Scary Mary – Making it happen?
Following December’s publication of Mary Portas’ “Review into the future of our High Streets” the Government was remarkably quick off the mark implementing one of her key recommendations – establishing pilot “Town Team” schemes. A formal response to all 28 recommendations is due soon but in the meantime Grant Shapps, Minister for Housing and Local Government at the DCLG unexpectedly stumped up enough cash for a competition to select 12 pilot towns, with each being given some £100,000 of funding to test the “proof of concept”.
On 4th February he announced the competition on YouTube (no less) from Hatfield Town Centre.“Our High streets have faced stiff competition from Internet shopping and out-of-town shopping” he declared, in front of a very unexciting High Street. “We are leaving them underused, unloved and under-valued. The internet is not going to go away and so for our High Streets to survive they need to offer something new and exciting”.
Was there a note of nervousness in his voice? Maybe, as he might have been warned about redheads by his mother. In any event Ms Portas was in like Flynn with her response: “I hope my Review has inspired people with another vision of tomorrow where our High Streets are re-imagined as destinations for socializing, culture, well being and learning as well as shopping. I want the first twelve Town Teams to challenge the old ways of working, experiment, take risks and reaffirm their place at the heart of a community. A place we all want to be and can be proud of.”
The Portas review is a good read and highlights the internet opportunities and challenges for retailers both large and small. It shows how online sales were creating High Street vacancies long before the recession bit. As Sir Philip Green of Arcadia Group said: “Why carry a High Street rent when it’s easier to increase sales online?” Portas demonstrates how the growth of internet sales is affecting multiple and independent retailers alike, hence the demise of Woolworths. The report recommends Town Teams of local businesses to manage their High Street like a business, just like the big boys do with their Shopping Centres.
Embracing a willingness to adopt technology recommended by the Portas report the DCLG competition is staged and run entirely online. It was only announced on 4th February and entries must be submitted by 30th March. That’s not much time to prepare an entry but as Scary Mary says, speed of response is vital to successful retailers. All entries need to be accompanied by a video posted on YouTube showing why this entry is down on the streets wiv the kids, innit?
Entries can be lodged by anyone interested in the future of their High Street, not just the local Council. Local partnerships of investors and landlords have as much chance as stallholders or retailers but strong leadership is expected. The entry forms are very simple and applicants are expected to describe their vision, the potential for improving their High Street and their priorities. £1,000,000 of prize money is a cheap way to market-test the reports recommendations and find new ideas to be rolled-out across the nation. If you’ve not yet read the report download it from
www.communities.gov.uk/publications/regeneration/portasreview
and the application form from
www.communities.gov.uk/publications/regeneration/portaspilotsprospectus.
The problem with reports like this is the devil hides in the detail. Some recommendations are very relevant to Markets e.g. a new “National Market Day” when anyone could try their hand at being a trader or removing regulations to allow anyone to trade on the High Street. It includes a recommendation small businesses (presumably including indoor stalls) are offered concessions on their business rates – but the devil is in the detail of implementation. There’s no mention of awkward issues like Market Charters and pedlars licenses and I’d be happier if the legality of individual stall assessments was challenged before giving concessions. But putting the detail to one side for a moment the real value of the report is the debate it stimulates and the reaction of government.
The continuing slide of the High Street was confirmed last month by insolvency specialists PriceWaterhouse Coopers. Some 5,268 shops were closed by major retailers in 2011 whilst only 5,094 opened. Bookshops, electrical and home-furnishing retailers were the worst hit with pawnbrokers, credit unions and pound shops taking up some of the slack. As Mike Jervis of PwC said: “Electricals and bookshops have suffered as these are now increasingly bought online, but retailers in this sector are typically carrying unnecessarily large property portfolios.” So there.
The Portas report contains a cartoon of the High Street featuring a prominent Market with smiley customers. I hope your Council got the message and is entering the Town Team competition. If not, there’s still time for you to front it up using your Market as a focus for “socializing, culture, well being and learning – as well as shopping”. You may only have 4 weeks to embrace change, but it’s possible.
