Is Mike Ashley The New Blackadder?

Many of us watched the goings on at the Sports Direct AGM yesterday open-mouthed at the level of drama being acted out both on and off the stage.

Shareholder revolts are nothing new, and Ashley and Keith Hellawell surely had it coming, especially as it emerged recently that Hellawell had attempted to dodge the bullet of criticism by tendering his resignation before the company published its damning review into working practices.

One of the major criticisms being lobbed at Mike Ashley is the treatment his staff have to endure as a result of regular end of shift searches.  So it was doubly ironic that yesterday he suffered the same ignominy under the full glare of the cameras.

One wonders if the inclusion of a huge wad of fifty pound notes in his trouser pocket was a deliberate attempt at bravado.  The search came as part of a tour of the warehouse facilities Ashley was leading, presumably as part of an attempt to show improved working practices. He must have known it was going to happen, so the appearance of that crisp wedge of cash would have been unavoidable.  Or perhaps he’s just so loaded he forgot about that bit of loose change in his trousers.  If that’s the case perhaps he should be renamed Blackadder after this scene from the show.

What it says about Ashley rather belies the impression I got of him at the recent Parliamentary inquiry he attended.  I wrote the column below for Retail Week last Month, but after yesterday’s performance I think I may have to revise my assessment.

He may still like to consider my suggestions for improvements in working conditions though, even though they may rob him of future chances to whip his wad out when he needs to make an entrance.

I stand by my judgement on Philip Green however, who seems to get more loathsome by the day.  As an ambassador for all that’s great about retail success, he’s about as welcome as a turd in a swimming pool.  Even if that swimming pool is on board a 100 million pound penis extension.  The recent ‘renaming’ of his fabulous yacht by comedian Lee Nelson rather summed up my feelings and probably those of the thousands of BHS staff and pension holders he’s helped to leave in dry dock


My Column from Retail Week 11th August

Watching the recent Parliamentary appearances of Mike Ashley and Sir Philip Green, I was surprised to find myself warming slightly to Mr Ashley, something I’d never have imagined possible a few months ago.

That said it was rather like deciding which dastardly stage villain you’d most like to share a stage with, or perhaps a better analogy would be the pantomime horse.

In Green’s case he came across as arrogant and resentful.  Quite obviously certain in his belief that he was better than every person in the chamber.

It was a performance of bravado and bluster that, if I had my psychologist’s hat on, I’d say was more over-compensation than real attitude.  But then considering he apparently needs one yacht for himself and several others for his ego, I might be giving him a far too sympathetic analysis.

In both cases it’s apparent that they were less concerned about how their behaviour reflected on their own companies than they perhaps should be.  A blasé attitude that their customers will remain loyal to their brands, regardless of their attitude to the usual social mores that constrain the rest of us.

Ratner Moment

They may be right, but I wonder how far we’ve really moved on from the days when a mis-timed joke can bring down a company, as we saw with Gerald Ratner 25 years ago (yes it really has been that long!).  There but for the grace of the god of retail goes any of us.

With that in mind I remain baffled over Sir Phil’s nonchalance at being photographed relaxing on the deck of his third multi-million pound status symbol, while BHS sinks slowly to the bottom with the loss of almost all hands.  As Gerald discovered to his cost, timing is everything.

Mike Ashley at least looked like he was taking the questions being asked seriously though.  Considering he reportedly had to be dragged to Parliament ‘kicking and screaming’ he seemed to warm to the experience remarkably well.

His main defence against the revelations of questionable staff treatment at his distribution warehouses was ignorance of the circumstances and practices going on inside his own company.

I’m not going to speculate about the veracity of that claim, but as in many walks of life, as with MPs, doctors, military leaders, and business owners, the fault ultimately lies with the person at the top.  They set the tone and decide the ethos and culture of the organisation.  It’s really not a defence to say ‘Not me guv!’.

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The culture in Sports Direct seems to be one of expediency and antipathy.  A strata of mistrust that runs through the company from the warehouse and shop floor staff upwards.  A belief that everyone is out to get everyone else.

Ashley expressed dismay that the daily searches of warehouse staff were taking longer than they did when he set them up 10 years earlier.  But in that admission he confirms that the general tone of the relationship between staff and management remains one of distrust.

Trust

Perhaps he’s right to feel that way, but that does beg the question as to why they would employ staff that they did not have absolute faith in.  Perhaps past experience informed their actions and the belief that they would be robbed blind if they didn’t watch everyone like a hawk.

