Scottish and Online Retail Sales in Lockdown

I am catching up on some of the recently published data about retail sales. This short post has graphs from two sources (a) the Scottish Retail Sales Monitor, published by the Scottish Retail Consortium and (b) Internet sales as a proportion of retail sales published by the Office for National Statistics.

Both have featured in this blog before but I am reporting here on the recent sales figures in these series as they show the changes that have been underway during the pandemic lockdown.

SRSM May 2020 Scotland

In the graph above, the last 18 months or so are shown in order to emphasise the recent data. The decline in the non-food sales (and thus in total sales) in Scotland is unprecedented in the 20+ plus years of this series. The depth of the decline, due to the closure of “non-essential” stores is notable. But, what is interesting is the beginnings of an improvement in May 2020, as some stores re-opened and some confidence returned. Most shops remained shut however so the decline is over 50% on last year. In food retailing, there was some growth, with other evidence pointing to a sustained switch to local community focused convenience stores.

With Scottish retailing coming out of lockdown on the 29th June, we can expect another report of a month of weak sales overall (June), but then a sense of recovery may take over.

The second source looks at the shift to online sales and again records a record. Two graphs are shown below; a longer run and a more focused shorter term picture.

ONS May 2020 Online sales

ONS May 2020 Online Sales Close up

The top graph shows the long run switch to online that has been underway, with the annual Christmas peaks apparent. The figures for April and then May (almost 33% of sales online) show the dramatic boost to this channel that the pandemic sparked.

The lower graph takes a shorter run period and shows again the same effect. But interestingly it shows what looked like more of stagnation in online sales in the latter part of 2019 and the earlier part of 2020. The dual Black Friday and Christmas peak of Nov/Dec 2019 is also interesting. The pandemic though has disrupted the channels and boosted online as opposed to fixed store retailing. This is clearly to be expected with the closure of many stores, and the reduction in total sales also helps this proportion. June will be an interesting figure to watch in terms of a return to “normal” or the initial signs of  the sustaining of a “new normal”.

Posted in Black Friday, Consumer Change, Consumers, Covid19, Data, Food Retailing, Internet shopping, Lockdown, Online Retailing, Retail Change, Retailers, Scotland, Scottish Retail Sales, Scottish Retailing, Uncategorized | Tagged , , , , , , , , | Leave a comment

Confidence, Cash and Friction: Shopping in Scotland

Primark

So, shops (well those not cooped up in an indoor shopping centre) in Scotland are now open. The long road back to re-opening the economy has taken another step forward, and one result is a gigantic queue outside a city centre clothing shop hours before it opens. But, after the honeymoon, what happens?

The key for retailers in this next phase will be the interaction of confidence and cash. The same is true of town centres and indeed of all economic activities. Many of the places we are thinking about are (as Ojay McDonald (@Ojay) said in a seminar last week) congested by design, whether products or customers, and so getting people back into these sites will require a major effort in instilling confidence. Yes, confidence is rising about defeating the virus, but it is not over yet, and the gains remain fragile. For many, the (perceived) risk factor remains high.

So what can retailers and town centres do to instill confidence? We have all seen and become used to the presence of hand sanitisers, more visible cleaning, queuing systems, face coverings, signage about spacing, plastic screens and visors and the abolition of cash. We have seen the growth of online and the rise of click and collect. Developments in queue management, traffic light systems, click and collect, pre-booking of appointments and other such mechanisms are all about instilling confidence that your experiecne will be as safe as it can be and that your fears (albeit these vary enormously) can be assuaged.

And the evidence is that this is working; consumer confidence levels are increased, if not by any means “normal”.

But what retailers can do little about is the economic “feel” that consumers have. Different consumer groups have fared differently during the lockdown and for many it has been tough. Others have saved cash and/or got used to spending it online. But the ending of furlough in due course, the sense that the next phase of the pandemic is an economic one as well as a health one and a rising concern about future levels of unemployment and job security all point to a tightening of consumers’ spending. This might not kick in for a little while, but there is a nervousness about how this will go.

Retailers can do little about this. They can kick start spending by discounting the piles of stock they may have. They may get temporary relief as people replenish or simply buy products, because they can. But the need for retailers is in knowing there is sustained activity, and that is very much out of their hands.

There is also another factor that links confidence and cash. The steps to instill confidence often introduce friction into the retail situation – as I found out queuing for 45 minutes (at least in the sunshine) to use a building society the other day – and the more friction there is, the less consumers can window or impulse shop. Delays and slowness are built into the system; it is likely that spending will be reined in as a consequence. The shopping experience will be more measured and planned, and probably take a longer time. Yes, we have confidence, but at what cost and to whom?

So if this has to persist – and it is likely to for some time – then how will consumers react? What frictions are they likely to be willing to put up with, and what will turn them off? What frictions, on the other hand, are some consumers willing to pay to minimise and for which retailers may be able to charge? We have got used to differential pricing for delivery to the house; so what about access to the store?

The opening up of Scotland’s shops from today heralds the next phase in the pandemic. It is one though that is a step into the unknown. We do not know how consumers or retailers will react initially and then as things develop. Have the last three months (and the thought of what may be to come) made consumers reconsider how and with whom they spend their money? What will consumers now value? And what will retailers start to offer to build confidence for consumers to shop with them?