Good luck.
A View from the Bridge – February 2012
Taken from the latest edition of ‘Market Talk’.
Click here to read the latest edition or click here to sign up to receive it via email.
| Six weeks into the new year and we are already seeing a large number of market redevelopments, privatisations and new opportunities on the high street as more national multiples prepare to slide under. Cloned high streets dominated by chains offering limited choice at high prices seem to be on the way out. We look forward to the resurgence of independent trading rising phoenix-like from the ashes of closing down sale banners.
As larger high street retail units empty out; the next layer up the food chain will begin to re-adjust. Landlords; particularly the heavily geared variety, will need to either reduce rent levels to attract businesses with flair and dynamism albeit without traditional covenant or, seek to expand within leisure and residential uses suited to local communities. Can this re-modelling of town-centres benefit markets? This is probably the single best opportunity for markets and it needs to be pursued with vigour and determination – something I’m convinced a number of like-minded firms will do and equally convinced that many will apathetically look on and wonder why their markets are failing! We hope you enjoy this issue and always look forward to hearing your comments. The Quarterbridge Team |
Growing excitement over Southport Indoor Market upgrade as “wonderful” traders reserve stalls
Jan 26 2012 by Joe Thomas, Southport Visiter
THE multi-million pound refurbishment of the Indoor Market is on target to be completed this summer. Builders are about to move onto the second phase of the £3m project, set to revitalise the iconic shopping area. And a host of “wonderful” new traders are looking to move in according to Quarterbridge, who are overseeing the upgrade.
It is already confirmed the new-look – and newly named – Market Quarter will have a fresh food area, which will be filled with retailers including butchers, greengrocers, a fishmonger, delicatessen, and a host of world foods.
Other businesses are also lining up to rent stalls and excitement over the new market is growing. Local entrepreneur Giles Gottig believes the improvements will be of great benefit to the town. Currently considering renting space in there he revealed the mood was positive among town traders and spaces were filling up.
He said: “I believe the refurbishment for the market is the right way to move ahead in the town.
“This was the only option in my eyes and what is positive is a number of people believe in it as space is filling already.”
Raymond Linch, managing director at Quarterbridge, said about two thirds of the refurbishment was complete, and phase two of the operation is about to start. This will see traders currently operating in the market moving over to the completed area, so builders can work on the remaining third.
Mr Linch said: “Things are going very well. We are delighted with how phase one is taking shape, which will be handed over in a few weeks. We are doing extremely well also in the lettings for the new traders.”
Blackburn wins Indoor Market of the Year at NABMA
Congratulations to Stallholders and Staff at Blackburn Market for winning the “Best Indoor Market of the Year” prize at January’s NABMA / ATCM conference. Blackburn’s new Market opened last June inside the refurbished Blackburn Shopping Centre – “and not a day too soon” according to many stallholders who experienced the dingy ‘60’s concrete hall it replaced fall down around them. The challenges of maintenance and falling occupancy were described by Council Head of Property, Andrew Bond in a presentation to delegates. He included lessons learnt the hard way such as controlling budgets for stall fit-outs, some of which had to be implemented before traders had signed their new leases.
Quarterbridge advised the Council throughout on the design, fit-out and lettings. Director Jonathan Owen said: “The Council took a bold decision to install display equipment for traders but it was crucial if the project was to be delivered on time. Open sightlines and quality displays are what shoppers expect nowadays but getting the right quality whilst meeting EU procurement rules was pretty demanding.”
The 60,000 sq ft Market now hosts some 120 stalls and a foodcourt, with direct links into the Blackburn shopping centre and 1200 space carpark. Follow-up surveys by consumer research company ROI Team have confirmed the food offer is the core attraction and a far younger shopper profile now use the market. Blackburn’s design has learnt from the competition and it’s paid off. Well done everyone – give yourselves a slap on the back!
