Landlords vs Retailers or Zombies vs Aliens?

There are not many reasons for feeling sorry for Philip Green (see my earlier blogs here  here and here and those were before the latest American and other revelations), but the fact that he is in such a weakened state that even the property owners and landlords are almost getting the better of him comes close to one (well, not really).  Arcadia teetered on the brink yesterday as some landlords refuse to meet his demands, but in the end he lived to fight on, even if he did have to put his hand in his own pocket.

In an interview this morning on the Radio 4 Today programme, Philip Green was his customary charming self and seemingly in denial still. But he did rightly say that retailing had changed fundamentally now. That does then beg the question as to whether these CVAs for Arcadia will be enough to save the business, as dramatic as they are? Is closing 50 stores the only shot in the locker? If so, as I have argued before, I don’t see a positive future. What is the compelling offer for the customer?

CVAs have become all the range; landlords and property owners have been all but ordered to wind their ‘greed’ in and to take a ‘haircut’ (difficult if you are bald already) and there is a view that the price of the retail crisis/over expansion is being paid by those left holding the shop portfolio.  The real cost of course is paid by those who lose their jobs or their pensions, but that seems often lost in the debate of who suffers more, the landlords or the retailers?  There is also a cascading impact on other trading retailers who want at least the same terms and so a downward spiral to e new equilibrium continues.

It does seem that this has seeped into public debate as well.  The so-called ‘crisis of the high street’ has seen public media commentary levels (well, volume) rise and issues of closed stores, CVAs, property greed all come to the fore.

Heading off for the train the other morning and walking through Stirling town centre I spotted that the Edinburgh Woollen Mill store had ‘Closing Down Sale’ posters in its windows.  Closer inspection saw ‘subject to landlord negotiations’ across the signs.  The photograph below shows this.

EWM

Now, I was not sure what to make of this and being inherently cynical, I immediately assumed it was a play to allow the ‘closing down’ claim which will make customers feel there must be real bargains around.  My cynicism might be misplaced; but then maybe not.  After all why tell customers you are in negotiations if you are not (or if you are?)?

Various twitter exchanges stepped up and pointed to other examples across the country.  Some of these (and not all are Edinburgh Woollen Mill) have been in this ‘closing down’ mode since before Christmas apparently.  Such signs are not uncommon.

If this is real then it simply expresses the difficult relationships in the sector currently.  But why bother telling customers?  If it is not real then it simply depresses me further – is this really the best our retail management and owners can do?  Are customers taken in by such things?  The “death of the high street” has many parents, but we sometimes overlook bad retail management and operations as a factor.

Posted in Advertising, Arcadia, Closure, CVA, Inter-depenendencies, Landlords, management, Philip Green, Property, Rates, Rents, Retail Change, Store Closures, Town Centres, Towns, Uncategorized | Tagged , , , , , , , , , , , | Leave a comment

The Future of Shopping Centres in Scotland’s Towns

There is no doubt that retailing is undergoing a major transformation.  In popular press terms this is the ‘death of the high street’, a phrase which is wrong on so many levels; it is not the death and it is not the high street being just two of them.  Things are far more complex and nuanced than this.

When we look at retailing in our towns we can be forgiven if nostalgic images of streets and streetscapes come to mind.     But the reality is somewhat different, with various distinct forms and structures.  Likewise the phrase ‘shopping centre’ conjures up a range of responses in people, often involving out-of-town sites and planned build on greenfield locations.

A closer examination of both these elements – town centres and shopping centres – comes to the rather obvious point.  In many towns the ‘high street’ is, or is dominated by, a managed planned shopping centre.  Across Scotland from Buchanan Galleries in Glasgow, the Thistles in Stirling, the Paisley Centre, Oak Mall in Greenock or the Postings in Kirkcaldy, a lot of our towns contain such centres.  And many of them are struggling – in the same way as retail overall is changing, so too such spaces have to adapt.  Whilst things are not so bad as the hyped £1 sale price of the Postings in Kirkcaldy might suggest (it went for more), there is an issue around such large space users and significant space occupiers.

