning Framework 4 – the national spatial and planning strategy for Scotland. It will now be the subject of further parliamentary discussion before hopefully being approved.

This revision is the result of a year-long process of consultation and reflection. About a year ago, I gave some initial reactions to the original draft as the first in a series of three linked posts (the others on the question of retail impact assessment and the need for a more radical reflection on the existing situation). In January 2022 I followed my initial reactions to NPF4 up with a more considered set of reflections as I prepared to give evidence to the Scottish Parliament’s Local Government, Housing and Planning Committee (the official report of the oral evidence session which I attended is available here, and the final report of the Committee into NPF4 is available here). In that post I suggested six areas for development of NPF4:

  • Tighter language
  • Re-consideration of (retail) impact approaches
  • Closing of loopholes
  • Alignment with other policy/strategy
  • Delivery and action plan development
  • Stronger role of community voices.

The newly published revision of NPF4 is accompanied by an extensive reflection on the wide range of general and specific points received in the consultation. It is impossible here to do justice to the range of these or the work that has gone into the revision.

Looking at the revised NPF4 it is heartening to see a lot of progress in some of my six areas. The language is certainly more directive, and alignment, and delivery are more central. The revision has I think a stronger place focus (though I regret the loss of “distinctive places” as a separate policy approach) and is clearer on the principles and possible issues, as for example the 20-minute neighbourhood and the problems with drive thru’s.

As ever, it will be the operation on the ground that will decide the effect NPF4 has. Here I do have some concern over the question of impact, in thayt I am not sure that my concerns expressed last year on retail impact assessments have fully gone away. Whilst the language is much stronger in the revised NPF4 and Town Centre First and the Place Principle are clear drivers, there remains scope for a Local Development Plan to do odd things and for quantitative “deficiency” to be used as a lever for out-of-town development. One hopes this will not be the case, given the clear thrust of the overall NPF4 approach and the wider policies with which it links, but my prior experience with some local authorities gives me pause. We must align all levels of the approach.

As an example, there was some press coverage last week about Scotland banning drive thru’s and out of town retailing, but this will be unclear until practice settles down and much may depend on local actors – which brings us to Stirling.

My two posts of last February that followed my appearance at the Parliamentary Committee were about the situation in Stirling (and in particular the over-ruling by members of officers in regard to a proposed major out-of-town Asda development) illustrated my concern about questionable local decision making destroying national, local and good policy intent. The posts (Stirling – all at C and Stirling- still all at C) focused on local decision-making and policy approaches. This decision to permit the out-of-town superstore, was in March 2022 called-in by the Scottish Government and last week saw their decision on the application (decision letter here and newspaper coverage here).

I was very pleased to note that the Minister agreed with the Reporter and refused planning permission. The grounds revolved around the Retail Impact Assessment and the Local Development Plan and inter alia the change in retailing and consumer behaviours since the late 2000s and during the pandemic. It was very positive to see the Minister making this decision, and one hopes it sends a clear signal for others. One hopes that this is the end of this matter, but that remains to be seen. The direction of NPF4 would certainly suggest that such developments should be consigned to history.

So overall I think it was a very good week, with a revised and strengthened national framework and some sense on a controversial local decision. It will take time to fully read NPF4 (and its implementation plan) and I may have further thoughts. Likewise, the reporter’s report into the Crookbridge site at Stirling is an interesting read and may warrant a further exploration of some of the issues.

Posted in 20 Minute Neighbourhood, Asda, City Centres, Climate Emergency, Food Retailing, Land Use Planning, Local Authorities, New Future for Scotland's Towns, NPF4, Out of Town, Place Principle, Retail Impact Assessments, Scotland's Town and High Streets, Scottish Government, Sequential Approach, Spatial Planning, Stirling, Stirling Council, Town Centre Action Plan, town centre first, Town Centres | Tagged , , , , , , , , , , , , , , , , , | 3 Comments

Scotland’s Towns Conference 2022

Scotland’s Towns Conference 2022, Scotland’s Towns Partnership with partners

Three long years after the last such event, we were finally able to host Scotland’s Towns Conference in person. On Wednesday 16th November a sell-out crowd of over 220 people made their way to the impressive Centrestage in Kilmarnock (Scotland’s largest Community Led Asset Transfer) to listen, debate, discuss, meet, learn and advise about all things town and town centre related.

