Tag: high street

Marks & Sparks profit drops

Marc Bolland, M&SUK high street player Marks and Spencer said its profits fell by 3.9 percent to £623 million, but its CEO claims there’s light at the end of the retail tunnel.

The market in clothes is challenging, said CEO Mark Bolland, but he claimed that M&S had invested heavily over the last three years and group sales rose by nearly three percent to £10.3 billion for its last financial year, to the end of March.

Bolland said in a prepared statement: “We are focused on improving our performance in general merchandise and were pleased to see early signs of improvement. Our food business had a very strong year, consistently outperforming the market.” Clothing sales showed growth in the last quarter of its financial year.

He said M&S is making “solid progress” on its journey. In terms of gross margins, general merchandise fell to 50.7 percent, food gross marging was 32.5 percent while its total UK gross margin was 40.6 percent.  UK operating costs rose by 3.5 percent compared to its previous financial year.

Dixons, Carphone rejig the high street

highstreetAn anticipated deal between Dixons Retail and Carphone Warehouse became reality today and is set to change the face of many high streets.

The deal, worth an estimated £3.5 billion, will mean the creation of a 50/50 owned entity which will be renamed Dixons Carphone.

Dixons has over 500 PC World and Currys stories in the British Isles, while Carphone Warehouse own over 2,000 stories across Europe.

Dixons said there would be some minor job cuts after the merger but Carphone Warehouse said there will be more jobs available.

Paul Heywood, director of Dyn in Europe thinks that customers are going to demand a good experience as a result of the merger. But he warned that the shops will have to work together fast to exploit the market, reduce costs and provide good customer support.

Smartphone shoppers smarter than average shopper

Amazon logoResearch from IDC suggests that your average smartphone shopper is smarter than your average bear.

And smartphones are turning out to be a bit of a nightmare for your average high street shop.

IDC analysed app and mobile of over 10,000 smartphone users during the holiday season.

One in three of the people IDC surveyed said they bought more online than from bricks and mortar outfits in the season, compared to the same period the year before.

Amazon did particularly well out of the trend.

Of those that were surveyed, 69 percent believed that smartphones were critical tools when you’re out shopping.  And 70 percent said they’d use their smartphones more in the future.

Five out of 10 people check reviews from their smartphones and shoppers tend to trust social networks for views.

IDC’s results were born out by Dan Wagner, founder and CEO of Powa Technologies. He said: “The traditional stores really need to up their game to compete in the new shopping paradigm that we are entering. Customer engagement is the key to survival in 2014, at present customers who walk through the doors of high street shops are unknown to them.

“This needs to change fast, customer engagement holds the critical path to growth in fierce market conditions. It is vital for retailers to know the buying behaviour of the person who has walked through the door: are they a loyal customer? What are they interested in? Online retailers have all this information and utilise it to engage their customers very effectively as the sales figures have born out.”

High Street must lean on tech to survive

highstreet South endMonthly figures released by KPMG and the British Retail Consortium show that growth on the high street showed a 2.6 percent increase in October – up from 2.4 percent in September.

According to Dan Wagner, CEO of Powa Technologies, the outlook is bleak.

He said more shops are closing than opening and the figures might look better than 2012 but last year was a disaster, with 48,000 people laid off, 4,000 shops closed and 54 retailers going bust.

Wagner reckons that traditional shops on the high street need to get to grips with new technology.

“This is a crucial time of year for the retail industry. More than ever before it needs a technology driven resolution to create new ways to engage with customers,” Wagner said.

He thinks mobile point of sale is one way for shoips to engage with the technology, with people able to pick up goods without being crushed to death by the festive throng.

eBay, Argos partner for collection

argos-logoFor some time now, eBay has been pushing discussion about the future of etail, the high street, and how brick and mortar will intersect with online shopping – now, in a bold move, the company has joined up with Argos in a bid to offer the best of both worlds.

Online shoppers will be able to buy selected goods from eBay and pick them up in-store at Argos outlets across the UK. 50 eBay merchants are taking part, but are anonymous at time of publication.

