Christmas trading 2011: results table – Wednesday (and final?) update

25th January 2012

WH Smith traditionally brings the Christmas results season to a close, and here they are, down 6% in the high streets and 3% at their Travel division.  Although this was accompanied by the usual statements about the entertainment categories (CD, DVD, now an infinitesimal part of Smith’s mix), and “resilience”, “challenge” and “cost controls” all made their usual appearances, there was little indicating retail progress.  Strong categories?  Kobo and online?  Former British Bookshops stores?  You can manage a business for cash for so long (and it’s been so long that it’s remarkable), but at some point you have to sell more product, to more customers, more often.  That’s what we want to hear from WHS, and it’s what’s missing again.

19th January 2012

I’ve been on the road for the past couple of days, and quite a few gaps in the table have been filled during that time.  Strong sales from Primark and Matalan indicate that there’s still a desire for value when it’s done well.  Of course, you might say the same about Peacocks, which by all accounts remained operationally profitable, but has been crippled by debt and forced into administration, threatening the biggest one-off loss of retail jobs since Woolworths in 2008.

The Centre for Retail Research in Nottingham has published a sobering schedule, detailing retail failures from 2010-2012.   They state that, over the five years 2007-2011, 173 retail businesses folded, comprising a breathtaking 18,342 stores, and over 150,000 jobs.  Questions please to the CRR –here’s the link.

Back to Christmas 2011, and at the other end of the fashion scale, Burberry and Mulberry have announced excellent growth, but it’s been unclear whether the numbers have referred specifically to UK retail, so I’ve omitted them.

No such qualms with not-retailers-at-all Greene King and JD Wetherspoon.  Looks as though we still have money to spend on a night at the pub!  And animals had a good Christmas, even if their owners cut back, with Pets at Home up 4.9%.

I posted a like-for-like book sales for Oxfam last week, and this has been followed by a flurry of other figures, reported in the Guardian.

Biggest news from the mid-week period has been from the electricals retailers, with Dixons (Currys/PCWorld) hailing -7.0% as a relative success, and Comet’s  -14.5% a reflection of the grim condition of a business struggling through a sale process, and pretty much disowned by Kesa.

However, I think there are good things to be said about Dixons, but they need a separate blog – watch this space…

16th January 2012

Just three additions today – Boots and The Perfume Shop, both looking good; and the McArthurGlen outlet centres, which appear to have had an exceptional season.  It’s worth bearing in mind that Christmas historically has peaked early at outlet “villages” like Swindon and Cheshire Oaks – outlet customers search out the best bargains early, and then complete their shopping in traditional malls and high streets – from memory, the final weekend in November was typically the best in the run-up to Christmas.

Who are we still waiting for?  Of those who made Christmas trading announcements last year: Electricals – Currys/PCWorld and Comet; books/media – WH Smith and Waterstones (though the latter is now privately owned, so is under no shareholder pressure to announce); fashion: Primark, Matalan; DIY: B&Q (though Christmas is hardly a prime season for them, it’d be good to benchmark their performance against Homebase and GCG).

Who would we like to hear from?  Big, successful private businesses like Arcadia and River Island; PE-owned growers like Pets at Home and Hobbycraft; discount grocers like Aldi and Lidl, and bargain retailers like Poundland; niche successes like Jack Wills and Cath Kidston; mega-brands like Selfridges…  It’s a long list, and any analysis of published numbers is inevitably just a snapshot of a sector which is far less plc-dominated than in the past.

13th January 2012

A quick final update before the weekend is upon us.  Has Tesco had enough press coverage?  As Twitter noted last night during News at Ten, you’d think they’d called in the administrators…  Still, Philip Clarke has been very candid about the challenges Tesco faces, and has been reminded (as The Times editorial today emphasises) that no company stays at the top forever.  I’m thinking hard about Tesco Extras, and a separate blog might follow…

Nils Pratley on The Trouble at Tesco

Harry Wallop on Is This the End of Tesco Dominance? (QTWTAIN)

Meanwhile…  Good numbers from Original Factory Shop, The Entertainer and Superdrug, but another tough season for Theo Fennell.  Nul points to Asda and Ted Baker for announcing total growth for Christmas, but not like-for-likes.  Of course, I appreciate they don’t have to announce anything at all, but if I had shares in Wal-Mart, I’d want to know what was what.

12th January 2012

After a positive start to the week, things have turned ugly with poor results from Tesco spooking the markets, and throwing fresh doubt over the sector.

As you can see from the table above, Tesco has performed significantly worse than other supermarkets (and M&S food, which has been broken out separately in reporting, and which saw a like-for-like increase of 3%).

House of Fraser has posted some remarkably good numbers, but it isn’t clear whether they’re inc or ex-VAT.  For the record, I’m a committed ex-VAT person – including a variable rate of tax in your sales is no way to accurately reflect like-for-like shopper behaviour.