For once, I was able to sit back and take it all in, having no speaking role. What follows are my reflections on what I heard. I am not focusing on the detail as I could not do justice to the breadth and depth of the speakers, nor of some of the discussions, but instead consider some broad thoughts.

The conference keynote kicked it all off, with Tom Arthur MSP, Minister for Public Finance, Planning and Community Wealth, welcoming delegates and pointing to the many good things underway, despite the challenges we all face economically. He focused to start with on the revised National Planning Framework 4 (more from me on this towards the end of this week) and the very strong support that this provides for town centres. He allied this though to the rise in and need for localism, community empowerment and engagement and wealth building and for enhanced connectivity and collaboration in places.

Tom Arthus MSP, addressing Scotland's Towns Conference 2022
Tom Arthur MSP, addressing Scotland’s Towns Conference 2022

The breakout sessions of the conference (the main components of the day’s discussions) focused on the themes from A New Future for Scotland’s Town Centres – Climate and Net Zero, Creative Towns, Streets and Spaces, Digital Towns, Town Centre Living and Enterprising Communities. They all showcased great local work on the ground under each of the themes. Yes, there are barriers and challenges (and in some councils these again seem to be self-inflicted – the one that stood out for me was the council that objected to its own town centre social housing scheme), but the abiding impression was the local positivity over what can be achieved. Throughout the day this was also seen in the showcasing of the excellent work underway in East Ayrshire and Kilmarnock. Real differences are being made on the ground.

The breakout sessions were supported by a plenary presentation by Ibrahim Ibrahim, Managing Director of Portland Design who focused on Future-ready retailing and how to reimagine the customer experience, rebuild retail spaces and reignite our shopping malls and streets.

The theme of making a difference locally was also evident in the finale of the conference, the Scotland Loves Local awards. Winners (and runners-up) in all the categories have done amazing work in their communities and all awards were richly deserved. No-one though could but be moved by the winner of the High Street hero award – Marion Gilliland – and the film about her shop, work, passion and love for Cumnock and its inhabitants. This was a fitting end to a great return to an in-person Scotland’s Towns Conference.

The 2022 winners of the Scotland Loves Local Awards are (and you can learn about their stories and activities here:

And thanks to all the sponsors of these awards:

Posted in Community, Community Assets, community wealth building, Creative Places, Digital, High Streets, Land Use Planning, Local Authorities, New Future for Scotland's Towns, NPF4, Places, Retail Change, Scotland Loves Local, Scotland's Town and High Streets, Scotland's Towns Partnership, Scottish Government, Streets, Streetscapes, town centre first, Town Centre Living, Town Centres, Towns | Tagged , , , , , , , , , , , , , , , , , | 1 Comment

The Year of the Tomato

Given that the clocks have changed, I thought it was about time I posted this reflection on my growing summer.

Lotos Vine mid summer

Whilst I have been tweeting more irregularly this year about my gardening and vegetable growing, anyone following me will be well aware of my success with tomatoes this year. I don’t think I am alone in that, and the year seems to have been good everywhere. But all good things must end and as the vegetables die back, I offer my annual reflection. Last year’s can be found here.

The star of the greenhouse was probably the tomatoes. All varieties (Rose de Berne, Galina, Red Cherry, Green Zebra, Dr Carolyn Pink, Dwarf House and especially Lotos) were prolific. The only issue was one Green Zebra vine which had blossom end rot, but the rest of them made up for that, especially well into September. The plum tomatoes (Roma, San Marzano) did well outside, and Tigerella (a donation) had a very good year. I am still ripening a few in the house.

Elsewhere the peppers (Semorah, Golden CalWonder) were a very successful introduction as was the cucumber (Early Fortune). My chillies (Palivec and de Cayenne) have been great, and a donated Hungarian Hot Wax chilli produced late fruit.

Less good were the courgettes (Verdi di Milano) which began very well, but then sulked in the hot weather. A similar story occurred with the aubergines (Ronde de Valence) which set lots of fruit (and some ripened early) but then stopped dead and left me with a load of unripe aubergines.