Revo Cover

Such considerations are why at the end of March, Revo (the new name for British Council of Shopping Centres), Scotland’s Towns Partnership and DWF LLP convened a session on the Future of Shopping Centres in Scotland’s Towns with invited speakers, commentators, practitioners and placemakers.  Someone was kind enough to ask me to chair and we have recently produced a summary of our discussions and presented this to Scottish Government and now more widely.

There is little point in rehearsing all that went on and the detail of the discussion.  We kicked off with three short presentations/think pieces on Paisley and Stockton-on-Tees and commercialisation research from DWP LLP.  Most of the time was then spent on discussion and development of possible lines for policy and ways forward.  You can download the short summary report The Future of Shopping Centres in Scotlands Towns.

An attempt was made to make the discussion forward looking and proactive, but almost inevitably the first part was spent on going back over the issues and challenges, mainly constructed around retail challenges and the risk for public/private (both or either) investing in towns.

Discussion did move on to solutions and opportunities and focused on data informed strategies, the new landscape of city regions and learning from strong asset focused investment examples (Altringham, Preston and Stockton mentioned).

Finally we turned to the topic of breaking down barriers to policy solutions.  Time was against everyone at this point but the focus was on the role of retail concentration and ownership of town centres, how to improve trust and collaboration and the need to think of towns (and shopping centres within them) as locally focused asset conglomerations.  Too often partial solutions based on specific problems have been sought, whereas the need is for an overall linked vision and strategy.

Shopping centres in towns are changing and their presence and use will need to reflect local situations and circumstances as well as local strategies.  It is unlikely they can all survive in their present guise and indeed that would not necessarily be a desirable outcome.  But we need to manage this adjustment process and use the assets for the town as a whole.  This will inevitably mean the rethinking of many uses and relationships, and the development of more multi-functional and interesting spaces.  Our discussion only scraped the surface of the issues, but was a start.

Posted in Architecture, Government, High Streets, Kirkcaldy, Local Authorities, Malls, Paisley, Places, Policy, Public Realm, Regeneration, Retail Change, Retail Policy, Retailers, Retailing, Scotland's Town and High Streets, Scotland's Towns Partnership, Scottish Government, Scottish Retailing, Shopping Centres, Spaces, Streetscapes, Sustainable Development, Town Centre Action Plan, Town Centres, Towns, Uncategorized, University of Stirling | Tagged , , , , , , , , , , , | 1 Comment

Return to Sender? Deposit Return Schemes

CPG DRS

I am in the fortunate position of being able to get involved in two Scottish Parliament Cross Party Groups; one on Towns and Town Centres linked to Scotland’s Towns Partnership, and one on Independent Convenience Stores linked to the Scottish Grocers’ Federation.  They provide a forum to discuss issues in these areas and to engage with MSPs and others on matters of concern.  Such access and openness is a benefit of the Parliament and being located near enough to get involved.

In most cases my involvement has been on topics I know something about and I have presented on occasions on policy and our work.  But the latest meeting in the CPG on Independent Convenience Stores was a little different.  It focused on the hot topic of Deposit Return Schemes in Scotland and the potential impact on small convenience stores.  It was different in that it was a topic on which I was aware there was an issue but really knew little.  So I sat at the back, listened and used Twitter to take some notes (see @sparks_stirling for the 21st May).

The Cabinet Secretary, Roseanna Cunningham opened the session by drawing attention to the Government’s recently published policy (see the consultation process and responses here, the debate in parliament here, and the Full 150 page Stage 1 business case here) but also the Government’s openness for further input on operational and implementation matters.  She was followed by a variety of scheme/system promotors and Scottish retailers who had been involved in trials over the last few months promoted by the Scottish Grocers’ Federation.  It is I think a mark of the enhanced role and capability of SGF that such things are now the norm in the sector.  A slightly heated Q&A session followed and we were so engrossed we ran out of time.  The fact it was a packed room (mainly of convenience store retailers) was an indicator of the significance of this issue.

So what did I take away from the event?