Argos already has its own click and collect service but expanding it to include popular eBay stores will certainly not harm the company, provided the scheme is implemented properly. Amazon, which eBay increasingly sees as its top competition rather than its original selling point as a bidding website, has collection points in the UK too.

Earlier this year, Argos reported its first sales boost in years. It attributed much of this to the check and reserve feature. This is not to be sniffed at considering the otherwise lacklustre state of the UK’s tattoo-parlour, betting and pawn-shop packed high streets.

eBay has trialled a service called eBay Now across the pond in New York and San Francisco, partnering with popular retail outlets such as Home Depot and Urban Outfitters to arrange for goods to be delivered within the hour for a fee. This may be rolled out to Britain next year.

Commenting on the announcement, Warick Business School’s retail expert, Dr Scott Dacko, said whether or not this service becomes “the” model, integration between online and offline sales is “the future for retail”.

“It is likely to be a win-win-win arrangement, with both partners and UK consumers benefiting all round,” Dacko said. “I am sure the arrangement will prompt a host of competitors to move more quickly into not only seamlessly integrating their online and brick-and-mortar operations but also looking into similar partnerships as well”.

During Christmas last year, eBay experimented with a bricks and mortar showroom where customers could try out products and interact with them through an app.

High street recovery continues in August

highstreet South endIt seems all that talk of high street gloom was just that – talk. According to the latest monthly figures from BDO, retail sales were up 3.5 percent sequentially in August. It was the best result since February and although the business climate is far from perfect, things appear to be getting better.

Don Williams, head of retail and wholesale at BDO said the feel-good factor last year came from the Olympics, which means it was artificial, but this year it has more to do with the tone in the media and people being less fearful of getting sacked.

“There is no doubt confidence is returning slowly,” he said.

Homeware sales were up 20.2 percent, the best result since 2007, but fashion wasn’t that hot with an 0.3 percent drop.

“The overall outlook for the UK high street was also positive,” Williams added.”This has been a strong month overall.”

Williams also noted that retailers are getting better at managing their cost base and they are investing more in online.

High street must evolve or die

highstreetA retail company is calling out for a change in the way the high street manages and expects upticks in sales.

Powa Technologies CEO Dan Wagner suggested it is ridiculous to rely on the weather for an upturn in sales when the country is in search of wider improvements in economic performance. “There should be a greater emphasis on innovation that engages more directly with consumers to deliver more activity at the tills,” Wagner said.

Online shopping has transformed the way people buy and the high street has struggled to keep up. Of course, high street stores were bound to have a hard time if they clung to old models, which has lead to the death or transformation of what were once givens in any town centre.

Convenience has trumped the bricks and mortar approach for many people. Especially when it comes to delivering content, microtransactions online get that content to whichever device you prefer so much faster than a bricks and mortar shop, it’s unsurprising that many film and music outlets have faltered.

But this won’t necessarily mean the death of the high street.

“New shopping models involve convenient delivery and collection methods, more enjoyable methods of browsing, and quick means of payment,” Wagner said. “We shouldn’t be anticipating the loss of the high street, we should be anticipating its evolution”.

Just where that evolution will go depends on companies being prepared to take risks. One possible model is a hybrid approach, where consumers can buy online and collect in store or vice versa in interactive showrooms.

Heatwave reheats British retail in July

highstreet South endJuly appears to have been a great month for British retailers and they have mother nature, a tennis player and a baby to thank for it.

According to the British Retail Consortium and KPMG, sales were up 3.9 percent, against a 2.0 percent increase in July 2012, the fastest July growth since 2006. In real terms, total growth was 4.4 percent, the fastest since April 2011.

Since much of the growth was fuelled by hot weather, fashion outlets and the food sector did particularly well. However, online sales grew by just 7.9 percent, much lower than the 15.6 percent in July 2012. Home accessories, furniture and home textiles were the worst performing sectors, as most people chose to buy flip-flops and barbecue sauce instead of new carpets and Allen key loving flat-pack furniture.