More information on the market is available at www.blackburnmarket.com
Czech out the competition – Market Matters February 2012
Havelske Market: Handicrafts made on the stall
How was your Christmas trading? Good I hope – despite the long hours, discount competition and light fingers looking for a little something extra. Anecdotal evidence suggests Market sales held up pretty well in 2011 as shoppers looked for bargains. Mainstream retailers announced a mixed bag of results though. Like-for- like sales for multiples were up 2.2% but that was nothing to crow about in comparison to Christmas 2010 when sales fell 0.3% because of awful weather and the recession. Despite the continuing recession in 2011 the unseasonably good weather should have made Christmas 2010 easy to beat.
Debenhams, JD Sports and Next all reported flat sales with some retailers like Blacks Leisure never even making it through the festive period. Tesco issued a profits warning which wiped the odd billion or two off their share price, but Sainsbury announced “their best Christmas ever”. Ocado and online sales were the big winners – up 20% or so. You know online marketing makes sense. Mainstream fashion retailers were stuck with furry coats in an Indian summer which prompted pre-Christmas sales earlier than ever with 25-50% discounts the norm. Buying departments were left with faces redder than Santa because you just can’t rely on the weather anymore, can you? Read more…
A Shout in your Ear! Market Matters December 2011
I’m no great fan of TV’s “Mary, Queen of Shops” but I have to say last month’s report by Mary Portas into “The Future of our High Streets” is a good read. She might be a bit too quick jumping onto a passing bandwagon for everyone’s tastes, but isn’t that what retailing is all about? At the start of 2011 MP was invited by the PM to suggest a cure for the UK’s declining High Streets. She published her report in December which can now be downloaded from www.maryportas.com. It contains some uncomfortable reading for retail businesses both large and small:
The Portas Report – an uncomfortable read for many retailers
“Expectations have been raised in terms of value and service which the average high street has simply failed to deliver. During the boom years many extremely mediocre businesses survived and flourished – Woolworths is a prime example”. Ouch. Read more…
The long awaited Autumn Statement
BOOM! … Shortly ensued by recession, borrowing, fiscal stimuli, borrowing, austerity, more austerity, more borrowing- the story continues.
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Chancellor, George Osborne
“People know that promises of quick fixes and more spending this country can’t afford, at times like this, are like the promises of a quack doctor selling a miracle cure.
We do not offer that today. What we offer is a government that has a plan to deal with our nation’s debts to keep rates low; a government determined to support businesses and support jobs; a government committed to take Britain safely through the storm.
Leadership for tough times – that’s what we offer.”
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Yesterday public sector workers expressed their dismay
On Tuesday, Chancellor George Osborne announced his eagerly awaited Autumn Statement. The Autumn Statement was published alongside the most recent forecasts from the Office for Budget Responsibility (OBR), the independent research subsidiary, which revealed a significantly gloomier picture than that painted in its previous report in March. Headline figures were the £111bn increase in government borrowing on top of what we will already be borrowing over the next five years, public debt to peak at 78% of GDP by 2014-2015, slashed growth forecasts with the economy flat-lining, and the controversial 1% pay cap on public sector wages for two years following the current pay freeze. The Autumn Statement was not all bad news though; the government announced it will underwrite £40bn worth of loans to small businesses with the aim to create jobs in the private sector (with public sector job losses forecasted at 710,000), the governments will increase state pension and basic working age benefits in line with inflation, and the government pledges to invest £5bn into infrastructure projects, to the delight of the Keynesians.
Since 1889 the kilogram has been defined as the weight of a cylinder of metal kept under guard at the International Bureau of Weights and Measures in Paris. To the bafflement of scientists they have discovered it’s weight is changing. Measurements confirm it’s mass has changed by about 50 microgrammes – the equivalent of a tiny grain of sand – over the last 100 years. “Actually, we’re not sure whether it has lost mass or gained it,” said Alain Picard, director of the Bureau. “The change may be to due to surface effects, loss of gas from the metal or a build-up of contaminant”.