  1. The various trials showed the practicalities of the scheme and the in-store operational ‘pit falls’. None of this was problematic and the systems can be made to work.  This should not be a surprise to anyone, especially if you are Scandinavian.
  2. Consumers reacted well to the trials and their response was highly positive. But, and it is a big but, the trials were false in that the consumers got money back but did not have to pay the deposit in the first place.  Something for nothing tends to be better received than nothing for something.
  3. The inclusion of glass in the proposed scheme (it was not in the trials) is controversial and retailers believe it will alter the practicalities significantly. There are operational issues of space, security, safety and mess/cleaning and there is a fear that these will overwhelm smaller stores if glass is included.
  4. The second big issue was the question of the handling fee to retailers and its relationship to the cost of machines. Smaller retailers fear that if the handling fee is too low they will have to subsidise the scheme, whereas larger multiple retailers will be able to profit.  As a level playing field is a key aim then setting the fee will be a major consideration.
  5. Some debate kicked off on the return and use of the deposit to consumers as vouchers. Should this be restricted to the store in which the recycling takes place and on only some products or as a cash voucher for use anywhere?  As it is a refund, a cash voucher is the more logical, but children collecting bottles to trade for sugary sweets does seem a little at odds with other Scottish Government goals on healthy diets/eating.
  6. The final point of note for me was the Scottish vs English (UK) matter. Roseanna Cunningham made a point of Scotland being ahead of the game and not wanting to wait for others to catch up.  There was not much concern from retailers in the room about the UK issue (retailers present were local or Scottish) but producers did voice a concern.  Other multiple retailers might have a different view.  The feeling seemed to me to be fine Scotland’s doing it, let’s make it work as best we can.

I am not sure that I captured all the sentiments and points of agreement and disagreement, either above or on Twitter. As was said at the outset, the policy direction is now set, and many are in favour.  But the devil is in the detail, especially for independent convenience stores, and so the implementation and consultation phase still has a number of possibilities and could end up problematic.  It will be interesting to see how this works through and settles down.

 

Posted in Community Grocer, Consumer Lifestyle, Convenience stores, Deposit Return Scheme, Food Retailing, Government, Keep Scotland Beautiful, Legislation, Local Retailers, Public Realm, Regulation, Retailers, Retailing, Returns, Reverse Vending, Scottish Government, Scottish Grocers Federation, Small Shops, Uncategorized, Vending Machines | Tagged , , , , , , , | Leave a comment

Efficiency or Idiocy?

For some time it has been apparent that Dave Lewis has been determined to address the ‘bloat’ in Tesco and cut back on all sorts of things.  In the big picture out have gone most of the diversifications of the previous regime, replaced by a focus on the core business.  The store portfolio has been hacked at the edges, though there remain concerns over the estate.  Within the stores, the excessive range has been chopped back, with more to come.  The result, and it seems to be working, is a sharper, leaner business providing more offer/value to the consumer.

Tesco counter closures

It was announced a little while ago that in some stores the next target was to be the counter service offers.  So the recent announcement in our local Stirling store (see photo) was not a total surprise.  The closures and limited hours means a chunk of real estate in the store is not going to be used, but more importantly some consumers are going to be dissuaded from visiting.  So, at what point does copying the competition and efficiency gains at all costs become a spiral of consumer dissatisfaction and behaviour change?  Where is the tipping point for some consumers?

Stirling is not a hot-bed of quality butchers nor does it have a fishmonger, so the alternatives are a little limited (though Bridge of Allan and Dunblane are well served), but perhaps others, hopefully an independent, will fill the gaps.  It is noticeable that at the Stirling Farmer’s Market the fishmonger does very well.

A photo update from 25th May – really, what are they trying to achieve here?

Tesco counters 1Tesco counters 2Tesco counters 3

 

 

Boots bags

Efficiency was also the theme of the second story that caught my eye this week.  At a time of national discussions of climate emergency and a fervour among many citizens and consumers about environmental matters large and small, Boots rolled out plastic bags for some prescriptions.  This, at this of all times, is genuinely jaw dropping.