In the garden itself the potatoes (Salad Blue, Red Emmalie, Casablanca, Maris Peer and Belle de Fontenay from Potato House) have been OK, but I think I under-watered them early on and so the yield suffered. The runner beans (Czar and a new introduction Rhondda Black) have done very well over a long period. Red onions, garlic and beetroot (all from local garden centre) were OK, but then I am not really sure I know what I am doing with them – though learning. My squashes failed.

Fruit wise the two re-potted (18 months ago) blueberries have produced very well and the plum and the apple tree did their jobs, though the latter remains small. The tree is not in the best place.

Rhondda Black

Overall, a lovely summer weather wise in the main and an enjoyable and productive gardening year.

As a final note I am trying to keep my own tomato seeds for the first time to sow in early spring. It will be interesting to see if that works. I feel slightly guilty at not buying as much from Real Seeds (where most of my seed comes from) but having had success with keeping chilli and runner bean seeds I want to try the tomatoes.

Posted in Food, Gardens, Greenhouse, Home, Home Growing, Real Seeds, Vegatables | Tagged , , , , , , , , , | Leave a comment

Retailing, Towns and Healthy Ageing

Today (27th October), the International Longevity Centre UK (ILC-UK) and the University of Stirling are hosting an (online and physical) event on “How can retailers keep us healthy?” with an emphasis on Spending with Dementia – making the high streets dementia friendly. The main components of the day (the programme is here) are to launch a report by the ILC-UK and abrdn Financial Fairness Trust on “Retail therapy – helping people with dementia enjoy spending” and to showcase some of the work underway in Stirling in the broad area encompassing retail, towns, healthy ageing (see a couple of papers here) and dementia (see University of Stirling’s Dementia Services Development Centre), including design of buildings and space.

The relationship between the University and the ILC has been strengthened recently by the appointment of an Impact Fellow under the UKRI Healthy Ageing Challenge (directed by my colleague Professor Judith Phillips) to look at the retail sector and to link between academic work and the sector to influence actions.

I was asked if I would open the day by presenting on some aspects of retail change, towns and the implications for healthy ageing. This I was please to accept, though quite where my contribution lies, I am not sure. As ever I try to provide the overheads I use for public consumption, and these are attached here.

The flow of the presentation may be slightly familiar to regular readers, but some new and updated material is introduced prior to some thoughts on a couple of questions for retailers around ageing populations and their health:

  1. What roles should retailers be playing?
  2. What does our population need from retailing and town centres?

The early part of the presentation focuses on retailing and retail change and on key dimensions of the decentralisation, disaggregation and car dependency of modern retailing, the rise of the internet and the recent development of convenience in a number of guises. We are living through a radical reshaping of much of our retail sector and any concern for healthy ageing and shopping has to be seen in that context.

There is of course a wider context as well, seen in how we have emerged from and valued different retail aspects during Covid, but now overshadowed by the Cost-of-Living crisis. Whilst urgent, the climate emergency seems to have been slightly relegated by this current economic crisis. The two are of course inter-related but the current focus is perhaps understandable. With operational issues and volatility for retailers, there is growing dissonance between what consumers want and what retailers can offer.

Following a brief discussion of town centres and high streets, the presentation considers aspects of the aging population and uses a shopping diary (see an introductory paper here) to point to the inter-related aspects of ageing, transport availability and retail sector structure. Finally in setting the scene for the two questions, we consider the policy context for this in Scotland.

  1. What roles should retailers be playing? Retailers, like it or not, are social engineers and have power and agency and can play a positive role in shaping their environments to enhance population health, including healthy ageing. Better availability of personal data by consumers could lead to a transformed offer and behaviour. Retailers have opportunities as well as threats from the ageing population and need to focus on their location, the role of the internet and delivery and the redesign of shops to better suit their customers in this regard.
  2. What does our population need from retailing and town centres? There are many attributes of place that are important for all consumers and town centres being attractive, accessible, and active are key amongst these. This implies the need to think about density of place, residential accommodation, and multi-functional spaces. Many of these points whilst highlighted for an ageing population align with the approaches set out in “A New Future for Scotland’s Town Centres”. This will vary from town to town but does require a concern for all components of society and population

It is often too easy to focus on the ageing nature of the population and on the impacts of poor health, but these have also to be set in the wider contexts of change in retailing, towns and policy. Limited consideration of what retailers need, and how our systems have structured this (and the consumer demand patterns) could condemn well-meaning approaches to failure. We need to make sure all the elements are aligned, and that policy is driving us in the right direction.