(At Borders, 75%-80% of our sales were VAT-free – books, newspapers and magazines – and the remainder was VATted – stationery, CDs, DVDs, toys etc.  We also paid a “special rate” of VAT, where eg a CD-ROM was attached to a book on computing or language learning, which reflected the fact that part of the whole product was zero-rated.  I’d like to think that the HMRC officers required to create and police these rules, and audit the proceeds, cost rather more than the total tax take.)

Anyway, back to Christmas 2011, and as expected, times were tough at the likes of Halfords, Thorntons and Mothercare.  Argos had a particularly grim set of results – for how long will 750 stores be sustainable?

Some more variances to reporting periods, highlighted in green.  These were the reporting periods twelve months ago:

  • Tesco LY: 6 weeks to 8th January
  • JD Sports: 5 weeks to 1st January
  • New Look: 15 weeks to 8th January
  • House of Fraser: 5 weeks to 8th January

FTSE 100 retailers are now shown in bold.

10th January 2012

Plenty of results added to today’s table, including a couple of outriders that you may not have seen reported elsewhere!

Game takes over at the unhappy end of the chart; their LY numbers are highlighted because of a change in reporting period – for 2010, they reported five weeks to 8th January, this time around, an additional three weeks pre-Christmas were included.  The Co-op also made a change – the prior year numbers relate to a 13 week period, October – December.

There’s some inc-VAT (Debenhams) and ex-VAT (Majestic) differentiation, which given the rate jump from 17.5% to 20% has a bearing on different companies’ numbers.  And of course, these are just sales – not profits.  The rumbling undercurrent – “of course, their margins will have taken a hit” – accompanies many of these announcements.

Nevertheless, it’s great to see many more pluses than minuses on the schedule – long may it continue…

9th January 2012

And they’re off.

It looks as though this year, every media source and his dog is going to be publishing regular updates on Christmas trading, so I’ll keep this brief, and update it as required.

I’ve included last year’s numbers, where I have them – and as this is a busy office, I haven’t dug out LYs where I previously didn’t have them – I’ll try and infill if Edwin Drood becomes unwatchable.

Worth noting that, where comparisons exist, the order of companies is exactly the same as last year.  (The reporting periods are all similar, so these are good comparisons.)

It’s worth remembering that bad results always take longer to calculate than good ones…

And for the many hundreds of you who enjoyed my “8o towns” blog from last week, I’ve shown store numbers.  Counting stores is always an inexact art, but most of the chains are on multiples of eighty.  Some will stay that way – supermarkets, Next.  But there’s restructuring in the air.

Just to keep us all honest, this article from the Telegraph highlights some of the more imaginative ways that Christmas performance can be characterised.

And, lest we forget, the following chains probably won’t be providing Christmas trading updates:

Barratts Priceless, Blacks, D2 Jeans, Hawkins Bazaar/Tobar, La Senza, and Past Times.  Ask not for whom the bell tolls, but let’s hope stores can be rescued, and jobs maintained.

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Big Box Man: options for Tesco and Dixons

The festive season hangover – the publication of Christmas trading results – is almost completed.  WH Smith will announce next week and, on past form, that is likely to be the end of it.  Thereafter, we will have to wait for actual half-year and full-year reporting, so that we can understand the levels of discounting that were needed to deliver some of those better-than-expected like-for-likes.

Away from the real strugglers, two businesses caught my attention.  The first was, of course, Tesco, whose -2.3% LFLs sat uncomfortably next to Sainsbury’s +2.1% and Morrisons +0.7%.  CEO Philip Clarke has now been in post for well over a hundred days, but he is acknowledging that Tesco has to change.  His comments, allied to the poor trading figures, caused a sharp fall in Tesco’s share price, but it’s very clear that action is under way.

I’ve written before about the grudging nature of the Tesco store experience (here), and the sense I always get that the best interests of the consumer have to be aligned with the best interests of Tesco, rather than the other way around.  It looks as though Clarke understands this – the Big Price Drop was yesterday’s response to today’s problem, and achieved the double of being trumped by other supermarkets’ vouchers whilst alienating loyal Clubcard holders; Fresh & Easy is looking like a bullet that needs to be bitten.

And here’s what interested me most: in conversation with Retail Week’s Alex Lawson, Clarke said:

You can go on growing space but we probably won’t be growing very big hypermarket space any more. We have got a few hypermarkets coming but will be announcing more on the bias of stores in April.

In other words, less of this in future?

And rather more of this?