We will be finding out in the next few months. It is also a breathing space in which we can re-imagine how retailing and town centres operate. And in which we can begin to think how as a country and a society we should construct such activities. At the moment we have to get things moving again as best we can; but after that there needs to be a rethink about what we want and need.

A final point: in some retail sectors many shop workers have been working throughout the pandemic. They have experienced a very different work place. Those returning today will see enormous differences. All are doing their jobs, and serving people. They deserve to be treated with respect. They are also affected by the issues of confidence and cash and are not personally responsible for the friction customers are experiencing. Respect them.

 

 

Posted in Cash, Click and Collect, Consumer Change, Consumers, Convenience, Covid19, Employees, Friction, High Streets, Home Delivery, Internet shopping, Lockdown, Online Retailing, Opening Hours, Queuing, Retail Change, Scotland, Scotland's Town and High Streets, Scottish Retailing, Shopping, Shopping Centres, Social Distancing, Town Centres, Uncategorized | Tagged , , , , , , , , , , , , , | Leave a comment

Shopping with Confidence?

Three months on and the great unlocking has begun in earnest.  No more testing your eyesight, it’s now about testing your bank balance – in Northern Ireland and England to begin with, Wales today and then Scotland.  “Non-essential” stores are now open for business, but certainly not in a pre-COVID form.

Northern Ireland began the move with re-opening on Friday, 12th June; England followed suit on Monday, 15th JuneWales starts today, the 22nd June and Scotland will be a week today (29th June).  This is begining to feel like a very different phase of the pandemic and something akin to trying to get back to normal.

And yet, it is not, nor should it be.  Where we are now is a very different place from early 2020 and what we then took for granted was “normal”.  For a start, the UK has one of the highest death rates of any country in the world and the over 60,000 people who have died from this need to have their deaths explained.  There should be no consideration of things being normal until we have held to account those responsible for our failings, and we have stopped the pointless deaths.

Secondly, the sense of ‘return to normal’ by ‘going shopping’ suggests that the world in early 2020 was a fair and good one, and that things have not been changed during lockdown.  They have.  We have re-discovered community but have also had to confront the inequalities that COVID has exposed in its impact and the differential experiences it has created.  We can not simply return to previous ways as though nothing should alter; things must change.

There can be no doubt that retailing has suffered; the data is absolutely clear.  But in going back to shop, we need to consider very carefully what it is we want our consumption to support.  Retailers need the support of consumers, but it can not be unthinking.  Support those good businesses who did the right things by suppliers and employees over the last three months.  Support local and independent, small retailers who need every penny to survive and who put back to the local economy through their actions.  Support the local towns and high streets who provide more equitable and more sustainable places. Support the local producers and retailers who provided a lifeline during the lockdown (and in the case of the former are still not getting their “normal” markets back).

At this point retailers are nervously looking for how consumers will react to the new shopping experience.  Will there be a honeymoon period or a sustained return?  Will the experience (or the thought of it) put off prospective consumers?  Will the relaxation lead to a large increase in COVID cases in a couple of weeks (as seen elsewhere)? We simply don’t know.

The early evidence from England is that footfall is down on last year, but surely this is only to be expected? We have lived through a major national trauma, and are still in the throes of a pandemic. Not all shops and other facilities are open (cafes, restuarants and public toilets being key components), the shopping experience is a very changed one, and many still lack confidence and experience in the new settings, with their new rules and constraints.

But however fast or slow it goes, this is but the first (of several phases) in the reopening and then resetting of our retail-consumer relationship (and the retail-landlord-property relationship). We are only at the beginning of this and those who see the re-opening of shops as an end to a situation or process, are going to be mistaken. There is much to be done to get these relationships to where they need to be for a sustainable future.

Scotland has taken a more risk averse and cautious path on many things through the pandemic. The siren calls to be “more ambitious” are very much at odds with the approach that produced the realities of the lower R number and the death rates in Scotland as opposed to many parts of England. There is a different calculus here between economics and deaths and the risks of a re-emergence of the virus generally or in a second wave. This pace is tough, especially for the retail and other businesses so adversely affected, but the long-term need is for consumers to have confidence in retailers’ and their own safe shopping. Rushing this for what may prove to be short-term relief may not be the success that many think.

Posted in Consumers, Lockdown, Non-food retailing, Rents, Retail Sales, Retailers, Retailing, Scotland, Towns, Uncategorized | Tagged , , , , , , , , , , | 2 Comments

Shopping in a Post-Lockdown World

Well, we’ve just had the sunniest spring on record, as well as the driest.  As we apparently ease out of lockdown we can but hope that such conditions continue, because when you look at some of the operational actions retailers and shopping centres are going to have to put in place, the thought of doing the shopping on a wet (summer, let alone winter) weekend is not that appealing.  If we have to live like this throughout the winter then it will be bleak for many consumers and retailers.

I am not an epidemiologist and the merits of otherwise of the English and the Scottish approach to easing lockdown, generally, and for retailers specifically, is not my focus here.  Though, I do know which gives me more confidence as an individual consumer  and better manages risks I am willing to accept (others may come to alternative conclusions).  Instead, I want to consider the approaches retailers in Scotland are being asked to take, some weeks later than in England.