Posted in 20 Minute Neighbourhood, Consumer Change, Consumers, Cost of Living, Covid19, Diaries, Health, Healthy Ageing, Healthy Living, High Streets, New Future for Scotland's Towns, Places, Retail Change, Retail Policy, Retailers, Retailing, Shopping, Town Centres, Towns | Tagged , , , , , , , , , , , , , | 2 Comments

Avenues to the Past: Stirling’s Historic Streets

This post is about an exhibition that has already closed.  Sorry about that, but I did not get to see it until its penultimate day.  It had only a three-week life, so I hope you forgive me.

Avenues to the Past was a small exhibition about Stirling’s Historic Streets, not only retail focused ones, but also residential ones.  It was only a few wall boards and some leaflets and information and perhaps was more of a promotion for Stirling City Heritage Trust, but it was interesting nonetheless.

It was also interesting in its location, being held in Made in Stirling.  I have written about that initiative before (in fact almost 10 years ago, and it is still going strong after several moves), but this exhibition took place in their (relatively) new and much larger premises containing sales, gallery, exhibition and workshop space.

The exhibition itself focused on the historic buildings and areas of the City of Stirling.  It was mainly descriptive but collectively showcased the sheer range of important buildings and streetscapes.  Some aspects focused on what we had lost, but most reaffirmed the quality of what we have and why we need to support and protect them.

In addition, a small range of free leaflets were available, some from previous activities and some linked to ongoing work.  These focused on the main shopping/banking street of Stirling, King Street, prior to the development of the Thistles Centre, and on the various architects who ‘built Stirling’ and whose designs and buildings can be seen on various walking tours (self-guided) in the City. These are really interesting and informative and showcase the buildings we have very well. The Stirling City Heritage Trust website has online exhibitions both John Allan and McLuckie and Walker (the men who “built Stirling”)

My overall thought was of how little of this history is known or visible as you walk around.  So much more could be made of these assets and hopefully more will happen due to recent £3m Conservation Areas Regeneration Scheme (CARS) grant and other funding.

Wouldn’t for example it be great if the Arcade (one of the few originals in Scotland) could become a thriving place again and if the Alhambra Theatre in the Arcade could be renovated and brought back into use?  We neglect all of these elements at our peril as they combine to make that sense of interest and place all towns, or indeed cities, need and want.

A screen grab of the Stirling City Heritage Trust website
Stirling City Heritage Trust website
Posted in Arcades, Architecture, Buildings, City Centres, Exhibitions, High Streets, Historic Shops, Places, Retailers, Stirling, Streets, Streetscapes, Town Centres, Towns, Urban History | Tagged , , , , , , , , , | Leave a comment

Scottish Grocers Federation Conference: Issues and Opportunities

Just over a year ago, I did my first F2F presentation in a long time, when I presented at the Scottish Grocers Federation annual conference in Glasgow. This was apparently one of the very first such events held in Glasgow as we all sought to recover from the pandemic. The presentation was on convenience stores and the pandemic, and I concluded by noting the exceptional performance of convenience stores during Covid and the ways in which local and convenience had become more important and more valued over the last few years.

Last week saw the return of the conference to Glasgow again for the 2022 edition. No need to speak this time, so I could simply enjoy and reflect on what was presented and said. A packed conference reflected on the current state of affairs for Scottish convenience stores and on the opportunities and challenges ahead. The main business session was built around technology and data, but it is perhaps fair to say that issues other than that dominated the conversations.

In the conference pack, as has become normal, there was the latest edition of The Scottish Local Shops Report. This 2022 version updated the data and information from previous years and as ever is a source of important information on the sector in Scotland. The scale and impact of the sector is obvious and in briefly presenting the report Dr Pete Cheema, the CEO of SGF, noted the expansion and growth of the sector over the last year and the ways in which consumers had continued to value and support their local convenience stores.