The explanation, such as it was, for such a change was that of handling and distribution efficiency. Plastic is better handled in central sites and lasts longer (yeah!).  This may be true, but is utterly irrelevant when your consumer base is going in completely the opposite direction.  How many people across the business were asleep at the wheel?  This smacks of a business out of touch, with itself and the country.

 

And finally, talking of out of touch, it was proposed this week that a penny tax on all self-checkout transactions should be levied to ‘heal the generational divide caused by Brexit’.  Where to begin?  This is barking mad at so many levels.  It fails tests of practicality, reasonableness, awareness, effectiveness amongst so many more.  What are these people thinking and why are people so out of touch so close to “power”

 

CHUK

Posted in Boots, Competition, Consumer Change, Consumers, Costs, Customer Service, distribution, Food Retailing, Local Retailers, Pharmacy, Plastic Bags, Retailers, Self-checkout, Stirling, Tax, Tesco, Uncategorized | Tagged , , , , , , , , , , , , , | 7 Comments

Feargal Quinn 1936-2019

On the 25th April, it was announced that Feargal Quinn the legendary Irish retail businessman, founder of Superquinn, had passed away.   The President of Ireland said

Higgins

There have been many tributes and obituaries to him in the days that have followed, including in the Irish Times, the Irish Examiner, The Times, Irish Independent, and RTE. Tesco Ireland took out a full page advertisement in the Irish Times Business:

Irish biz

There is little point in repeating here what others have said so eloquently.  He transformed Irish grocery retailing and was ahead of his time in many retail respects. It was a privilege to have met him and his family and our sympathies are extended to them at this time.

Feargal was an honorary graduate of the University of Stirling and in November 2012, Steve Burt, Professor of Retail Marketing and then Senior Deputy Principal of the University presented the laureation at our winter graduation ceremony. I re-produce it below.

“Chancellor, Principal, Members of the University, Graduands, Ladies and Gentlemen, Senator Feargal Quinn will receive the award of Doctor of the University in recognition of his outstanding contribution to entrepreneurship, business and management.

Senator Feargal Quinn is an Irish businessman and an independent member of the Seanad Eireann, the Senate component of the Irish National Parliament. Born in Dublin in 1936, he was educated in Newbridge College, County Kildare, and graduated from University College Dublin with a degree in Commerce. He is married to Denise Quinn, and they have five children and 14 grandchildren.  There is already a strong family connection with the University of Stirling because his son, Eamonn Quinn, is a successful Stirling MBA graduate.

As a child, Feargal received an excellent education in business and hospitality management from his entrepreneurial father, who set up the Red Island Holiday Camp at Skerries, County Dublin. Feargal spent his school breaks at this holiday camp, working as a waiter, a bingo caller and all manner of other miscellaneous jobs. With hindsight, he was experiencing an invaluably broad range of work-based learning opportunities which would later inform his successful adult business enterprises.

The most well-known of these is his establishment of the Superquinn supermarket chain, which began over 50 years ago when he opened his first store, aged 23. He went on to become the executive chairman of a chain of over 20 supermarkets with around 6000 employees. He is currently non-executive president after his family sold out their interest in August 2005.

Superquinn built a reputation for innovation. In 1973, for instance, it pioneered the idea of in-store bakeries, now a common place feature, but a novel concept 40 years ago. In fact, Superquinn piloted numerous world-leading retail technologies, including self-scan shopping, multifunction kiosks, digital shelf labels, and mobile checkout technology.  Of  equal value were the less hi-tech developments; the introduction of the Superquinn playhouse scheme, for instance, equipped stores with professionally staffed playhouses, allowing parents to leave their young children in a safe, enjoyable environment during shopping trips.

Feargal gained recognition for his effort to make shopping a pleasant customer experience. Long before it became common practice in retail management, he would get up early, six days a week, to meet and greet customers on the shop floor, listen to their comments and act on any points that were raised.

Once Superquinn had been established, he was head-hunted to run what became An Post, one of Ireland’s largest companies, for ten years.