At this point, in retailing in Scotland, not a lot has changed in three months.  There is still the distinction between essential and non-essential retailing and the latter, as shown by various data continues to really suffer.  Online, community focused stores and producers going direct to  markets seem to be doing well in many cases, and long may that continue.  Some major chains are opening up again and finding pent-up demand.  But, many others are considering what steps they need to take operationally either to operate now or in a few weeks when smaller shops and parts of larger stores may be allowed to open.

The Scottish Government guidance is available here and lists various topics for consideration and action by retailers, shopping centres, location and place managers.  The headings are:

  • Physical distancing
    • Signage and marking
    • Store capacity
    • Staff and customers
    • Queue management
    • Adapting services
  • Hygiene
  • Cleaning
  • Other Methods of Reducing Transmission
  • Customer and Staff support
  • Staff Safety: additional measures

Reading the detail, it is clear that the main concerns are about the safety of customers and staff in two directions.  First, keeping people apart before and when they enter, and are in, the store or centre.  Secondly, making interactions between staff and customers as impersonal as possible.  So systems of controls before entry, in store, changed facilities and systems, complete blanket signage and messaging and a lack of interaction are going to be the norm.

This is not retailing as we knew it.

Whilst seemingly not as stark as the choices facing cafes and restaurants, retailing also faces problems of capacity, cost and demand.  How will consumers react to the new retailing, especially when the novelty wears off and bad weather sweeps in.  Will people queue in an IKEA car park for hours on end in say January?  The same is true for town centres and their shops.  What is the willingness to ‘go shopping’ when you don’t really need to? And when it might take a lot longer than you might expect? And there are what may be seen as less risky and more pleasant alternatives. But then peopleseem to be willing to queue for hours for their IKEA or McDonald’s fix, and this can’t just be post-lockdown fever?

IKEA QUEUE

This could get stale quickly, especially in inclement weather

For retailers this uncertainty over demand and supply poses a problem which exacerbates the difficulties already in place.  Can retailers make enough money to survive in such peculiar circumstances?  How do they reconcile what they order with such possible variations in demand?

There is so many unknowns at the moment.  It is early days in emerging from lockdown.  As we open up, so more things will become clearer.  If transmission rates fall and there is no sign of recurrence will restrictions (e.g. 2m to 1m) be relaxed?  Will consumers then feel more confident? If they do, then there will be a rebirth of much retailing.  There is likely to be a demand rush and retailers will find consumers open to buy and willing to react positively to new retail offerings.  Longer term though much will depend on the state of the overall economy and there is a need to get places and town centres back at the heart of our society and economy.

There is of course a darker scenario; of recurrence of the virus, renewed lockdown and a collapse of retailers and consumer confidence. But in keeping with the fine weather let us hope we don’t get there.

 

Posted in Consumers, Covid19, Employees, Employment, Internet shopping, Lockdown, Online Retailing, Places, Retailers, Scottish Government, Shopping, Shopping Centres, Social Distancing, Town Centres, Uncategorized | Tagged , , , , , , , , , | 1 Comment

Tracking the Impact of Lockdown on Retailers

The impact of COVID-19 has hit retailers in different ways. We are now beginning to see the official figures and some retailers have provided updates. As anticipated in a previous post, the April sales figures for Scotland showed a massive impact on non-food retailing especially. The graphs below show the exceptional historical nature of what we are living through, followed by a close up of the impact compared to the last year or so.

SRSM April 2020 Long RunOSRSM April 2020 Close up

ONS figures released last week make exactly the same point. The headlines are worth repeating as they show the damage inflicted but the varying outcomes for different retailers and retail sectors. For many retailers of course, deemed non-essential, the business has essentially gone into deep freeze.  This is particularly the case for small retailers in non-food.  Some have been able to move sales online and tried to keep going that way. But many have simply been forced to shut up shop. The ONS headlines show:

 

  • The volume of retail sales in April 2020 fell by a record 18.1%, following the strong monthly fall of 5.2% in March 2020.
  • All sectors saw a monthly decline in volume sales except for a record increase in sales for non-store retailing at 18.0% and a continued increase in sales for alcohol stores at 2.3%.
  • The volume of clothing sales in April 2020 plummeted by 50.2% when compared with March 2020, which had already fallen by 34.9% on the previous month.
  • The proportion spent online soared to the highest on record in April 2020 at 30.7%, which compares with the 19.1% reported in April 2019.
  • All store types, except non-store, reached record proportions of online spending in April 2020 as some stores shifted to online only trading.
  • The three-month on three-month growth rate in the volume of retail sales decreased by 8.6%, with declines across all sectors except food and non-store retailing.

 

These are remarkable figures.

We are also now beginning to see major multiple retailers report their sales over this period.  These are of course unaudited sales figures, and there is no accurate word on profitability (most grocers say their extra costs have broadly been met by their savings from rates relief), but the figures do give some inkling to different fortunes and to the impact of the virus. There are too many such retailers to cover them all here, but three that caught my eye are considered: Sainsbury, Next and Kingfisher – in turn mainly food, a non-essential clothing retailer with a strong online offer and a DIY essential retailer with an online arm, operating across a number of countries.

Sainsbury

Sainsbury

The figure shows the problem that emerged in food retailing.  A massive week on week increase (40%) up in March followed by a return to normal food business.  Morrisons more recently reported a boom followed by a below trend sales and then stability.  Huge fluctuations between and within weeks makes supply systems difficult to manage.  In clothing and fuel the impact of lockdown is clear.