That positivity was heard in discussions with retailers and was evident on the floor of the conference where, for the first time, producers from the Scottish Grocers Federation, Scotland Food and Drink and Scottish Government “Go Local” programme were present, showing off their local Scottish produce to the retailers. There was a lot of interest in this, both in terms of the Go Local programme itself (and for transparency I am on the Project Board) and the opportunities it presents, but also more generally in recognising some of the many excellent smaller producers we have in Scotland, who could make a point of difference for local convenience stores. Certainly, the early data from the project are very positive about the impact on producers and suppliers in getting more local product into convenience stores. This approach builds local communities, supports local businesses and provides local consumers with great products.

However, there are also clear head winds for the sector, and indeed for retailers generally. There was much shaking of heads after the UK government’s “special fiscal event” a few weeks ago (and the UK Government Minister did little to allay concerns) and about its impact on consumers and business. One of the other reports in the conference pack was on Crime in the convenience sector and this remains a major concern. Energy prices and the ability of consumers and businesses to afford to spend and operate was a running conversation, and the lack of clarity for convenience stores around energy costs, beyond the six-month announcement, was preying on people’s minds. Some of the increases in energy costs were so obviously business killers.

One topic though was almost an ever present. Deposit Return Schemes are meant to come into operation in Scotland next year. In the exhibition hall there were a number of operators of reverse vending machines and other systems and possibilities. On the conference platform, a number of speakers mentioned the difficulties being faced (and on radio) and of course there is now an active legal case about the degree to which the scheme adheres or not to being “cost-neutral” for convenience retailers. This one will rumble on for a little while one suspects.

In closing the conference, Tom Arthur MSP, the Scottish Government Minister for Public Finance, Planning and Community Wealth noted the importance of the convenience retail sector and that its success very much aligned with the programme from government for strengthened communities and local resilience, and that SGF were a key part of the work under the Government’s Retail Strategy. But he also could not have failed to hear the concern the sector had about DRS, crime and costs. There is an alignment here, but some choppy waters need to be navigated in the next 12 months.

Posted in Community, Consumers, Convenience, Convenience stores, Cost of Living, Costs, Crime, Deposit Return Scheme, Energy Costs, Food Retailing, Go Local, Local Retailers, Producers, Retail Strategy, Retailers, Retailing, Reverse Vending, Scotland Food and Drink, Scotland Loves Local, Scottish Government, Scottish Grocers Federation | Tagged , , , , , , , , , , , | Leave a comment

The Price of Petrol

Asda Photograph by Richard Walker for Asda

During the summer my pattern of buying petrol changed.  My semi-regular route takes me past two independent garages and two superstores.  Almost invariably over years Tesco has been the cheapest, often by some margin.  But this changed at some point, though it took a little while for me to really recognise that this seems to be a long-term change. A couple of months on and the petrol in Stirling has become cheaper in the independent retailers than in Tesco (in one case by 5p), though in the last two weeks this has narrowed.

In early August, we were down in North Wales, just as the price of petrol really began to fall from its very high peaks.  The variability in price amongst stations was highly noticeable and notable.  The independent garages were not just cheaper than any of the major supermarkets but substantially so; up to 15p per litre in one instance. Then later, on a recent visit to Lewis and Harris the price of petrol in the islands (and not just in Stornoway) was lower than the price in mainland Scotland and when we returned to Stirling. I have not experienced that before on the Islands.

None of this is new news and the RAC in particular has been on the supermarket’s retailers cases, most recently last week.  They make the point that in the past the volume purchased and its frequency by the major retailers gave them a price first-mover advantage in the market.  According to the RAC this though seems no longer to happen when wholesale prices fall and pump prices should follow. 

Others have also noted that now Asda is owned by not Walmart but by the same owners as EG, there is no incentive for Asda to be the first to drop prices or indeed to be the lowest.  The market mover of the past – Asda – is no longer playing that role and there seems to be no successor in the other food retail chains.  So comparable prices in these retailers are higher than exhibited in the past.