Feargal’s experience and knowledge of retail and business have earned him tremendous respect among aspiring entrepreneurs, and positioned him as one of Ireland’s most popular business trouble-shooters. His bestselling book Crowning the Customer, is used by multi-national companies as the essential guide to customer care. Additionally, his popular television series “Feargal Quinn’s Retail Therapy” has allowed him to use his huge talents to help smaller, fledgling businesses find success in recessionary times.

Feargal has often repeated his famous retail mantra: “I listened, I learned, I discovered”. This humble and compassionate approach to the customer experience is, for him, the simple secret to his success.

Feargal’s personal success has kindled his genuine interest in young people’s education and employment opportunities. In the mid-nineties, he played a pivotal role in one of the most important reforms in the Irish education system, when he chaired the steering committee overseeing the development of the Leaving Certificate Applied. This self-contained two-year learning programme prepares students for adult and working life.

He is a former President of EuroCommerce, the Brussels-based organisation representing retail, wholesale and international trade across Europe. He also held the position of Chairman in Ireland’s National St Patrick’s Day Festival. Currently, he serves on the board of directors of CIES – the Food Business Forum based in Paris as well as the American-based Food Marketing Institute.

Feargal’s political career is no less illustrious than his business one. In 1993, he was elected as a Senator from the National University of Ireland constituency, becoming an independent member of the Seanad Eireann – in the Irish Parliament – and has been re-elected successfully in all succeeding elections. He has served as a member of the Joint Oireachtas Committee on European Affairs, the Joint Committee on Finance and Public Service and a member of the National Economic and Social Forum. Currently, he is a member of the Joint Committee on Jobs, Enterprise and Innovation.

He has received three honorary doctorates, was the winner of a “People of the Year” Award in 1984, and is the recipient of the French Ordre National du Mérite and a Papal Knighthood.

Senator Feargal Quinn has played a fundamental and pioneering role in retail, international trade and entrepreneurship for over half a century. This, coupled with his substantial contribution to culture and politics within Ireland, makes him a worthy recipient of the degree of Doctor of the University. ·

Chancellor, in the name and by the authority of the Academic Council, I present to you for the Honorary Degree of Doctor of the University, Feargal Quinn.”

 

 

Posted in Alumni, Consumer Lifestyle, Customer engagement, Customer Service, Food Retailing, Ireland, Retail leadership, Retailers, Retailing, Supermarket, Superquinn, Uncategorized, University of Stirling | Tagged , , , , , , , | Leave a comment

Asda/Sainsbury’s vs the CMA: The verdict

If this was a boxing match, then the result was a clear knockout, perhaps to the surprise of some onlookers.  As one of my followers on Twitter noted, it is nice to see a regulator regulating.  In this case, it was a straight NO – there is no case for the merger and it would cause multiple substantial lessenings of competition – in supermarkets, convenience stores, petrol and on-line.

To quote the regualtor the merger was blocked as it would lead to  “expected price rises, reductions in the quality and range of products available, or a poorer overall shopping experience”. The customer would be worse off.  This is a devastating multi-punch combination snatching (nay, bludgeoning) the prize money from Mike Coupe’s grasp. The full report is available from the CMA here.

I was not sure what I expected really, but it was nothing as brutal as this.  I thought the CMA, especially after the knock-down of the provisional findings earlier in the year, would probably ask for a very high number of store sell-offs; so high as to be impossible for Asda and Sainsbury to contemplate complying with.  That way the ‘failure’ would be on the companies.  But no, they went all-in; we just say no.

Asda and Sainsbury must have thought at the outset that they had a chance.  A year ago I wrote on this (“we’re in the money”) and was far from sure the merger would be allowed; but as I noted then, I could not believe Tesco/Booker was allowed.  Given the market changes at the convenience store level, the c12% share of Aldi and Lidl and the shift to online sales (say 6% of groceries), then I suspect Asda and Sainsbury felt they had some hope.  But they did not, and the CMA have really shied away from an effective duopoly, despite these wider market developments.  The surprise for me in this is the strength of the CMA arguments on online retailing – they saw the state of the market as a negative for the merger, and not as a market undergoing change (at some pace) and thus likely to develop in interesting ways.