Next

Next

Next had at the outset a more balanced online and store portfolio.  On lockdown the store component was shut being ruled non-essential but online could continue.  In practice, Next could not make the distribution operations for online work safely and so had to shut down to rethink.  Slow opening of the online channel then followed. All this is clearly shown in the graph, which also shows the massive impact on sales.

Kingfisher

Kingfisher COuntry

In the UK Kingfishwer operate B&Q and Screwfix.  Both were allowed to continue to operate, but the stores proved problematic under social distancing.  They had to be closed to rethink safer operations before being reopened, intially with click and collect and home delivery, and then latterly with store openings under strict social distancing.  The graph shows the performance of the UK and Ireland, but also France and Poland. In France, as in the UK, the company closed the stores, but then introduced click and collect and home delivery. All stores are now open for a “self-service” range. In Poland all stores remain open but operating under strict conditions, and with click and collect and home delivery. In addition to Sunday closing (the law) Saturday trading was temporarily stopped, but has now restarted. As of 12th May, Spain (not on graph) and Ireland remain closed.

The second graph compares store performance and e-commerce performance over the same period. The vital importance of operating click and collect and home delivery as well as online is clear. Whilst e-commerce is not of the same scale as the store operations it has allowed sales to continue and indeed to expand in that channel.

 

Kingfisher Store and Ecom

All these businesses are operating under strict social distancing. Kingfisher note stores are operating with:

  • Colleagues in gloves, masks and visors
  • Limiting number of customers in store
  • Safe queuing before entering the store
  • Sanitiser stations throughout the store
  • Floor navigation markers to help enforce social distancing
  • Perspex screens at checkout
  • Contactless or card payments only

This is the new retail store.  It remains unclear how customers will react to this, if retailers can make it work profitably once support is removed and whether consumers will continue to operate online as opposed to visiting stores.

B&Q

If this is what large retailers have experienced and have had to adapt to in order to sell, then spare a thought for the small independent retailer who will have an even greater adjustment to make. And for all their employees, whether working or not at the moment. Will the online and home delivery models developed out of necessity prove to convince customers of their difference and dedication to serving communities? It is to be hoped so. We shall begin to see how this plays out as lockdown gets eased.

Posted in B&Q, Click and Collect, Consumers, Contactless, Covid19, Employment practices, Food, Home Delivery, Internet, Internet shopping, Kingfisher, Lockdown, Multichannel, Next, Online Retailing, Poland, Regulation, Retail Change, Retail Sales, Retailers, Sainsbury, Screwfix, Uncategorized | Tagged , , , , , , , , , , , , | 1 Comment

Retailing, Shopping and Covid-19

Lecture front page

Over the last couple of months I have produced on this blog a range of pieces around retailing, shopping and the coronavirus pandemic.  There will no doubt be more to be said as the situation develops.

One of these pieces – What should we value about retailing and towns and what should we do about them – attracted a fair degree of attention in a variety of places.  The piece was a call for more radical thinking around the future for towns and high streets: essentially a plea not to go back to how we were, but instead to carve out the economy and society that we want (and need) and to be inclusive and community focused rather than distant transactional and extractive as so many of our places have become.  The original post has been re-blogged and altered for use in various sources and outlets.

At the University of Stirling, we are proud that much of our research has a public policy focus.  We have created a public policy blog to present, from across the University, this research and thought leadership on policy.  As part of our reaction to the pandemic, we are now producing podcasts from various of our academics on their specialist area and the implications of COVID-19, raising questions and policy implications.

I was asked to contribute to the series, and my podcast is available via as part of the lecture series and directly here.  I have taken this opportunity to expand on and repurpose much of the recent material in this blog and build on a presentation I gave at an Institute of Place Management Webinar a few weeks ago (for the delegates, I promised to post the presentation and this podcast is that).  A full transcript of the podcast can be downloaded here (Transcript of Podcast May 2020).

Some of this work was also the subject of a podcast discussion I did with David Jamieson for Source.scot, a couple of weeks ago.  This interview was a part of a feature entitled “Retail behomoth: are we witnessing the birth of a savage new business age”. My interview (“Beyond the noise: how the crisis is transforming the retail sector”) ranges widely over retail change, the impact of the virus on the sector and what we want to come out of this period for towns and retailing and can be listened to here.

 

There will be much more to be said about the longer term impact of the pandemic on retailing and shopping. I doubt we can yet begin to really see what the potential disruption will be like.  We can though start to anticipate the type of future we want and try to work out the steps to get there. This is ever more important if we are not to simply go back to the (failed) ways of doing things.

Posted in Community, Consumer Change, Consumers, Covid19, Employment, Employment practices, Government, High Streets, Independents, Institute for Retail Studies, Internet shopping, Lockdown, Multichannel, Online Retailing, Panic buying, Places, Public Policy, Reinvention, Retail Change, Retail Policy, Retail Sales, Retailers, Retailing, Scotland's Town and High Streets, Scotland's Towns Partnership, Scottish Government, Scottish Retailing, Shopping, Social Inequality, Tax, Town Centres, Towns, Uncategorized, University of Stirling | Tagged , , , , , , , , , , , , , , , | Leave a comment

The Need for a Digital Tax

The origins of this post lie in early March when we were delighted, in what now seems another era, to host Helen Dickenson, the Chief Executive of the British Retail Consortium, at our Retail Futures event. She spoke on the topic Retail Armageddon or Reinvention?