“Food has performed very strongly, with summer barbecue ingredients and feel-good foods doing well during a month where the Lions, Murray, Chris Froome in the Tour de France and the start of the Ashes series all contributed to the positive summer feeling;” said Helen Dickinson, director general of the BRC. “Clothing has also had a very good month, which was down to good weather spurring summer fashion buys and some very good discounting.”

David McCorquodale, Head of Retail, KPMG, said July was a “golden month” for retail sales and a return to form for British retailers.

“Hopefully this uptick in sales is another indication that the UK economy has turned the corner towards growth. Murray mania, summer sun and the arrival of the royal baby gave consumers that much needed feel good factor, encouraging them to leave caution behind and help retailers put in a champion performance,” he said. ‪”With autumn ranges now hitting the shelves, retailers need some cooler weather to encourage consumers to treat themselves to some new winter woollies. If they get these new ranges right and suitable weather, it could be game, set and match.”‬‬‬

Heatwave and summer sales push retail up

highstreet South endJuly retail sales in Britain rose at their fastest pace since January, thanks to summer shopping and the unseasonal heatwave.

According to the Confederation of British Industry (CBI), retail sales hit their six-month high in July. Retailers recorded strong demand for clothing, footwear and just anything related to tropical temperatures.

Shop rents in Cardiff tumble 70 percent

cardiffThe high street is hurting and property owners in Wales seem to be getting the worst of it. According to property experts and the council, the number of empty shops in Cardiff increased from 9.7 percent in October 2008 to 15.8 percent last October.

As a result, shop rents have dropped by up to 70 percent in parts of Cardiff’s historic city centre, reports Wales Online. The depressing figures were presented to Cardiff council planners by property firm Calan Retail, which is struggling to find tenants for its own property.

Calan has now applied for permission to change the use for the ground floor and upper floors in its Habitat building to restaurants and cafes, as they should do better than retail shops. Calan executive Andy Sturrock told the council that the retail market went through a seismic change over the past six years.

Rents on Queen Street have fallen by a third since 2008, but the worst example comes from a unit at Cardiff’s Capitol Center. The unit used to be rented by fashion chain Oasis for £224,000 per annum, but last year it was acquired by a sandwich shop for £70,000.

European retail property market stays busy

warehouse-openAlthough Europe is going through the worst economic crisis in decades, the retail property market is still showing signs of life – and it’s getting better. It is estimated that €16.3 billion of retail property was traded in the first six months of the year, up 31 percent compared to the first half of 2012.

Demand is strong and it’s coming from various sectors, with increased spending on cross-border deals. There is a lot more interest from institutional investors, including Asian funds. The focus appears to be on the more traditional shopping centre market rather than out of town locations.

Britain remains Europe’s biggest retail investment market, with an impressive market share of 32 percent. Volumes are up 94 percent over the first six months of 2012, reports Property Magazine. Other big markets are also doing well, especially in Northern Europe. Germany, Sweden, Norway, Denmark and France have all experienced a rally. Oddly enough, there is more interest in troubled markets like Greece, Portugal, Italy, Spain and Ireland. The temptation of low prices and volatility seems to be attracting risk loving investors with nerves of steel.

Michael Rodda, head of EMEA Retail Investment at Cushman & Wakefield, said some investors are starting to look further afield, while others are contemplating taking on more risk, usually via development.

“The Nordics were strong again in H1 and we expect this to continue into the second half of the year but we are beginning to see increased activity outside such core markets,” he said. There have been some notable transactions in Central and Eastern Europe for example, such as Atrium’s acquisition of Galeria Dominikanska in Poland, and there is also now real momentum building up in Iberia, where we expect to see a surge in activity as rental re-pricing looks to have bottomed out and improving availability of finance appears to be on the horizon.”

David Hutchings, Head of EMEA Research at Cushman & Wakefield, said retail property remains in demand across Europe and buyers seem undeterred by the stresses and strains of the market, and the increasing competition from online retailers.