Standard kilogram: Disappearing mystery
This is particularly irritating to the French authorities as the 99% platinum / 10% iridium cylinder was made in Britain and is the “base constant” of the metric weights and measures system. The International System of Units (SI) depends upon it remaining constant to provide a precise measurement standard for engineers, scientists and merchants. If a kilo of spuds is no longer the same as a kilo of spuds a hundred years ago that is an oddity, but if a kilo of diamonds in Paris is now different to a kilo of diamonds in Africa then that is a problem. Read more…
Southport Market Redevelopment Taking Shape
In recent months Southport market has transformed from a design into a reality. The build is progressing marvellously as the ceiling, floor and tiles have been put into place. With the walls taking shape one truly receives a remarkable impression of what the market will be like once opened in 2012; as clichéd as it sounds, this Edwardian building certainly has the “wow” factor and it delivers not only in aesthetic value, but also in practicality with a functional design.
Lettings for the sought after units remain well ahead of schedule and enquiries remain very strong for the last remaining stalls. There seems to be a buzz around Southport market as designs become reality going from 2d to 3d and within the community there is support and excitement- this has been epitomized in a very positive article in the Southport Visitor.
“It’s always nice seeing a development progress from plans on paper into something tangible; this project has all the hallmarks of something special”- Hayden Ferriby
Southport market is building up momentum towards a grand finale, surely to become Britain’s best market.
Large windows are being put into the market hall to increase natural light and create a nicer shopping experience
Tiles are unique to each unit giving the market a traditional yet modern feel
Units within the market are taking shape as the structure is near completion
Supermarket price war eases inflation
Yesterday’s FT reads “Supermarket price war eases inflation”, “hurrah” jeer the public, finally a slow up in inflation, albeit a 0.2% slow up to 5%, 3% above target and crucially above the rate of wage inflation. Nonetheless inflation is on its way towards the 2% target, let’s not put a downer on it, George Buckley of Deutsche Bank describes the drop as “the first of many declines over the coming months”. This said, I can’t help but ask the question: who actually pays for supermarket price wars? Should we all cheer the decrease in inflation? Does the 0.2% drop expose any unerring truths?
With the economy flat-lining and a lack of confidence throughout both domestic and foreign markets, supermarkets have helped the everyday consumer by initiating a series of price guarantees: Tesco’s Big Price Drop, Asda’s Rollback, Sainsbury’s Brand Match, Morrisons’ Price Crunch and Waitrose’s Brand Price Match. These supermarkets are jostling for market share as their sales volume decrease for the first term in a decade. How have supermarkets financed these price drops? Have their costs of production decreased or have they reduced their supernormal profit margin? The first observation to make is that since the start of the month the price of Brent crude has increased; furthermore, one would have thought that regardless of their monopsony power, supermarkets would not have significantly decreased their costs to suppliers within the space of a month. Whilst other costs, such as the energy price hike, will play a role in the price of supermarket goods they are more minor and they would put inflationary pressure onto the price of goods rather than deflationary. If the cost of production hasn’t decreased, and if anything gone up, then it would seem as if the supermarkets have sacrificed their holy profit margins… Gasp.
Having looked at the intricacies of the price drop, let’s contextualize things to see how the consumer and the supermarkets stand. “Sainsbury’s annual profits rise by 12.8%”. “Morrisons’ profit rises”. “Tougher times- but profits up for Tesco”. These headlines were all first page hits after a quick Google search; so how is it that despite this month’s price war, quarterly and yearly profits seem to grow? I must tread carefully so I don’t generalize too much; a Guardian article written at the start of October reads “Asda profits hit by price war”, the article then proceeds to say how Asda’s revenue has increased to a paltry £20.5bn and that its operating margin increased to 4.9%. Furthermore, whilst the headline pins the £93m decrease in profits on the price war, the article seems to give far more weighting on “one-off costs” such as a £137m increase in royalties. Indeed, price war is only mentioned once in the article, so how much the price war is to blame for the drop in profits is dubious.