Little did we know that it was going to be both.

In my most recent post I set out some of the steps we might need to take, once we are passed the immediacy of the Covid-19 crisis and are contemplating what future we value and desire/need. One of these steps was the need for a digital tax, and the linked theme of the unfairness of business rates.

This post takes the bones of something I wrote in early March but never used, as Covid-19 intervened. Since then two things have happened that have added to the urgency of moving on a digital tax:

  • The Chancellor has shown we can think boldly by abolishing business rates (well at least for a year). We could simply make this move permanent (actually I don’t this would be right).
  • Online sales have gained enormously from lockdown, expanding rapidly (we can already see a hint of this in the March ONS figures in the graph below – who knows what April will bring?)

 

ONS Online sales April 2020

Source: Office for National Statistics (UK)

 

At that Retail Futures event, I tried to discuss/provoke the Panel by suggesting that a digital tax was going to be needed as part of the answer to the long-standing business rates perversity.  The Panel liked the idea of lower business rates but baulked at the idea of a digital or online tax!  One phrase stood out for me in their comments.  It was along the lines

“The moment we see something works we want to tax it”.

Well, yes.

As I have noted before (“Houston, we have a problem”), the property based business rates tax is centuries old.  We have an analogue tax in a digital world and are paying the price of this.  Business rates became a cash cow for Government a few decades ago and they have milked it steadily (dry) since.  It is an out-of-date approach, perversely implemented, with well recognised failures, causing immense damage to the fabric of the country (high street vs out-of-town; north of England vs London and others).  But Governments love it, due to its predictability (and growing scale in recent decades).

As noted in my last post, we all say we want flourishing town centres and places.  We claim we want diversity and a range of independent and entrepreneurial small businesses.  A carbon neutral future is going to come up the agenda as essential.  And we are now going to be living with enhanced technology use.

Property based business rates are anathema to many of these desires.  If we are serious about what we want then we have to protect our centres and small and local businesses, incentivise our start-up tech based entrepreneurs and actively set out to end damaging consumer and business behaviours.  This means looking at, and taxing, the real costs of digital online giants (and their delivery mechanisms) and out-of-town activities (not only retail).  We also need to ensure a fairer national playing field than the current ‘subsidise London’ one, perpetuated by business rates.

However in doing this we also have to be honest about the economy and society.  We can’t simply stop taxing the old (property) and forget about the new, or tax the new and forget about the old.  If we want good local places, then local authorities, town managers etc. need to be given the resources to do their job.  The mind-set of ‘give me excellent services, for free’ simply gets us nowhere.  Our economy has altered, and will continue to do so.  So our tax system has to alter with this.  This is not only a retail issue; as electric cars supplant petrol/diesel cars then what is replacing car tax?  If we want roads we have to pay for them somehow.

And in our current predicament, if we’d only been properly paying for the NHS, would we have had such a traumatic time? If you want public services (and we need them), then government has to prioritise and pay for them. Saying something is new, so we shouldn’t tax it is not acceptable. Nor is allowing online retail giants top pay a trifling proportion of tax on billions of sales and profits (swollen further by the pandemic).  They claim to pay what they have to; well then, let’s ask them properly for what they should be paying. This is about being a society, not simply a bunch of automated transactions.

A digital retail tax is not straightforward, but we must confront its need.  We can devise a system that works and we can protect the start-ups and entrepreneurs in this space.  Simply refusing to contemplate any steps in this direction as it ‘taxes success’ is ridiculous.  That success has in part been bought by an unfair playing field and a mis-appreciation of societal costs.  This can not be the way forward if we value the things we say we do.

Posted in Amazon, BRC, Competition, Covid19, Digital, High Streets, Internet, Internet shopping, Local Authorities, Online Retailing, Places, Reinvention, Retail Change, Retail Economy, Retail Policy, Retail Sales, Social Inequality, Social Justice, Spaces, Tax, Town Centres, Towns, Uncategorized | Tagged , , , , , , , , , , , , | 1 Comment

What Should We Value about Retailing and Towns and What Should We Do About Them?

Apologies, this took a little longer and got a bit lengthier than I originally intended.

 

If they look beyond heroic individualism and accept that individuals exist in a network of social bonds and obligations, we might just see a real realignment” (James Kirkup, Why did Boris Johnson survive? Unherd, 15th April 2020)

Ok, the quote above is taken from a very different context and meant in a different political way, but it sums up some of my views about what we are seeing in retailing and the evidence over the recent weeks that place has become more important to more people than ever before. Can we really be satisfied with the retailing system and the towns (high streets, town centres) we have, once the dust sort of settles from the pandemic? I hope not.

The retail system in the UK is broken in many ways.  It works for quite a lot of people most of the time, but mainly the affluent and the car-borne, though not for all and when it works, it does so at the expense of both society and local economies.  It is not sustainable in the broadest sense and does not meet the obligations we must now accept for rebuilding our future. Our towns, places and hogh streets are broken. We have accepted the ways things have been for many years, in the pursuit of low prices and the often false god of economic productivity.  Our retailers have become dis-associated from their local markets, consumers and places and even more distant from many of the suppliers on which they rely. This has recently been seen to be especially so in terms of food retailing and the clothing and fashion sector, though in different ways, but it is true across the sector and the country.

