A quiet few weeks in retailing (not)

The last few weeks have been really quiet in retailing – no, just kidding.  What with Brexit – and the uncertainty it has generated – beginning to take hold in the markets, the unfolding BHS and Sports Direct scandals putting retailers in a very bad light, the cost pressures piling up on retail businesses and if you live up here in Scotland, the seemingly endless winter, even my well-honed capacity for doom and gloom is being taxed.

So I thought it was time for a quick roundup of recent things that caught my eye:

Sainsbury and Netto divorcing: the plug has been pulled on the Sainsbury’s great discount experiment, with 16 stores being closed. In one sense it did not surprise me; trying to catch up with Lidl and Aldi was always going to be a tough ask.  The need for Sainsbury to focus on the Argos acquisition makes some sense, but one also has to have some concern here given the apparent Argos reliance on paying for products in dollars.

My Local going into administration: another disappointing end for a retail ‘start up’ though in this case it emerged slightly more fully formed from the wreckage of Morrisons convenience chain. Only in place since the end of October, My Local has not even made it to a year. Morrisons will still be on the hook for some of the costs one presumes; though the Co-operative Group seem to be picking up some sites.  Start-up convenience in a really pressurised market shows how difficult food retailing is currently and the need for focus and scale.

The human factor in both stories needs to be remembered, as these chains employ quite a lot of people directly and support others indirectly – as of course it has to be in BHS and its large scale impact (more on this is coming in our next Town and County Planning column due in August/Septmeber) on people and places.

The Asda Changes: Finally joining the club to make a full set of all of the “Big 4” changing their leaders in the last two years, Asda is about to change its top man (yes, they are all men) after some less than stellar performances in recent years. A restless Bentonville (and other parts of the empire are also having problems) has been linked with a massive price war leading to brokers’ sell recommendations across the sector, but most notably in Tesco and Morrisons.  No idea if the rumours of such a massive price war are true, but the sector really is in a tough place – unless you are a leading discounter, but could this be about to change?

If we move from food to clothing, then the big story is the Marks and Spencer clothing performance.  Well, let’s not look, but rather draw a veil.  Clearly it is not quite a twitching corpse but the latest figures are the worst yet (given the comparisons) and with seemingly no end in sight, the new team (another one) will have to get some quick wins or the last rites will be getting too close for comfort.  Marks and Spencer can’t continue like this and hope to remain intact. The whole let’s focus on “Mrs M&S” is just so misjudged, which is a shame as some of the other ideas about stabilising the business are simply good retail practice (and did contribute to the decline at this point) – but may be coming when people are just about beyond caring. Time will tell. The inability to add up the numbers for the results presentations is unfortunately symptomatic of a business in stumbling mode (group sales were initially claimed to be UP 1.3% but in fact were DOWN 0.4%)

And that brings us full circle.  We can read the Brexit result and the political fall-outs, break-ups, resignations and stand-offs in all sorts of ways.  But it does feel rather  ‘fin de siècle’ with the old order under threat of being swept away.  Chilcot adds to this feeling of things have gone too far and there is momentum to a major re-alignment or new approach.  Much the same can be said about the UK food retailing scene.

Maybe that’s enough ‘we’re doomed’ and it may be overdone as I write this in the aftermath of Wales going out of the Euros, so the next blog will pick up on a couple of store openings that also caught my eye. Promise.

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues. I am Chair of Scotland's Towns Partnership. I am also a Deputy Principal of the University, with responsibility for Education and Students and a Fellow of the Royal Society of Edinburgh
This entry was posted in administration, Asda, Brexit, Discounters, Food Retailing, Lidl, Marks and Spencer, My Local, Netto, Sainsbury, Sports Direct and tagged , , , , , , , , . Bookmark the permalink.

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