We’ve seen problems for big box operators, as a result of online competition, in specialist sectors – Comet, Best Buy, Borders, Virgin Megastore and many more.  However, the suggestion that Non-Food isn’t pulling its weight at Tesco; that Non-Food is as vulnerable in Tesco to online competition and showrooming as it is in less diversified specialist retailers – well, that is quite a sea-change.  With 10% of all retail spending in the UK now taking place online, it’s inevitable that Tesco will be suffering attrition from online-only retailers, but the strategic shift implied by Philip Clarke (presaging an announcement in April) could herald the biggest shift in the pattern of UK retailing since Woolworth failed.  Perhaps it also paves the way for Tesco to save the high street…?!

However, I don’t buy the “big box dinosaur” argument, although – as the Tesco Extra picture above demonstrates – you can reach a point when the size of your store becomes oppressive, and just adds to the unwelcomeness that can be part of the Tesco experience.

But good big boxes will survive and thrive, both because retail parks work exceptionally well (particularly away from London) as the most cost-effective way of bringing a diverse retail offer to a scattered population, but also because the big box experience, when done well, can deliver results that the high street just can’t match.

And so to Dixons.  It’s been a filthy Christmas in electricals, with Best Buy closing down and Comet getting worse and worse as Kesa takes time to sell, leaving Dixons looking relatively healthy with a -7.0% like-for-likes.  Chief Executive John Browett has been concentrating on changing the way the stores look and – more importantly – the way the customer feels about his business.  I think he’s on the road to success – I liked the “Black” store at Westfield, and I really liked the refurbished Currys/PCWorld retail park store I visited earlier this week.

Like the store in this photograph, a consolidated electricals offer is now available under one roof, and sensibly the consumer electronics – audio, visual and computing – are on the ground level, with white goods – washing machines and vacuum cleaners – on a mezzanine.  This makes for a smaller and more efficient footprint, but it also enables Dixons to create an electronics offer that I think makes John Lewis look tired and off-pace.

John Lewis?  Bow, bow ye upper middle classes!  But where JLP presents a brown goods world of carefully delineated TVs, radios, hifi and computing, the new Dixons layout recognises that we don’t use devices in this way any more, and that the distinctions between various product lines are now blurred.  Its layout and flow presents a more effective offer for the consumer, and invites them to enhance their home electronics more effectively than old-style competitors.  Wireless sound systems and big screens are now computer adjuncts, not “hi-fi” and “television”, and Dixons gets it.

Their Knowhow sub-brand message is driven home with relentless effectiveness – we really do understand this stuff, it says.  Much has been made of the culture changes within the business, recognising (at last) that an ill-informed hard sell in an intimidating environment just doesn’t work any more.  The new stores are customer friendly with good graphics, plenty of explanation and demonstration items, and informed but unpushy service.

Dixons has a huge estate – over 600 stores of various ages and configurations – and it has much to do to bring them all into line with current best practice.  I’m optimistic, though – I think they’ve really got something here.  However – please – they’ve got to do something about branding.  The new stores aren’t “two stores under one roof” – they offer an integrated selection of electricals for the kitchen and every other room in the house (and office).  Currys was a dismal washing machine shop, with neglible brand heritage (and it’s a word that looks poor on fascias, sounds blah when you say it).  PC World harks back to the glories of Windows 95, but it leads with Apple and Kindle – suddenly, “PC World” sounds about as on-brand as Radio Rentals.  Time to can these hoary old brands, and return to the one with the best heritage in the sector:

Images: Wikipedia; The Guardian; Peterborough Today


The Top Eighty retail locations in Britain?

A consistent theme in retail analysis over the past 12 months has been that, whereas 5/10/20 years ago, a non-food chain required 200/300/500 stores to achieve national coverage, today only 50-80 might be needed.

I don’t think that any one person is the author of this insight (but I’ll credit them if I’m mistaken).  The thinking is as follows:

We now have a network of modern city centres and regional malls across the UK.  These provide up-to-date retail space, with the flexibility in size and height that modern retail chains seek.  By way of comparison, here’s Westfield at White City:

…and here’s a typical mall from the 1980s (in this case, a roofed-over 1960s construction):

The best shopping centres are offering their customers more than ever before; the rest of the field is struggling to keep up.  And a high proportion of the total population is now within 30 minutes drive-time of a first class mall or city centre.

The other motor of change is, of course, online shopping; as this blog far-from-exclusively confirmed last week, the UK leads the world in adopting online retail, with 9% of all sales (by value) going to internet sites rather than bricks-and-mortar stores.

Two of Britain’s strongest retailers, John Lewis and Next, announced their Christmas trading results yesterday, and they underline the trends above.  JLP has had a soaraway Christmas, with its stores anchoring many of the “key 80” locations.  Total Partnership sales from physical stores are up by 9.3%, and online growth has roared away, up 27.9%.  Next’s total sales were up by 3.1%, but this was a tale of two formats; stores were down -2.7%, and online was up +16.9%.  John Lewis has fewer than 40 department stores; Next has around 500 shops.