COVID-19 must alter our perceptions and challenge our willingness to accept this ‘bargain’. We deserve better in so many ways.

Now, this is not to say that multiple and large scale retailing does not have its place; it does. Nor is it to argue that the just-in-time supply system in food failed under the weight of binge-buying ahead of lockdown. The response from many such retailers, producers and supply systems has been impressive and the recovery effective. Consumers have gained and do gain benefit from the operation of large retailers. But do they pay their way and should they be more responsible (to producers, consumers, suppliers, places, communities) in their dealings? More fundamentally should we engineer more of a balance in the system in order to provide properly for more of our population? This is also not just about providing economically, but also socially (the network of social bonds that retailing should be part of).

So, what might we want our retail sector to look like?

  1. It needs to be a system that works for all of our population and not just for some. Food banks are not an acceptable component of any advanced economic system and the presence of so much food poverty is a national scandal.  We need an enhanced local focus, reducing dependency on long, complex, supply chains. The pandemic has highlighted the inequality we knew was there, but we kept wanting to forget about.
  2. Local has to be a major focus of our system. This is about local neighbourhoods and places as well as the local supply chains and assets that are required to break our over-dependence on international and distant supply.  A renewed focus on community, support and place has been demonstrable in recent weeks and we need to build on this. The plight of many artisan and local producers, unable to supply their normal markets of food service and restaurants, should be a wake up call. We have great local producters and products across the UK, and we should be seeking to support them by opening up local markets and encouraging the focus on local consumers. This is true of food and also non-food producers. We must connect better our producers and our consumers, and this is best done in towns and town centres.
  3. This implies a rebalanced sector with switches from national multiple chains to local and independent operations; from physical to digital taxation and from a reliance on the car and out-of-town stores to in-town and neighbourhood stores and markets. It suggests a new relationship with quality and sourcing (and in food, our diet) and an underpinning need to enable people to access this physically and economically.

We have proven through the last six weeks or so, that previously impossible solutions, are not that, and that we can rethink our approach and systems. We can not go back to what has been failing us generally; we need to be bold and rethink these relationships and redefine what is acceptable.

My focus above has been mainly on food retailing, but the issue is broader than that. If we are serious about supporting “the high street” and town centres, as so many claim, then this is the opportunity to rebalance to focus on what we value and thus what we should be active in encouraging and discouraging; one or the other is not an option.

If we accept that, then what measures could we take to make this happen?  Some initial thoughts might include:

  1. A rebalancing of taxation between digital and physical modes of retail supply. Online has exapnded during this crisis and given the probable future for social distancing and other crowd based activities, many of those who have used online, may well continue to use it. This is a reflection of the changing nature of the economy and as such we need to rebalance taxation to accept and reflect what has now changed in business operations. If we want physical stores we have to stop taxing them out of business, whilst allowing others a free pass at using, but not paying for common good (such as the roads they currently use for delivery). International tax avoidance should be stopped; behaving in that way should abrogate the right to operate in this country. This is not to try to end online, but to reflect its true costs and also the changing nature of business.
  2. Immediate substantial increases in income for ‘key workers’ and those currently marginalised in our economy. We have demonstrated that these people and jobs have real value to the operations of our economy and society (including obviously health and care workers, but also shop workers). We should not limit our thanks to a weekly clap and forget that many are living precariously in so many cases. They require a susbstantial increase in living wages, linked with a more progressive taxation system (on individuals and businesses), to take people out of the current poverty cycle and to provide them the wherewithall to prosper, not simply exist.
  3. Disincentivise retail components damaging the concept of place and not paying their true social and economic costs e.g. out-of-town car focused stores. The current lockdown has seen the rediscovery of local and community, often focused around place. Activities that damage place need to be challenged and refocused. Some of this can be done by fair taxation (including abolition of rates for high street independent retailers), reflecting the true economic and social cost (fresh air now there is much reduced traffic anyone?) and some might need to be by more direct challenge to their right of operation. If businesses are damaging communities in the broadest sense should they have a right to continue to operate?
  4. Change the VAT system so as to reward the reuse of historical and existing buildings rather than as currently happens rewarding new build on often greenfield sites. It is crazy that we actively benefit those that destroy our built heritage, providing them with a cost and competitive advantage over existing operations and buildings.
  5. Allied to this there needs to be substantial economic protection and support for independent producers and retailers so as to encourage their sustainability and growth and reduce the burden they face. If we value the local and entrepreneurial, then we need to show our support for them. We are saying that convenience stores and local independents have done a fabulous job in the pandemic; then let’s show it afterwards by making the “playing field” rather more level. The proportion of their spend made in local areas is far higher; they are the glue of the social networks we claim to value (as they have shown over the last few weeks).
  6. Requirements on retailers of all sizes and scale to demonstrate their ‘local’ credentials in terms of procurement and product and service supply. Too often local has been managed (if considered at all) by a few nods to local employment and some pictures of vaguely local producers in store. If we are willing to support local businesses through our taxation and licensing system, then we need mechanisms and measures to demonstrate that localness. This is not only in people, but in products, services, community payback and other measures of local community good that build places rather than extracting value.
  7. Financial and managerial support should also be provided for local markets on a regular basis, with ‘local’ (and ‘farmers’ and “fishers” for food) being defined terms and a responsibility on local authorities to provide space and opportunity for such markets on a regular basis. Some of this would be physical as markets are inherently social, but strong encouragement for local collective and community supply is needed, whether physical and/or virtual. This must not be a burden on local authorities that is unfunded but a funded requirement.

