Some smiling faces in the retail community this morning, with news that like-for-like sales in September lifted by 1.5%, easily the best result of the year. Why the bounce? There will have been some pent-up demand, following the armchair weeks of the Olympics and Paralympics, and – extraordinarily – there was actual alignment between fashions instore and the weather outside, so customers stocked up on winter clothing.
This didn’t necessarily mean a kiss of life for the high street, however – online sales rose by 9.9% year-on-year, compared to 4.8% in August, so the big shift from physical stores to the online environment accelerated, once customers started shopping again. And JJB Sports called in the administrators at the end of the month – one of the biggest failures in a terrible year for business failures.
There’s an interesting piece in the FT this morning (you’ll need a subscription), which lists some of 2012’s most notable casualties – Blacks, Game, Clintons etc – and notes the overall fall in the number of trading retail units across the country. Most pertinently, it highlights the quiet retrenchment taking place within successful non-food chains across the country, whereby multiple smaller stores are being closed in favour of a fewer, larger stores in the big centres. (nb my blog on the top eighty retail locations, from the start of this year). It may not feel like it, but independent retailers are increasing their share of the number of trading retail units, with 67% of all stores controlled by indies, up 1% against 2011.
And this is where the retail shake-out in the headline comes in; progressively, over the past four years, the out-of-date leviathans, the single product chains, the superseded-by-technology businesses and the unable-to-respond-to-slicker-competition-or-just-ground-down-by-Amazon retailers have been bought out, merged or closed down. There’s now a big “middle of the market” gap between the FTSE 100 corporations and the street-fighting new players, but this recessionary climate has been rolling for long enough to allow the biggest players careful application of their cash piles to reshape their store portfolios and integrate first-class online offers, while the new companies have grown up, and been designed from the ground up, for an omnichannel (apologies to John Ryan) world.
A guaranteed better retail tomorrow requires consumer confidence, and we haven’t yet turned that corner. (With Europe unresolved, the end of austerity is still some way off.) Nevertheless, we are seeing the birth of a new, fitter retail sector in the UK, with plenty of entrepreneurial spirit among the start-ups, and in larger, imaginatively run, modern businesses like Hotel Chocolat or The Hut. This is a volatile and fast-changing sector (asked Bill Grimsey), and there will be more business failures, more empty shops, more job losses. But good retail practice thrives on its ability to adapt, to anticipate changing consumer behaviour and surprise, delight and good value. The new generation, and the wisest of the old, understand this, and are seizing the opportunity.