Of course, different stores have different demographics.  A high-fashion teen chain and a smart furniture business might both prosper with 50 stores nationwide, but their customers wouldn’t all be best served by the same locations.

Nevertheless, in the spirit of digging out a hornet’s nest and poking it with a sharp stick, I thought I’d define 80 primary British locations for 2012.  I’ve grouped them by location type, which I’ll enlarge on as we go along:

All of these centres are well-established, and are pretty evenly distributed across the country.  Metrocentre is the oldest, but their owners continue to invest to keep abreast of consumer and tenant requirements.  With the exception of Merry Hill (now a Westfield), they all sit on motorway junctions, rather than in city centres, and attract customers from a wide geographical region.  Typically these megamalls are close to a retail park, so that big-box sellers of furniture and DIY are also represented.  (And I appreciate that Braehead and Silverburn are different malls in different parts of Glasgow, so I’m already making two count for one…)

Just a few years ago, central London’s shopping offer consisted of the West End and Knightsbridge, with the offer elsewhere pretty strictly local.  Today, a 40 minute ride on the Central Line takes you from one vast Westfield to the other, and en route you pass through (or at least close by) four other huge, separate markets.  The City has evolved from a few poky high street stores on Cheapside to a major retail offer stretching from One New Change to Fenchurch Street (with an appendage out at Canary Wharf), and stores have grown bigger and more numerous in Covent Garden and Knightsbridge/King’s Road.  The West End – from Fitzrovia to St James’s – offers the finest concentration of shopping in the world, and it’s the world that now shops here; increasingly, London caters for a global rather than national catchment, as the old family shopping trips from the provinces to the West End are replaced by crowds of Chinese tourists with their newly enabled credit cards, leading the charge at the Selfridges sale.

England and the Octopus was the title of a book published a hundred years ago by Clough Williams-Ellis, in which he expressed his concern that London, the Great Maw, would consume the countryside around it, growing unstoppably.  At the time, he was probably worried about the rural charms of Dollis Hill or Morden; today, London dominates the economic activity of everything in an eighty mile radius – commuting distance for the capital’s huge workforce.

Much (too much?) of the UK’s wealth is concentrated into this region, which extends from the outer suburbs (Brent Cross, Romford) to the great University cities and the coast.  Many of these towns are smaller than, say, Huddersfield, and some are debatable – is Crawley more worthy than High Wycombe, Newbury or Basingstoke?  Brent Cross is just too small for the Megamall list, and – with expansion repeatedly stalled – is no longer the thing of wonder it once was.

Travelling across the Octopus is often a challenge – only a stark fool would drive the eleven miles from Kingston and Croydon unless his life depended on it – so there are plenty of prosperous shopping hubs; this list only covers the larger and more obvious among them.

A slightly contentious list here, particularly as some of these towns are proper regional centres in their own right – Bath, Chester and York have been important for 2000 years.  However, what all these towns have in common is high tourist spend, and enviable concentrations of local wealth.  Indeed, it’s the history at Aquae Sulis, Deva and Eboracum that ensures the tourists keep coming.

Cornwall is a poor county, but a strong tourist destination – there are national fashion chains a-plenty in small towns like Newquay and St Ives.  The same effect can be seen in pockets elsewhere in the UK – Aldeburgh in Suffolk boasts a Jack Wills, for instance.

This is perhaps the most obvious schedule.  Almost all of the major cities of England, Scotland and Wales have seen huge, strategic redevelopment in their city centres to ensure that they retain their importance.  Schemes like Liverpool One, Cardiff St David’s and Bristol’s Cabot Place have brought new vigour into previously moribund centres; there are still a handful of cities on this list where development has stalled, and there’s the Athens of the North, where the ongoing tram developments might have been specifically designed to keep consumers out.  Nevertheless, these are great cities that can guarantee footfall and spending.  (nb: if I’d included Ireland, Belfast (UK) and Dublin (RoI) would of course be on this list.)

“The Best of the Rest” is an ugly term, and it covers a broad sweep of locations, from affluent Solihull to struggling Stoke.  It’s a list that could easily inflame local loyalties – I haven’t found room for Portsmouth, Taunton, Blackpool or Stirling, but in setting an arbitrary figure of 80, I had to call a halt somewhere.  Some of these locations are significant population centres, but they aren’t generating growth, and their town centres are sorry echoes of their former selves.  Doncaster is here in part because it was Mary Portas’s focus, but it also stands for many other post-industrial towns in Yorkshire, Lancashire and the West Midlands that have seen better times.