To me that lack of trust seems to be at the heart of the problems at Sports Direct.  Sadly, rather than dealing with that, Ashley has pushed to improve the searching procedures to reduce the ‘bottlenecks’ at the end of shifts.

But another approach would have been to foster more loyalty in his workforce so that they might be less inclined to help themselves to a five-fingered bonus in the first place.

The culture in Sports Direct seems to be one of expediency and antipathy.  A strata of mistrust that runs through the company from the warehouse and shop floor staff upwards.  A belief that everyone is out to get everyone else.

Studies carried out many years ago showed an inverse relationship between company culture, pay levels, job security and the problem of pilfering.  In my own company, selling many easily pocketable items of high value, we never resorted to body searches.  I did consider them on occasions, but felt that the damage they would do to morale and staff relationships weren’t worth the small amounts that we undoubtedly lost over the years.

And with stringent stock control procedures in place, and – most importantly – seen to be in place, we knew the losses were minimal, even though on one occasion we had to have the manager and all the staff in a branch arrested over cash handling irregularities.

The key for me was that we had a good relationship with our staff and there was mutual trust and respect.  I’m firmly convinced that prevented just as much shrinkage as any number of cavity searches, body scanners and security staff.

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So as Mike Ashley starts to get to grips with the managerial problems within a company that he admits may have outgrown previous internal audit procedures, he could perhaps do worse than take a look down the other end of the telescope.  Put himself in the place of his workforce who, if recent reports are to be believed, feel undervalued, under-paid and under suspicion.

A more open and meritocratic attitude towards HR management has so often been cited as the root of success in many companies, most notably in the IT sector.  Likewise success in retail doesn’t have to come down to the hard nosed antisympathetic treatment of those who work for you and with you.

Moreover, in terms of customer facing businesses like ours, we certainly don’t need our leading lights to be seen in the media as disconnected, uncaring profiteers.  Or to be dubbed by the press as “Rude, unprofessional and bad-tempered”.

Indeed as we’re finding out now, in a supposedly more enlightened and informed world, such behaviour could not only be counter-productive, it may even lead to another ‘Ratner moment’ in the very near future.

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We Need Rates Reform Not Magic Rabbits

Pulling a rabbit out of a hat.

Maybe it has something to do with the proximity of Easter, but it’s long been the tradition for chancellors to pull a rabbit out of the hat during a budget speech, and last week there were leporidae leaping about all over the place in Westminster.

Speculation is that the abundance of feats of fiscal phantasmagoria this time, were simply there to divert attention away from the fact that George Osborne has spectacularly failed to hit any of his own arbitrarily set targets which we are supposed to be judging him on.  But whatever the reason, the showstopper for most retailers was the changes to business rates.

As usual, in the run up to this budget, there were calls from retail pressure groups for  there to be some serious moves towards rates reform, rather than yet more promises of reviews and recommendations.  I, along with other campaigners, joined that chorus, although I have to say that this time round I wasn’t expecting much in the way of harmony.  I thought the indications were there that we’d not see any real structural  change in the current broken system of local taxation.

On the whole I think I was right, but there were some more helpful than usual measures in George’s big red box this year.  Unfortunately though, on closer scrutiny they’re not quite as positive as they first seem.

Move to CPI

The one element of the package that could be described as structural was the move to CPI from RPI in the setting of rates multipliers.  CPI is the main indicator used in most other government departments to set things like pension increases, so it’s long been indefensible to use RPI for payments going the other way.

Indeed the last government’s own tame celebrity consultant, Mary Portas, had this as one of the key recommendations in her high street review back in the heady days of 2011.  Although, like many of her recommendations, this was also ignored.

So on the face of it, it’s a good move, until you realise that it’s not going to be implemented until 2020.  The subtext of that for me is that we’ll be keeping the same anachronistic system of setting a tax using notional valuations for at least another 5 years.  Something I had hoped would have been consigned to history some years ago.threshold-graphic-zoom

Revaluation Cycles 

More evidence supporting that depressing assumption came with the plan to change revaluation cycles to 3 years rather than the current 5.  Again reaffirming that the Chancellor sees a long term continuation of the current arrangements, albeit in a slightly more responsive way.  Although, as he’s been seen to play fast and loose with these cycles when it suits him, including delaying the 2015 revaluation by two years, one wonders how much value there really is in this commitment.