As I noted at the outset, none of this is to deny the important role of mass retailing and production; this is about a rebalancing, not an abolition of the approach. But the retail (and especially the food) system has failed us, and no amount of post COVID-19 ‘back to normal’ rhetoric should be accepted. The “old normal” did not supply or nourish the nation in the way it should; we now have to be able to feed our country on a sustainable healthy basis and build a sustainable future, focused around towns and place.  This will require a radical shift in thinking and operations.

These suggestions address the concept of place, the high street, and what we should be valuing about such core social and economic spaces. If we want to have flourishing towns then we need to support them, not by handouts to repair and rebuild, or exortations to understand and manage (as important as these are), but also by demonstrating that we are serious about stopping damaging activities elsewhere and refocusing on building locations, not extracting value.

The world has changed. Ending lockdown and returning to the old ways is not an acceptable way forward. We have seen that alternative futures and ways of doing things are possible. We have to take this opportunity to change our towns and places for the better.

Posted in Community, Consumer Change, Consumers, Employment, Food, Food Banks, Food Retailing, Government, Grocery, Health, Healthy Living, High Streets, Independents, Leadership, Local Retailers, Non-food retailing, Places, Proactive Planning, Rates, Reinvention, Retail Change, Retail Planning, Retailing, Scottish Government, Shopping, Spaces, Streets, Streetscapes, Supply Chains, Tax, Town Centres, Towns, Uncategorized, Urban | Tagged , , , , , , , , , , , , , , | 4 Comments

Scottish Retail Sales: seeing the impact of Lockdown

Earlier today (22nd April) the March figures from the Scottish Retail Sales Monitor (managed by the British Retail Consortium and KPMG) were published. They were as bad as everyone expected, and the commentary in the media showed due concern (for example, BBC and the Herald).

The front page of Monitor is reproduced below (and ANGRY FACE ON as I’ll come to the ludicrious part of the headline later) and the headlines are clear. Total sales in Scotland 13% down on last March (Like for Like down 14.5%), Non-food sales down 33.6% or 27.9% online adjusted. “A Shocking Month” is only the half of it. And talking of halves, food retail was UP 12.1% during this period. Within the month of March retail sales were UP 9% in the first three weeks and then DOWN 44% in the last two weeks.SRSM March 2020

To get a more visual sense of the scale of the carnage, the graph below plots total retail sales in Scotland according to the SRSM since the series started, disaggregated by food and non-food. This series and these graphs have figured in this blog before, but never quite looking like this.

SRS scot food vs non food march 2020

If you look at the chart above then you might be wondering why previous posts in 2011, 2012 and 2014 have all pointed to the worst ever sales in Scotland. The scale of the impact of COVID19 and the lockdown on retailing and retail sales is all too obvious. We have never seen anything like this in non-food, and rarely seen such growth in food. Never has there been such a disparity between food and non-food.

Now none of this is much of a suprise. For a lot of the month food was beset by panic buying in anticipation of  lockdown and as a diversion from the closure of food and beverage and restaurant outlets. Non-food was in the main deemed non-essential and stores forced to close. As Primark noted they went from sales of £650m per month to ZERO.

Scot retail sales scot vs uk March 2020

My second graph however is rather more puzling to me. This shows that in March total retail sales in Scotland were down 13% as noted above. However the data from the Monitor suggest that total retail sales in the UK as a whole were down “only” 4.3%. Now, 4.3% is bad, and pretty much unheard of in the series since 1999, but it is nowhere near the calamitous 13%.

So, is Scotland really suffering that much more badly than the rest of the UK? I really doubt this, and am struggling to see an explanation for the difference. We did perhaps go into lockdown slightly earlier up here. Maybe we are better behaved? Perhaps geography and the internet (which this series has some difficulties with) have a differential impact. Possibly other “regions” of England have a similar pattern to Scotland but are masked by the South East and London (after all Dave Lewis of Tesco did say earlier in the week that panic buying was an affluent and London and south-east phenomenon mainly, and I suspect he had Clubcard data backing this up). Potentially the sample behind this survey is being differentially impacted in Scotland and/or the sample does not pick up the switch to local stores and local collective internet sales that well. But the difference between Scotland and the UK as a whole is quite stark.

This will be something to watch in next month’s figures.

Given that today is the 22nd April and we have been in lockdown for all of April, the next set of figures are likely to be even worse. Food will not have had the early March and panic-buying bounce but will continue to benefit from the out of home eating switch. But non-food will have been mostly shut down and the internet has not been a sufficient replacement. The figures are likely to be dire.

Behind these data are people’s businesses and livelihoods and whilst many retail and supply workers are being rightly praised for their efforts, many other retail workers have been laid off, sacked or furloughed. Their lives have gone backwards or are on hold. We need to think of them at this time.