Where do the supermarkets stand? As the headlines show they are still making abnormal profits and despite this month’s price war antics but I suspect the profits will remain relatively untouched, the reason is threefold. Firstly, food and drink inflation dropped from 6.4% to 5%; in effect prices are going up at the same rate as other prices in the economy from a previously elevated level, so it’s not as if the prices of food and drink are falling in real terms. Secondly, this week’s data only represents the price changes of the past month whilst profits are published quarterly and with the festive season closing in supermarkets can expect an increase in footfall and average transaction cost. Thirdly, the price guarantees simply aren’t all they seem: supermarkets accused of hiking up prices to make the savings seem larger, supermarkets state to be eligible for the guarantees customers must spend a minimum amount and certain price matches apply to certain supermarkets only.
Where do the consumers stand? Same old: incomes stagnant, general price level rising, savings dipped into and the outlook is bleak. Fear not, food and drink is only rising at 5% so things are better than before, despite 19.9% increases in energy bills just as the weather takes a turn for the worse. Whilst consumers are shopping around, using discounters such as Aldi and Lidl, visiting their local market and using price comparison websites, supermarkets remain every shopper’s failsafe. Unfortunately, a side effect of the market structure in supermarkets is for prices to be rigid and stay high as firms collude covertly and tacitly. The five major players in the supermarket industry are reported to have 75% of the grocery market, such a high five-firm concentration ratio breeds collusion which is so hard to prove for the OFT, so often goes unpunished. Even a ‘price war’ is limited at some stage, if it were a true price war firms would undercut each other until the point where revenue is the same as their costs (limit pricing), is this realistically going to happen? “Tesco report yearly pre-tax profits of £0, down £3.4bn from 2010”… “Oh, and pigs fly!”
George Buckley’s words have been repeated today by Sir Mervyn King, predicting that inflation will undershoot the target of 2% in 2012. Worryingly, this situation seems may be more dire than the current stagflation. The current inflation hike sadly isn’t a result of economic prosperity, consumption, investment or strong exports; it’s a result of inflated commodity prices causing supply side problems. Whilst supply side shocks are very severe, see 1973 oil crisis, they tend to be more short term than demand related depressions; consumers will inevitably rejoice the fact that they can buy more for their buck, but it is a worrying thought that inflation will free-fall to near zero levels and could potentially result in a lost decade. Yes, this is a very gloomy picture but the worries have been echoed all across the world, the fact that the Bank of England are considering more quantitative easing when we are currently at 5% CPI sums this up very neatly. Instead of hypothesizing on potential Armageddon I’ll take a more objective view on recent events. Yes, inflation is down. Yes, in real terms we are slightly better off than a month ago. Yes, supermarkets are continuing their price guarantees. And yes, inflation is due to come down even more in the next few months. Let’s try and put some (blind) faith in the people at the top to restore growth, rein in inflation and get the ball (not bubble) rolling!
Now for a final word on what this means for those in the market industry: does this bode well for outdoor markets or is the net effect negligible? As discussed, consumers are scouting around for the best deals, in this sense markets should prosper particularly with regards to fresh food. This phenomenon is clear to see, over recent years Quarterbridge has witnessed rejuvenation in interest of markets. Another crucial change in shopping habits, spurred on by bargain deals, is the bulk buying culture. This would seemingly spell bad news for the markets, the pragmatic element of supermarkets seems to trump all independent retailers, however to make such a statement the basket of goods that have deals attached to them should be considered. Products with the highest value-added (tinned goods, dry goods and utilities) are the goods that are mostly bought in bulk and being not such popular market buys, I would argue that bulk buying culture shouldn’t affect markets too negatively at all, particularly since markets such as Queensgate and Kirkgate now facilitate bulk buying through the availability of trolleys and ‘pay now, pick up later’ facilities. The net effect on markets then seems to be the same as before with a growing awareness of all the benefits of buying from knowledgeable, independent traders. While markets offer genuine value for money, support for local retailers and inject life into the local economy, look at what supermarkets actually offer with a more objective eye. Peel back the façade of price guarantees and price crashes and a different picture emerges. This is what Quarterbridge have seen for some time and a picture that everyone should be aware of.