Doubled Thresholds

The other course in this smorgasbord of rates tweaks was the doubling of the threshold before properties become eligible to pay business rates.  This was increased from £6000 to £12000 in one fell swoop, with tapered relief on properties up to the £15000 mark.  Something I’m sure Osborne hoped would give him the wow factor with the small business community.

And yes, it’s a bold move.  But considering the speed with which rental tones have continued to move, even through the recession, this change means the system will have just about caught up with reality only to see it speed off into the distance again.  This is especially true of the very high rented areas like London where decent retail properties below £12000 are going to be even rarer than magic rabbits.

The subtext of that for me is that we’ll be keeping the same anachronistic system of setting a tax using notional valuations for at least another 5 years

And let’s not forget that there are still many relatively small retailers who will continue to fall between two stools, in premises too large and over-rented to benefit from these changes and yet not large enough to have the economies of scale to cope with other challenges on the horizon, such as changes to pension liabilities and the new National Living Wage.

Someone Else’s Money

We also need to remember that in these times of austerity and dwindling local authority budgets, Osborne announcing these generous reductions in tax take is really him writing cheques he knows he’ll never have to cash.  As we all know, it’s always easier to play with someone else’s money.

Having told councils last year that they will be retaining 100% of business rates in exchange for further reductions in central government grants, making changes that will significantly impact that income seems like a breathtakingly cynical bit of game playing.  And this will have a knock on effect in town centres and local communities where small stores are trying to do business.

So, as much as I’m pleased that, by some estimates, as many as 50% of smaller retailers could be taken out of the current business rates madness altogether, I’m struggling to accept these measures as anything other than a sop to distract us away from the real prize of proper, lasting and equitable local taxation reform for all on the high street.

Piecemeal

Until we do have that, I can only see more piecemeal concessions being bolted on to a system already creaking under it’s own inefficiencies.  We still need a mechanism that’s responsive to local business conditions.  One that can be influenced for good and bad by local council policies and can be applied equally across all types and sizes of business.

all-or-nothingMy personal preference is for a system of local purchase tax, similar to what we see in many US stores.  But I know I’m in a minority in favouring that.  Indeed the very idea was discounted early on in discussions over reform last year.

Much as I support small retailers, I also believe that all sizes of business should pay into the local economy through such taxation.  But a system that took proper account of trading patterns, would mean that smaller businesses would pay an amount appropriate and, above all affordable, in their particular circumstances.

My personal preference is for a system of local purchase tax, similar to what we see in many US stores.

I’m happy for those businesses that will benefit from these changes, and I hope that they will stimulate local economies and help small independent retailers weather the continuing storm on our high streets.  But I remain concerned that these measures are not going to divert us from the goal of seeking a root and branch reform of a rotten system that should have been retired many years ago.

If anything I think the measures announced in the budget suggest that rates reform is going to be kicked into the long grass for at least the term of the current parliament.  If that’s the case I guess all we can expect in the immediate future are a few more rabbits emerging from that undergrowth, making a leap for the Chancellor’s top hat.

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Could The ‘Living Wage’ Be The Living End For Some Small Retailers?

Payday written

The number of major retailers lining up to announce impending pay increases seems to be growing by the day, seemingly inspired by the Chancellor’s surprising commitment to what he called a National Living Wage.

Cynics amongst us may say that one motivation for this uncharacteristically altruistic move was to wrong foot opposition parties such as Labour and The Greens who’ve advocated the pay reforms proposed by the Living Wage Foundation.

That said, George’s Osborne’s aspirations fall somewhat short of the LWF’s, but on the face of it we at least have a welcome move in the right direction.

The new rates don’t come in until next year but there may be an ulterior motivation for some larger retailers upping the wages ante now, and in some cases going beyond new statutory requirements. Not only does it gain them several kudos points in the PR arena, it also piles pressure onto their competitors to follow suit. Happily for employees, wages may just have become a much more competitive battleground.

Tesco for example are currently facing a crescendo of calls for them to chase those foreign upstarts Lidl down the Living Wage trail at a time they can ill afford to add further financial pressures to their already creaking P&L sheets.

Balance Sheet Shuffling

For most larger retailers though, paying the higher rate shouldn’t really be a problem. They may have to do some balance sheet shuffling, but it should only make a small dent in their profitability. Certainly there may be a few long faces at the next shareholder meeting, but a couple of extra glasses of champagne will probably help them see the positive side.