Hutchings believes supply levels are likely to improve toward the end of the year, and investment in the retail sector is expected to increase 8 percent on 2012.

Online retail growth slows

visa-epayAlthough online retail sales are still growing, new research from Mintel has revealed that growth is slowing quite rapidly. The online retail sector expanded by about 50 percent in 2008, but last year growth slowed down to just 15 percent. However, this is still much better than the rest of the retail sector and it means the UK online retail sector will double by 2018, with double-digit growth rates.

On the other hand, the slowdown means new players will have a much harder time gaining market share. Established operations only need to maintain their lead, which was gained with little or no competition. The next big frontier is mobile retail.

Mintel retail analyst John Mercer believes online only retailers have possibly picked all the “low hanging fruit,” so new outfits will have to get more creative. However, he notes that the market is still very dynamic.

“In a low growth market [for retailers generally], double digit growth [in online sales] is nothing to be sniffed at,” he said.

Although online-only outlets seem to have grabbed an early lead, they are about to face a lot more challenges. They currently account for less than half of all online sales, but Mintel believes they won’t see much more growth, as high street retailers enter the online space, reports the Financial Times.

New services like click and collect, coupled with new POS and payment technologies might help the high street gain a competitive edge over online-only retailers. After all, many people still like to touch and feel products before they pull the trigger and this is something the convenient online channel simply can’t deliver.

Good weather boosts June footfall, high street gets the best of it

highstreet South endRetail footfall in June was up 0.1 percent year-on-year, reversing the negative trend in May, which saw a 0.7 drop. Good weather seems to be the main factor, as high street footfall was up 1.4 percent while out of town footfall was up 0.6 percent.

However, according to the British Retail Consortium, footfall in shopping centres dropped three percent following a previous drop of 1.7 percent in May. Looking at the first half of the year, the trend is largely positive, as footfall fell 1.5 percent compared to 2.9 percent during the first six months of 2012.

Greater London did particularly well, with a 2.4 percent spike, followed by Wales with a 2.3 percent increase. Scotland and the West Midlands were up by 1.2 and 1.3 percent respectively. However, footfall in the East Midlands was down 1.9 percent.

“The improvement in the weather may well have contributed to this,” said BRC director general Helen Dickinson. “Our recent retail sales figures showed a strong performance from fashion and footwear and it is likely that shoppers took advantage of the start of the sunshine in June to visit their local high street and buy items for their summer wardrobes.”

However, Springboard pointed out that good performance of high streets also has a lot to do with the fact that they underwent a bigger decline in footfall in previous year, which means they are starting from a lower base.

Morrisons’ boss calls for online sales tax

 morrisons-dalton-philipsMorrisons chief executive Dalton Philips believes the Government should impose a new online sales tax to level the playing field with its rivals and e-commerce outfits. Philips told The Daily Telegraph that the tax imbalance between internet and high street retailers is illogical and it is taking its toll on Britain’s town centres.

Interestingly, Morrisons is moving into the online space right now, but it still feels it should pay its fair share. Last week Philips said Morrisons lost £700 million of sales last year because it lacked an e-commerce platform. Shoppers simply chose the convenience offered by online groceries instead. In response, Morrisons is entering the e-commerce space with Ocado and it believes the new platform should be able to break even in just four years.

But Morrisons’ online push isn’t about to change Philips’ mind.

“As a country, we need to look at how we’re going to tax retailers in general wherever they operate, because we’ve all got to contribute to society, but one can’t be disadvantaged over the other,” he said. “I’m not into intervention for intervention’s sake but you’ve got to have a level playing field. As more and more sales migrate online, it seems to me intuitive that you would tax the online channels as well.”

Philips added that there was simply no logic to the tax system anymore, as the rates keep going up, while at the same time town centres become ghost towns, as brick and mortar outfits find themselves fighting against the odds to stay competitive.

More often than not, they fail.