And that’s my 80.  It won’t be the same as yours, and it certainly won’t be the same as any particular retail chain’s.  This is a blog, it isn’t science.  Before signing any lease, a good retailer will match careful demographic analysis against their own gut feeling and enterprise; they’ll be looking for the next right place to be, not a town that enjoyed its greatness in the 19th or 20th centuries.  I’ve missed off the outlet parks (Bicester, Gun Wharf), and I’ve largely skipped over the retail parks in places like Broughton, Birstall and Kinnaird – huge destinations locally, but little known outside their catchments.

But – most importantly – getting reductive to 80 underlines the challenges facing the smaller towns.  Let’s travel from Watford to Nottingham on the M1 – 110 miles, passing Milton Keynes and Leicester (shoo-ins for the list) and Northampton (very borderline), but omitting (deep breath) Hemel Hempstead, Luton, Dunstable, Bedford, Bletchley, Rugby, Wellingborough, Kettering, Market Harborough, Nuneaton, Loughborough, Burton… twelve towns among the hundreds that were once must-have locations for national retailers.  They still have stores there, but now, increasingly, they’ll be looking at their leases and reconsidering their options.

Images: overseaspropertymall.com; superstock.co.uk


Back to the FutureBook: a retailer’s view

A scintillating day yesterday at the FutureBook Conference at the QEII Conference Centre in the heart of Westminster.

2011 has been the Year of Change, with digital content and eReading becoming established across the sector, thanks to the explosive success of the Kindle and (to a lesser extent) the iPad.  The potential of smarter and more versatile devices, allied to social networking in the very broadest sense, has got people like Stephen Page rethinking the whole publishing paradigm – and it was great to see experienced but independent leading publishers like Page, Rebecca Smart and Kate Wilson being recognised for picking up the old business models and giving them a damned good shake.  It was also refreshing to see more young and/or independent delegates, who will reshape the face of publishing over the next 5-10 years.

Takeaway stats:

Dominique Raccah, CEO of Chicago-based Sourcebooks, kicked off:

Ereader users believe they are purchasing more titles.  The evidence suggests, yes; but the industry still lacks a reliable eBook “chart” in the UK and the US, and Amazon/Apple are notoriously tight-fisted when it comes to sharing their data.

Ereader users believe their overall spend on books has risen.  As overall spend (eBooks + pBooks) has fallen, this is hard to prove.

Ereader users believe they’re reading more.  Again, ths is unproven, though there may be a link to “dual screen” use, whereby the user browses a device (most typically, an iPAd) at the same time as they’re watching TV.

A snapshot of the Top 85 Kindle charts in the US: 66% of titles were published by “traditional” publishers; 18% were self-published; and 16% came from “non-traditional” (ie digital) publishers.  nb for the traditionalists, this compares to about 95% (my guess!) trad publishers in the average print bookshop.

Evan Schnittman of Bloomsbury divided the audience with his “hardcover + eBook” proposal (he’d charge a 25% premium for the bundle, which presumably would include a VAT element).  Personally, I’m gung-ho for this idea, particularly as Evan reminded us of the difference between “books” (objects that deliver permanence and permit display), and “reading” (which is all about content).

I sometimes chuckle at the “convenience” argument around eBooks.  Is it really a whole lot more convenient to carry an eReader than a single book?  (Do you remember, in the dim, dark days before Kindle, when you used to say “I’d love to read more, but carrying a book is so inconvenient“?)  It’s the enhanced convenience of carrying lots of books, and being able to purchase when you wish.  These are great qualities, though perhaps they encourage the grasshopper mentality of the dual-screener?  (Research suggests that 26% of Kindle users do this.)

Meanwhile, while the take-off trajectory of eReaders has been, and will continue to be, spectacular; though bear in mind that 76% of book-buyers have yet to buy any kind of eBook and – according to BML research – over 50% of those aged 35 or over don’t at present intend to do so.

Finally – I think this was an AT Kearney stat – European eBook sales currently break down as follows:  52% of all eBook purchases take place in the UK.  Germany – where Thalia’s Oyo is making the running – delivers 28%.  After that, France is at 7%, Italy 3%, and the rest of the continent 10%.

This brief run-down of stats doesn’t give the reader any real flavour of the optimism, enthusiasm and boundary-breaking that characterised great ideas and discussion from William Higham, Valla Vakili, Charlie Redmayne, John Mitchinson and many, many more.  But we need to press on…

OK, let’s talk about bookshops

It fell to me to wave my accustomed bucket of cold water around the Fleming Room, and to remind the Conference that this once-in-300-years reshaping of the industry is taking place during the worst consumer downturn, and the worst set of economic forecasts, for many, many years.  New devices, formats and ideas are being launched into the teeth of last Wednesday’s Autumn Statement, which promised austerity beyond the next election, and a return to 2001 living standards in – 2017?  2020?  Providing the Euro doesn’t implode, of course – then things will be much worse.