WolfsonI have to admit to some bemusement at the recent whinnying from Lord Wolfson about Next’s wage bill increasing by £27m as they also announced profits of nearly £350m. For someone reportedly earning £4m a year himself, it seems rather churlish to begrudge his staff a mere 8% dividend on the profits they helped to generate.

Recent reports about retailers such as Sports Direct allegedly sidestepping even minimum wage regulations don’t do our industry any favours either.

For smaller businesses though the picture is somewhat different and there’s growing disquiet about how many employers are ready and able to deal with the additional demands that will be made on their businesses when the new system starts to be phased in.

For many independent retailers already struggling with overheads increasing every year, the Living Wage is going to be much harder to deal with, especially as we now see that the denouement of the Chancellor’s plot was to pave the way for a shredding of the tax credit system.

Even though that has for the time being proven to be a cut too far, I think it’s far too early to breathe a sigh of relief about future attacks on the low waged economy.

The reliance on tax credits by some businesses has been seen as perversion of the system, but in the face of scant support elsewhere, they  have tangentially helped small businesses by topping up the wages of their lower paid staff.


For many independent retailers already struggling with overheads increasing every year, the Living Wage is going to be much harder to deal with


Whilst I agree that for larger operators it’s difficult to defend such subsidisation, for some smaller companies it’s something of a lifeline.  That’s not ideal, and I know most small businesses would much rather pay a decent wage without pushing their valued workforce onto state assistance, but often there’s little choice.

I know of shop owners trading at the very margins of profitability, often only drawing a minimal salary themselves, sometimes well below the minimum or living wage. They can’t simply magic the money to cover additional wages out of thin air without help on other overhead priorities.

Business rates

VOAMost notable amongst these is business rates, which was the subject of yet more empty political posturing at the Conservative Party Conference, followed by an announcement of a further delay on proposals for reform in the Autumn Statement.  There are now fears that this burden will be even more overwhelming in some areas after next years revaluation.

Many are also creaking under the weight of additional pension liabilities now being phased in. The alternatives for these retailers will be to further reduce staff numbers, break the law, or simply go under.

There are some councils who earlier this year proposed schemes where they would reduce business rates for companies who agree to pay the living wage.  However the devil is in the detail and many of the proposals only meet a small part of the additional costs imposed by the increase to the minimum wage.  Although I’m sure most small retailers would prefer to pay their staff more given the opportunity afforded by overheads savings elsewhere

Can’t pay Won’t pay?

There is of course the argument that if you can’t afford to pay a decent wage, you shouldn’t be in business anyway, but that seems to me to be an attitude that runs contrary to the ethos of the Living Wage principle.

Surely small business owners have the right to make a reasonable living as well as their staff, and options such as statutory profit or equity sharing could be considered for smaller employers and their employees.

I’m a supporter of the Living Wage and I’m delighted it’s finally starting to become a reality. But it can’t simply be waved into existence without some thought for the implications for companies who, no matter how much they may back the principle, may genuinely struggle to pay it.

Without a more comprehensive approach to the overall economic model that these businesses face, it’s likely that, for some of them, the Living Wage could easily become the living end.

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This article is an updated and expanded version on my recent Retail Week column

Unrealistic Rents Are Risking The Future Of Our High Streets

high-rentThe British Retail Consortium warned recently that a failure to deal with our broken business rates system could have a devastating impact on our economy.

In a stark prediction to the Chancellor, they estimated that up to 80,000 shops could fall empty over the next 2 years, putting 800,000 jobs at risk.

This is based on the assumption that 60% of stores facing lease renewals over the next 2 years may simply walk away from what has become an unsustainable commercial property model in the face of climbing rents and falling sales.

I’ve previously highlighted the perfect storm that is brewing up towards the end of 2015, with 40-50% of commercial leases falling due to for renewal.

The BRC’s predictions may be pessimistic, but there’s every reason to believe that a huge dent could be put in the retail economy very soon. This is especially worrying, considering consumer spending and the associated debt shift to private borrowing is what appears to underpin much of George Osborne’s plans for our economy over the next few years. Likewise many local authorities now rely more heavily on business rates as cuts in central government funding bite even deeper.

I’ve often been critical of the BRC. I see them as an organisation geared heavily towards protecting the big boys in the retail hierarchy, with only the odd glance back down the ladder towards small independents and medium sized chains. But on this occasion I’m in complete agreement with them, although for slightly different reasons.