I am not a sector expert and do not know the full machinations of petrol pricing but found this was an interesting notion, not least in competition terms. It is therefore perhaps surprising that the recent Asda purchase of c130 Co-operative petrol stations for £600m has not attracted that much attention, and certainly not yet from the Competition and Markets Authority (CMA) (From a purely retail point of view, the deal makes sense for Asda as it expands at a stroke their convenience store operation, where they have lagged for decades). This is more so as when the Issa brothers and TDR Capital bought Asda the CMA required them to divest 27 petrol stations, and the CMA had warned of possible higher prices for petrol after the merger. There is of course still time for the CMA to get interested in this specific deal, and some trade press commentary is predicting a small amount of sell-offs. I wonder though whether a larger consideration of competition in the retail fuel market might be warranted, and may well come from the CMA’s Road Fuel market study, though the main concern to date has been on wholesale price transmission.

The concern for the leading food retailers (who currently dominate petrol sales) must be that consumers notice this (especially in a cost of living crisis) and they begin to lose reputation for being on the customer’s side.  Whilst petrol profits might cross-subsidise some product prices, will customers notice this?  And if independents are the price leaders what does that mean for other price perceptions?  At a time of a cost-of-living crisis (whatever we think about the climate crisis, the true cost of petrol and how we meet national targets to reduce car usage and mileage) foregoing years of price leadership is an interesting position.

Posted in Asda, CMA, Competition, Competition and Markets Authority, Convenience stores, Cooperative Group, Independents, Petrol, Pricing, Tesco, Wholesaling | Tagged , , , , , , , , | 1 Comment

The (Retail) Reality of our Current Predicament

Whatever political leanings one has, the last ten days or so have hopefully provided a nadir in political (mis-)management of the economy and society.  The crashing of the pound, the almost demise of the pension market, a screeching u-turn on the smallest (though symbolic) part of the plan (“special fiscal event”) and the sense of a government and a national bank pulling in opposite directions should tell people enough is enough.  Are we pumping money into the economy (government) or trying to control consumer spending (bank)?

Some of this is clearly not of this government’s making, but a lot of it is, and has been steadily building for a decade and a half or so.  Choices made and approaches taken since the Conservatives have been in power have led us to this place, most notably in austerity and its impacts.  Brexit was a milestone on the way to some strange utopia and added more problems to the economy at, as it turns out, the worst possible time.

This post is not simply a space to go on about where we are and who are the baddies, but to try to look at the potential retail impact of our predicament.  Energy costs are an issue, product prices and inflation are rising, labour costs are increasing but labour is in very short supply, consumers are being more careful, so retailers’ sales are declining and so on.  And that was before last week. Even Next felt the need to cut sales and profits forecasts. 

I have found the Economics Observatory material to be useful and informative (note: I have written for them on odd occasions). Recently, and very helpfully, they produced a post with a series of charts about the economy and current issues.  It is well worth reading and having a play with the timescales on the charts.  You can make your own minds up about how long our problems have been gestating and how important the current levels are.  They all show, even with the Covid period, the staggering scale of the issues created in the last 10 days (and it is the scale and speed together that are key).

Oh, and that the pound is a roughly a quarter down against the dollar since 23 June 2016.

The economic crises has been long in the making, being accelerated in 2016, and turbo-charged by Covid and now especially last week.  Retailing has been changing and often suffering since the financial crash of 2008 and whilst some of this is structural and technologically driven, much has derived from growing consumer weakness even in times of low interest rates and cheap money.

Retailers operate a balancing act between costs and sales.  The UK Government has given a 6 month reprieve on energy costs but what happens then?  Nothing seems to be on offer on business rates yet, and in that event if the annual multiplier is used next year there could be carnage.  Some costs are off their peak (shipping, petrol) but any instability or fall in the pound won’t help. 

Consumer demand is patchy.  There is money about in some quarters but a clear lack of money, even for basics, in others.  As personal costs rise so demand slackens, something already being felt over the long run of austerity and now accelerating further.  As prices rise for consumers, so spending on essentials, including energy and food, become paramount and leave nothing over.  As interest rates rise so more people get sucked towards a more limited pattern of spending.  It is not just those on benefits that are struggling (and they really are) but sections of society well beyond that. This will expand further if mortgage rates continue to increase and/or a fall in house values occurs.