So, book people need to be thinking not just about how to reshape their industry in such a way as to preserve copyright, encourage new talent and stop Our Friends in Seattle (or, more broadly, the “GAFA” group*) from dominating commerce and innovation; they need to embed that change at the same time as Joe Public is devoting his dwindling income to candles and tinned food.

I was chairing a discussion panel that brought together Kobo vendor relations manager Cameron Drew, Hive development manager Julie Howkins, Middle East bookseller/publisher Jeremy Brinton, Retail Week Knowledge Bank director Robert Clark, and Leo Burnett marketing strategist Dr Alan Treadgold.  Here are some of our key points:

The UK pBook market has consoidated to one specialist (Waterstone’s), one generalist (WH Smith) and one website, which between them meet most of the needs of committed book-buyers.  (Of course, there are also three participating supermarket chains, though they aren’t specialist by any definition.)  This represents a real narrowing of the market – but perhaps that market will now start to broaden again, driven by feisty and more self-confident indies, the arrival of eReader alternatives to the Kindle (specifically Kobo), and an expanding reach (devices, channels, formats) from the Stephen Page-defined world of broad publishing.

However, no one has yet resolved the “showroom” conundrum: once its sales have fallen by around 20%, a physical bookshop becomes untenable, and has to close.  Bookshops can move to cheaper premises, can sell a broader range of products (toys, coffee etc), but unless they are actively participating in eBook sales, their market share will be eroded beyond recovery.  This will leave those 50% aged 35+ who don’t intend to buy an eReader for Amazon to scoop up into their search-excellent, browse-lousy world.

The panel recommended some solutions to this problem:

Ereader manufacturers that partner with retailers can encourage consumers into a bookshop relationship without committing them to a non-transferable, Amazon-type scenario.  Hive-affiliated bookshops (currently about one-third of serious indies?) can sell eBooks in multiple formats, and share in the revenue they generate, as well as creating local incentives for their customers.  And Kobo’s retailer partnership model (WHS, Fnac, Indigo etc) clearly has legs.

Physical bookshops must use their websites to drive store footfall.  One of the UK’s most consistently successful retailers, Richer Sounds, has a strong eCommerce site, which nevertheless acts primarily as a driver to get customers into personality-saturated stores, where they can test the product and take advice from trained staff.  There’s a bookshop model here.

Click-and-Collect is growing swiftly as a preferred distribution channel for many customers.  26% of Argos’s business is Click & Collect, and M&S, John Lewis and Sainsbury’s are among the retailers investing heavily in this service.  Click & Collect allows the customer to pick up their goods at a time convenient to them – and of course exposes them to personal service, and many more buying opportunities.

Social networking through eReaders (Kobo Vox) can bring reading communities together, and could be curated by bookshops who currently support reading groups.  Events and literary festivals not only bring together readers with shared interests, but underline a bookshop’s specialisms.  (And deliver healthy book sales to boot.)  In short, community runs through good bookselling like the words in a stick of rock, and good staff matter more in bookselling than perhaps any other retail sector.

Everyone in the world of books – publishers, authors, retailers, analysts – needs to be focusing more on their end customer: the person who buys the book.  Historically (ie until a few months ago) publishers tended to view retailers as their customers, with (as John Makinson has noted) a B2B mindset at odds with the creation, marketing and selling of consumer products.  Book trade people need to be aware of retailing best practice, and to understand how consumers and retailers are behaving in sectors far away from their own.  We cannot integrate ourselves into 21st century lives while still behaving at one remove from our readers.

Finally, there is a common retail trend running through all sectors – fashion, homewares, electrical etc – and that’s a trend for fewer, better shops.  We certainly have fewer bookshops than we had five years ago, and it seems likely that the number will continue to fall.  Those that are left must be digitally integrated, and committed to a programme of continual improvement.

*GAFA:  Google/Apple/Facebook/Amazon.  Each is developing a vertically integrated suite of services and functions, as follows:

  • Storage
  • Device
  • Purchase
  • Payment
  • Social

The walls around each of their gardens vary in height.


Christmas: far too early to call

Not a great deal of action on the Front of Store blog in the past couple of weeks, as I’ve been out on the road a lot, assessing stores, formats and catchments.  Plenty of news in the retail sector, though, with the end of the Best Buy brand in the UK, and the sale of Comet for £2 (with a £50m dowry); as the Observer comments on the electricals sector this morning:

Amazon’s small overheads and Tesco’s huge scale have enabled cheaper products to eat away at the specialists’ profits. So far they have resisted the fate of the book and record stores swept off the high street by online rivals. Could the worsening economy now push yet another retail category into the virtual universe?