ANGRY FACE BACK ON – the title at the heead of the Monitor this month is deeply misleading. This is not a High Street issue alone; it is a retail issue. Just look at the closed shopping centres, retail parks, stand alone out of town store and food places. There was no need to make this about the high street; it gets enough bad publicity already. And the data in the Monitor do not allow differentiation between high street and out of town. Yes our town centres are suffering, but other retail and leisure sites and places away from town centres and high streets are also in the same difficult position. We have a crisis of retail not of high streets alone.

Posted in Availability, BRC, Closure, Community, Consumer Change, Consumers, Convenience stores, Covid19, Food, Food Retailing, Grocery, High Streets, Independents, Internet shopping, Lockdown, Market Shares, Non-food retailing, Panic buying, Places, Rents, Resilience, Retail Change, Retail Economy, Retail Sales, Retailers, Retailing, Scotland's Town and High Streets, Scottish Retail Consortium, Scottish Retail Sales, Scottish Retailing, Shopping, Social Inequality, Supply Chains, Town Centres, Towns, Uncategorized | Tagged , , , , , , , , , , , , , , , , , | 1 Comment

Supermarket Nightmares: Keeping your Distance

Ken Towle Keep your distance

“Life is summed up on a floor sticker” Comment and image from tweet (11 April) by @kentowle, CEO of @NisaRetail

In, what seems like an eternity ago.  I got into a degree of trouble for suggesting that food retailers, for good or bad, were ‘social engineers’ and we needed to recognise and understand the implications of this.  This was on the back of some work done by Steve Burt and myself for Food Standards Scotland on the ways we could enable healthier purchasing in food retail stores.

The fundamental point was that food stores are not neutral environments and that consumers have their behaviours manipulated in store.  Many did not want to believe this had much effect on purchasing and behaviour, or that the retail space was that manipulative.

Well, the world has changed and we are all having to get used to new ways of food shopping, panic or binge buying, restricted choices and vaguely familiar brands. The  food shopping experience is now fundamentally different.

Visually, the obvious changes are the floor lines and queuing to help people get used to, and adhere to, social distancing.  One way flow systems, directional aisles and the like are also being seen.  Barrier systems to protect cashiers from consumers and the almost abolition of physical cash are further manifestations of how the world has changed almost overnight.  And in the future we may be forced to wear gloves and face masks in order to enter the store – or even have our temperatures taken.

All this begs a number of questions over what  can be done or will have to be done in this ‘brave new world’. How could food retailers redesign their stores to make them feel safer (but not off-putting) but also to encourage the spending breadth and depth of before?

For large store food retailers, this is an alien and possibly existential concept.  Large food stores for decades were built on the idea of maximising dwell and interaction times. They aimed to be engaging and experiential. The location of items, the end aisles and other promotions, the cafe and the checkout offer were all designed to engage, provide interest and to sell.

But now, the aim is to get people to shop safely.  This means being apart, doing it quickly and seamlessly and avoiding interactions and groups.  The more people interact, backtrack, talk or handle products the worse – this is the antithesis of the development of large scale food retailing over the last 60 years. If you browse and touch some products then you could be accused of being anti-social or worse. Welcome to the nightmare world of modern food retailing.

So, given a blank store, how would you lay it out?  How would consumers flow through it?  What would be the order of products and their handling and payment?  What should take place in store and what should take place away from the store?  The answers to this point to a changed solution – a fulfilment factory of basic standardised products being handled as infrequently as possible.  The online offer in a different guise; the Morrisons box writ large; an Argos catalogue for food; dark stores rather than palaces of consumption.  All of which ask why we need to go to such stores to shop at all; the store can do this work; collection or delivery becomes the only point of consumer engagement (oh, and paying).

Twenty eight years ago Paul Freathy and myself wrote about Henry Ford’s retail commissary idea and practice.  Being an automated, regular, production line type operations, this failed experiment of the 1920s-1940s has some things in common with where we might end up in food retailing.  Likewise Clarence Saunders’ 1940s ‘Keedoozle’ automated store, a long ago and mostly forgotten forerunner of Amazon Go, may have elements of design for our future large stores.  But then, maybe online will be the answer to many of the issues, if it is actually scaleable. After all,  consumers may not want to risk their health by going shopping. Many will be fearful of the experience and the risks; commodity shopping should not be this painful. Ending the lockdown does not mean we go back to normal.

The thought that large store food retailers are going to look and operate the same as they did a few months ago, is in my view a little fanciful.  Both consumers and retailers supply and demand have altered and patterns of behaviours are now different, both generally and in-store.  As things settle down so the ramifications of this will redesign how, where and when we shop for food.  And the assumption that large stores that we travel to in cars are as important in the future as they have been in the past, is no longer a given.

Acknowledgement

Thanks to a tweet from @LiamDelaneyEcon for mentioning a post by @Ideas42Designing for Effective Phyiscal Distancing in Essential Public Spaces  and thus prompting me to think a little more about what large food retail spaces might become.

Posted in Academics, Amazon Go, Behavioural Economics, Consumer Change, Consumer Choice, Consumers, Dark Stores, Design, Employment practices, Food Retailing, Food Standards Scotland, Health, Panic buying, Retail Change, Retailers, Social Inequality, Supermarket, Uncategorized, University of Stirling, Well being | Tagged , , , , , , , , , , , , | 1 Comment