Retailers are thus caught in the maelstrom created by government policy and inaction.  They see and feel this generally but especially in the employment market where wage hikes and other initiatives to help employees (or indeed to attract them) abound, but where other retailers are struggling to pay the going rate.  For retailing to flourish there needs to be more macro stability and less volatility. If people don’t have money to spend then what can retailers sell? If their own costs are rising and out of their control, then how long can they continue to trade? There are short term things that governments can do to make life easier for retailers, but in the long run, there is a requirement to rethink the distribution of resources and to bring far more people (consumers and retailers) back into feeling positive about their finances and the outlook. Only then can the wider challenges of the sector (and beyond) be faced

Posted in Consumers, Cost of Living, Costs, Economics Observatory, Employment, Government, Inflation, Pricing | Tagged , , , , , , , , , , , , | Leave a comment

Then there were three?

British grocery retailing has for decades been dominated by a small number of large and powerful retailers. That remains the case. Over the period however the number of firms involved has altered.

In the 1980s we talked about the “big 5”. This became the “big 4” when Morrisons and Safeway merged and has remained that since. Until this month when the Kantar market share data for Aldi (9.3%) overtook that of Morrisons (9.1% – the smallest of the big 4). Is this a new “big 4” or a smaller “big 3”?

Regular readers will know that I tend to look at such market share data on an annual basis and see long term change as more critical that monthly swings. This though seems a big moment. It has been coming for some time and as indicated in my latest annual check, the Aldi-Morrison gap was closing rapidly, but also the Aldi-Lidl combined market share was larger than either Asda or Sainsbury on their own (and this market share stagnation/erosion was one of the reasons why there was a proposal to merge the two four years ago, which was blocked by the CMA). This reflects the sea change in British grocery retailing since 2008 and the ongoing switch to discount and smaller formats from larger supermarkets.

The monthly Kantar data that showed Aldi overtaking Morrisons tells a particular story. We might, given inflation, expect large monthly sales growth figures, but the disparities are stark (YoY change, based on the last 12 weeks):

Lidl +20.7%, Aldi +18.7%

Others (Farmfoods etc) +11.6%

Iceland +5.8%, Ocado +5.2%

Co-op +2.7%, Asda +2.2%, Tesco +1.9%, Sainsbury+1.8%

Symbols/Independents -3.1%, Morrisons -4.1%, Waitrose -4.7%

Morrisons are having a bad time and the discounters are having a field day as the cost-of-living rises. It is hard not to see the latter trend continuing given the pressures on consumers (inflation still c10% and food inflation higher, with both predicted to rise further), though discounters, as all retailers, will need to reflect carefully on price rises and how much they are able to pass on of their own cost increases. In that regard the report in Retail Week this week states that Aldi are raising prices faster than other food retail stores, which shows the tensions and pressures for retailers and consumers. Nonetheless it is hard not to think that Lidl (7.1% market share in these figures) will also overtake Morrisons at their current rate and the gap from both discounters to Asda and Sainsbury will narrow.

Asda did the best of the “big 3” and this is being attributed to their expanded Just Essentials range (the replacement for Smart Price), though so successful has this been that they are introducing purchase limits for individuals (It seems as though reactions to the colour yellow were outweighed by the low price). Sainsbury have had increased pay again (as have other retailers) reflecting pressures in the labour market. With energy costs for businesses unclear and price inflation remaining, retailers are under extreme pressure (as are many consumers) and managing this is a new challenge for many.

Breaking my long term rule, these monthly Kantar data will be worth watching in the coming months as significant shifts in spending appear to be underway.

And a final thought; if Aldi is bigger than Morrisons and Lidl closing in, what would the CMA reaction be now to any merger amongst the previous “big 4”?

Posted in Aldi, Asda, Brands, CMA, Cost of Living, Discounters, Food Retailing, Grocery, Kantar, Lidl, Market Shares, Morrisons, Retail brands, Retail Change, Retail Sales, Retailers, Sainsbury, Tesco | Tagged , , , , , , , , , , , , , | Leave a comment