It has been a difficult autumn across most retail categories, with the continued mild weather slowing down sales of winter fashion and precipitating a series of one-day events at the likes of House of Fraser and Debenhams.  Recent results at Next and Marks & Spencer both illustrated how challenging the middle market is, even for the best-run businesses, and WH Smith unveiled lower sales and higher profits for the nth successive quarter – Nils Pratley has commented astutely on this.  (Nationally, book sales are poor, running 12% down on 2010 last week.)

There are just 41 shopping days left until Christmas, and though the streets of Staines were busy yesterday afternoon, there’s still a lot more window shopping than actual commerce taking place.  Consumers are well-versed on tough Christmases now, and the question is not “will prices fall?” so much as “how early will the sales start?”.  There’s already plenty of red-and-white in the windows, as hard-pressed retailers seek to liquidate stock and free up cash.

London’s West End tourist boom continues, with Crown Estates announcing that there will be fewer, larger stores in Regent Street in the future; Westfield Stratford has welcomed millions of customers (I’ll be back there on Tuesday) and has indicated that the old Whitgift Centre in Croydon could be next for the Westfield treatment.  But London has never been as disassociated from the rest of the country, in retail terms, as it is now.

It’s going to be a difficult Christmas, with every sale a small victory against consumers’ tight purses and low levels of “feel-good” (despite that “Capracorn” John Lewis ad).  Online will grow, device sales will soar (Best Buy may be dead, but Wireless World is Carphone’s focus now) and new retail formats will emerge on the shoulders of the old.

On a lighter note, here are a couple of stores positioning themselves for the future of the book trade:


Britain’s Top 100 Consumer Brands (Nunwood research)

Marketing strategy researchers Nunwood have published their Top 100 chart of UK consumer brands, based on feedback from 7,000 consumers.    You can read more about their findings here.


Westfield Ho! Visiting Stratford City, Part Two

Welcome back to the second part of the Front of Store Westfield tour…

Sticking with the Lower Ground Floor, we emerged from the phone shops into a world of children’s specialists.  Build-a-Bear, Lego and upscale clothes stores like Polarn O Pyret and Atelier de Courcelles are already in evidence; Mamas & Papas will follow on a higher level.  (Observation: upmarket children’s stores have foreign names.  JoJo Maman Bébé would be another.  Whereas the mass market has clunkier, English names.)

So, The Entertainer.  The six-day toyshop is a staple in many shopping centres, and this was a pretty standard store – reasonably fully stocked, but many popular brands had been allocated limited space or were unstocked, and generic product took their place.  Putting all the rollerblades in “Boys Toys”, including the pink ones, summed up a rather formulaic experience; staff stayed firmly behind the tills (including those wearing “can I help you?” sashes), which rather defeats the experiential joy of a good toyshop.  We left, feeling a bit flat, and crossed the mall to Mothercare.  Here, shopfit quality has been lifted (attractive light woods and pastels), and roomsets show off nursery furniture to advantage, but again, there were no staff on the sales floor.  The customer may have sought assistance with car seats or buggies, or wanted some show-and-tell in the curiously unbranded Early Learning section at the rear, but all staff were again coralled behind the tills.

Retailing isn’t easy at the moment (you may have noticed), but it does seem curious to under-staff your most important new stores within a week of opening.  If you can’t throw some payroll hours at converting new customers to your brand, and you don’t have a high-concept store design or radical new products, how are you going to get your store to stand out from 300 others at Westfield?

Pausing to admire the publishers’ pack-shots on the Foyles hoarding (opening next month), we headed into one of Westfield’s biggest draws, the John Lewis store.  And our initial impressions were… oh dear.  This has all gone badly wrong.

The Partnership has built a large store that feels small.  Perhaps the escalator cut-out is too big, but where M&S is spacious, JLP is cramped and tight, particularly on Lower Ground, where the juxtaposition of menswear to the right and kitchenware to the left feels absurd.  The shopfloor has been segmented using fretworked screens and other devices which only serve to further cramp the feel of the place – the aisles are tight, and the product juxtapositions frankly bizarre.  And the severed hands hanging from the ceiling are downright creepy.

Things improve on what Westfield calls the Ground Floor, and JLP calls First (women’s fashion, accessories and beauty), and things are as they should be here and on First/Second (furnishings and fabrics).  The top floor is strong, with the best toy offer we’d seen all day – at last, someone carrying all the brands, facing the plush towards the customer, and keeping the offer clear.  But the top floor also contains a big fat compromise of a space, which may explain why the bottom floor is such a dogs’ dinner.  A huge London 2012 shop sells every imaginable take on Olympic mascots and logos, complete with a viewing gallery offering a sensational panorama of the Olympic park.  This must take up over a quarter of the total retail space on the floor, so you have to conclude that several categories will exit the lowest level and move to the top in due course – but not until autumn 2012.