The Asda/Sainsbury merger was born out of problems for both retailers and none of those have gone away.  The market continues to alter.  Tesco has rebounded more quickly than expected and remains secure defending a 27% market share.  Morrisons and the Coops are having fun whilst Waitrose and M&S try to figure their problems out.  The discounters march on.

In April 2017 the columnist John Richards mused about the cost of all the adventures Sainsbury have had over the years (see my post and links) and whether the cost outweighed the benefits and whether the management time and effort could have been more profitability spent focusing on the core of the company.  He described their approach as Sainsbury’s “death wish” and cited SavaCentre, Homebase, Shaw’s, Netto and now Argos as illustrations. That may be a tad strong, but you perhaps get where he is coming from. He also missed out Egypt and some other lesser roads entered. And then they went and added Asda to the list of “distractions”.

But back in the Uk, what are Sainsbury stores like and how are consumers reacting? Sainsbury has trod water for far too long and is likely to need fresh blood at the top and a real and sustained focus on operations.  This has been missing for quite some time. Asda are stuck where they were with an unclear growth strategy.  The parent Walmart has failed to change the UK market as it hoped when it lobbied the Labour Government ahead of its takeover almost 20 years ago (see the linked papers here).  If they want out, then who is the buyer?  Reading the CMA report, It would have to be a new player, but to what end and what could they do with the business?  An interesting conundrum but how desperate to sell at any price are they?

Basically, a year wasted for both Asda and Sainsbury and at some cost. The problems for both remain the same. Not so much “we’re in the money” as “we’re in the s**t”.

Posted in Asda, CMA, Competition, Competition and Markets Authority, Consumer Choice, Consumers, Convenience stores, Cooperatives, Food Retailing, Internet shopping, Lidl, Market Shares, Regulation, Retail Change, Retail Policy, Retailing, Sainsbury, Supermarket, Uncategorized, Waitrose | Tagged , , , , , , , , , , , , , , , | 6 Comments

Debenhams and Tesco

It is necessary to start this blog post by reflecting that underneath the news stories and headlines are real personal stories in which individuals are losing their jobs.  Too often it is easy to focus on the store closure and ignore the human cost.  We need to remember this, as it underpins both the retail stories discussed below.

It is hard to know what to say about the saga of Debenhams and the antipathy there seems to be between the various parties.  At one level, given previous stories, it is hard to like Mike Ashley, but at least he is trying to put some money where his mouth is.  Whether this is because he sees a retail or a property play is another matter.  But in the case of Debenhams this is now moot, as he has been finally rebuffed. Though as I write seems determined to try to sue someone involved.

So, for now, Debenhams is in the hands of the lenders.  Looking at the business it is hard to be positive.  Buffeted by the changing consumer interests and behaviours, in large spaces hit by the excessive town centre rates charges, the business is in real difficulty.  But considering the stores (and experiencing them) it is difficult to see their point of differentiation and the reasons for consumers to visit.  Stories of in-store confusion and poor service abound.  They have been losing their way for a while.

The current proposition seems to be to try to close some stores and rationalise the portfolio.  There may be some benefit to be had on rents as well.  But none of this really addresses the fundamental problem of the attractiveness to consumers.  A smaller chain still faces the same problem. What are the plans to sort out the offer to customers? And can they be made affordable?

This week Tesco produced their latest figures and seem to be on track to come back fully from their problems.  Dave Lewis has altered what the business does and refocused operations.  Some of this has involved closing stores (and cutting plans for openings), reducing staff, planning to cut some counter services and simplifying operations.  There is more to it than this of course, but the point to make is that slash and burn and simply cutting stores is not the answer on its own.  Tesco still have a long way to go, and some of their initiatives will not work in all probability, but there is far more of a sense of trying to satisfy customers than is yet in evidence from Debenhams. It is a simple reminder that the business must run for the benefit of customers or they will go elsewhere.

Posted in administration, Consumer Choice, Consumers, CVA, Debenhams, Department Stores, Employees, Rates, Rents, Retail Change, Retail Failure, Sports Direct, Store Closures, Uncategorized | Tagged , , , , , , , , | 6 Comments