A Shout in your Ear! “Market Matters” January 2012

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.

She goes on to criticise unimaginative retailers who might know their product inside-out but are simply no good at running a business.

“There are thousands of businesses in Britain who once managed to make a living out of retail but have simply failed to adapt. Hard-working, committed and professional people, frequently real experts in their fields who haven’t adapted their retail offer to meet the increasingly-demanding expectations of todays consumer.  In a world where the sheer sophistication, speed and scale of the web and major supermarkets will always be pushing new boundaries you’ll never be able to compete with the range and diversity of the major multiples”.

Empty High Street shops – apparent even before the recession

At this point a few of us might start to feel a bit uncomfortable but I have to say she’s on the right track – there’s very little room for sentiment in retailing where you either Do or Die. I also agree there’s no point in going head to head with a supermarket chain – better to box clever and specialise. She points out the phenomenal growth of online sales is as great a threat to multiple retailers as independents so demand for High Street shops was already drying-up before the recession hit. As Sir Philip Green of Arcadia Group says: Why carry the burden of a High Street rent when you can increase profits by selling online? Although rents are (believe it or not) still cheap on markets there are still too few businesses promoting themselves via the web and treating their stall as a “showcase” while making core profits on the internet. Online sales are growing at 10% per annum and set to increase.

MP also has a good poke at landlords and local government for allowing charity shops to take over High Streets and withholding business rates concessions that encourage occupancy. She advocates “Town Teams” comprised of local stakeholders – retailers, landlords and residents, who would run the High Street as a business (just like their out-of-town and shopping centre competitors). She is dismissive of existing Town Centre Managers who have “varying powers and responsibilities with little retail or consumer knowledge” – well maybe, but whether the town Teams are intended to replace or be piggy-backed onto existing Business Improvement Districts is unclear, as is how they are financed.

The report is a good read but some of her ideas ring a loud alarm bell in my head – relaxation of the Use Classes regulations for instance. The need to obtain planning consent to change from one retail use to another was introduced to give local Councils control over the type of shops on their High Street. A Council, like a good market manager knows how important it is to encourage competition and variety but a manager can apply his own informal version: “Sorry mate but we’re full up with mobile phones already”. Removing use classes control on the High Street would simply see the remaining few independents displaced by multiple-owned convenience stores fighting for market share – or fast food takeaways or charity shops. The problem is not the system but the lack of determination with which it is enforced.  Maybe the Town Team can do that.

The Portas report is a great contrast to another long-awaited published in December – Lord Turner’s report into the managerial ineptitude of the Financial Services Authority which allowed the Royal Bank of Scotland to collapse. After all, it only cost the British taxpayer some £45 billion of bail-out. Hardly worth mentioning really…

Hector Sants: Formerly of the FSA – now the Bank of England. Nice one, H

In 500 pages of technical explanation of how and where it all went wrong I didn’t see anyone say “I’m sorry – we screwed up “ or better still – “We did screw up but the people responsible have been sacked and prosecuted.” Instead the former Chief Executive, Hector Sants is now deputy governor of the bank of England. Thanks heavens for that – we’re finally safe from the Eurozone crisis. Negligent directors of private companies get sued and barred from further office but government bodies use the Charge of the Light Brigade excuse coined by Sir Humphrey in Yes, Minister: “This was a most unfortunate clerical error…”

One that didn’t get away…

On an equally sad note I’m sorry to bid farewell this month to Peter Naylor – long-suffering editor of “Market Trade News”. Widely-respected throughout the publishing industry for his ruthless determination to stamp out split infinitives and incorrectly-placed commas his editorial talents are only matched by his story-telling skills. His tales of monster salmon which have eluded him on the North Esk may get taller each year but I have to admit he is a bloody good fisherman. Tight lines in your retirement Peter!

Jonathan Owen is a director of Quarterbridge Project Management – a specialist consultancy providing business advice and design services to Market owners and trade associations. He has a keen interest in the politics of retailing, growing vegetables and eating well.

Market Matters, published in Market Trade News magazine