An aside – isn’t it about time we stopped treating the 1960s as the pinnacle of British grooviness?  Routemaster buses, Concordes and original Minis barely exist in modern London, and are surely irrelevant to our image of a 21st century cosmopolitan capital city.  At least red phones boxes and beefeaters still exist, but we need better, more modern icons.

Back to the shops, but before we leave John Lewis (after a reliable lunch at The Place To Eat) I should note that customer service was as exemplary as ever.  There’s nothing unfixable about this store, but it wasn’t delivering the experience we’d come to expect.

What makes John Lewis more profoundly disappointing is the quality of Marks & Spencer.  M&S has created a proper department store in a free-standing building that provides a sense of occasion on every level.  I haven’t seen the prototype fit at Kensington High Street, but this was a classy, well laid-out and very shoppable offer.  Menswear (complete with a tailor running up alterations, and much clearer definition for brands like Blue Harbour) was simply the best I’ve ever seen in an M&S; home and furnishing were strong, and a delightful top-floor cafe offered treats that the customer could also buy from the Foodhall.  I’ve written recently about the challenging legacy of old stores that M&S has to deal with; by contrast, in a brand new space, they are creating some of the best retailing in the UK.

Clinton’s has made a bold attempt to update its image.  The orange and purple trialled in St Albans is much in evidence, but some of the shopfitting was cheap, and the juxtaposition between a funkier feel and some of the granny-targeted merchandise was jarring.  Service was excellent, though; Clinton has too many shops, many of them desperately old and tired, but there’s a place afor a mid-market gift/card chain, and one hopes that the new management team can move the business forward.

Timothy Melgund at Paperchase has often asserted he runs a fashion brand, rather than a stationery shop, and the new store is on the prime fashion pitch, beautifully presented and ideally sized.  Cards can be generic things, and Clinton/Scribbler/WHS are subject to constant price comparisons with the supermarkets; Paperchase overlays some quality and product uniqueness, and lifts itself well clear of the fray.

A few years ago, a vast HMV would have taken dominant space in a new mall like Westfield.  Not any more – a smaller unit on a side aisle has to suffice.  The CD/DVD offer is what it is, slowly and inexorably declining (though it doesn’t look as though anyone has told the buyers – stock density is extreme); games appear to have been circumscribed, and the technology offer – pitched to save the business – hasn’t noticeably moved on from the Islington protoptype.  This was very disappointing; Apple, Currys/PC World Black, and the upper end phone stores were displaying better tech on better fixtures, with dangly cables under control, and staff to explain and sell.  HMV offers MP3 players, boomboxes (archaic term, sorry) and accessories, but it’s hard to see for whom this store would be first choice for this product.  Execution of these ranges will have to be more stimulating if they’re to offer any real hope to HMV.

Next time I visit Westfield, I look forward to seeing more stores trading – there are still a lot of “under constructions” and “to-be-lets”.  I’ll rope in a teenage daughter and we’ll take a proper look at fashion.  However, I also wanted to understand where the customers were coming from.  Great play has been made of Stratford’s connectedness – two tube lines, Overground, DLR, national rail and direct links to the Continent, plus an adjacent bus station.  You can reach Westfield directly from any of these, but plenty of people are entering on foot from “old” Stratford.

Old Stratford compares very badly to Westfield and the Olympic Park, reminding the visitor of how deprived parts of our capital can be.  A one-way system encircles the old Stratford shopping centre, so that most foot traffic passes through a dingy mall and across knackered highways to reach Westfield.  Display boards promote upcoming public realm improvements (clouds on sticks!), but it is hard to see how this sort of surface flim-flam can improve the residential and commercial environment.

Stratford’s old mall is big, dating back to 1970s planning models that brought whole town centres under one roof (think Camberley, Eastleigh).  The interior is dark and crowded, stinks of cheap disinfectant, and is full of the crowds you can see on the bridge above, pushing their way through and past the old shopping experience and on to Westfield.

Massive regeneration will surely help the area, creating jobs and housing.  A masterplan was signed off by Newham Council at the end of last year – just five years after the successful Olympic bid.  Serious thought needs to be given to local shopping provision – presumably the duplicate chains in the old scheme will be seeking to exit, leaving market stalls and pound shops behind them.  A decent, modern supermarket would be a good start, but at present, the contrast between Westfield and its immediate surroundings is too stark.  The number of shoppers in Westfield suggests long-term success (though, as I indicated in Part One, the Olympics need to come and go before retailers will have an objective picture of their performance).  To the south, Canary Wharf’s wealth has largely failed to trickle out to its immediate surroundings, beyond the gated apartments and highways.  A scheme like Bluewater – turn left off the M25 and head for the quarry – has little integration with Dartford and Gravesend.  Westfield and Stratford City, on the other hand, are in the heart of the deprived East End, and can – must – do better.

Photos:  Telegraph, Design Week, Mail/Getty