Rates Burden

Business rates are of course a huge burden on high street operators and an issue that urgently needs to be addressed by the Chancellor – indeed it’s something I rarely tire of saying myself. But this has been the case for at least the last 10 years now.

However all this is largely irrelevant to the overall problem. The main reason why many store leases may lapse at the end of this year has less to do with rates and more to do with the ridiculously out of kilter valuations of the properties themselves.

It’s often conveniently forgotten that business rates are based on historic rent agreements. Many of them made by companies financed by the very same people who also bankroll mall developers and institutional landlords, both of whom have a vested interest in keeping rental expectations unrealistically high.

The driving force behind our inflated rating valuations are the equally avaricious demands by landlords who would rather see a store empty than see it’s theoretical value fall.

Bluff And Deception

Anyone who has had experience of lease renewals over the last 5 or 6 years will tell you that there’s very little sign of pragmatism from landlords or property advisers. Any hopes of the market being reset after the financial crash have long been abandoned.

This is partly down to the way that commercial property has become the vehicle of choice for the disconnected behemoths that are multi-national investment funds, but mainly because most such organisations are hip-deep in the same quagmire of over-leveraged debt that led to the spectacular economic swan dive we all witnessed a few short years ago.

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There has long been a fragile framework of bluff and deception underlying the retail property market. More than any other commercial property transaction, store leases and rents are teetering on the edge of an abyss created by property advisers and fund managers who simply refuse to give any quarter to such mundanities as fiscal viability or long term tenant relationships.

The general principle seems to be that as long as they can keep the music playing, no one ever has to count the empty seats. The problem now of course is that a raft of impending lease expiries means there may soon be a lot more chairs and a lot less people willing to play the game.


The driving force behind our inflated rating valuations are the equally avaricious demands by landlords who would rather see a store empty than see it’s theoretical value fall.


There was nothing tangible in the recent budget about business rates reform, and that’s something that we must continue to demand from a government that has been consistently phlegmatic about, despite promises of action.  But that’s now only half the story. Without effective commercial rent and lease control, or some voluntary injection of common sense into the equation, these other costs will simply expand to fill the vacuum created by any reduction in the rates bill.

If we’re going to avoid thousands more empty stores and hundreds of thousand of lost jobs, we need a comprehensive review of the entire bricks and mortar proposition. In the meantime property taxation will only be a part of any retailers decision to stay or walk away.

The Undercover Analyst – Checking the Numbers on Mobile Phone Stores

main logo blueIt’s time for another of my regular checks on high street operators in association with retail analysis experts ShopperTrak. This time I’m looking at mobile phone stores, a category we’ve seen explode over the past 10-15 years and one which has come to dominate our high streets. As always these reports are written after actual visits to selected un-named stores and will focus on areas such as store design, operation, staff management and customer service.

Ok, I’ll admit it, I’m a bit of a gadget freak.

I spent my youth dreaming of the kinds of gizmos that now populate our everyday lives. Star Trek style talking computers, Blade Runner video phones, Batman’s wrist worn communicator and, not forgetting, jet packs.

The last item on my list might still be a way off, but the others are all with us now in ways that most of us have come to regard as just a normal part of our ordinary lives. Those of us who can remember the days before you could stand in the middle of nowhere and to speak to someone on the other side of the world, simply by reaching into your pocket, probably won’t appreciate how mind blowing that still is. The fact that such technology has now settled in as part of the mundanity of every high street might have something to do with that.

JetstonsThese stores sell us brain meltingly complicated technology in much the same way as we’d pick up a packet of kidney beans in our local supermarket. In fact, in many cases, we could do both under the same roof. It’s technology Jim, but not as we knew it!

For this outing into the new frontier of consumer electronics I chose a road I once frequented on a regular basis looking for the latest in Hi-fi and sound equipment. Tottenham Court road in the 80s and 90s was THE place to come for the latest sleek sound system at knock down prices. Part of the process in those days was to visit every store looking for the best deal, before playing each shop off against one another. I have to admit that’s a bargaining technique that stood me in good stead in future years in business.

It was therefore saddening to see upon my return, that my choice of electronics stores these days was not as diverse as it once was It is predominantly populated with mobile phone stores, with only a few of the store fascias I remember from the old days.

I chose to visit three mainstream mobile phone shops to make direct comparisons between them. As they are all selling exactly the same hardware, with only notional differences in tariff offers, it was quite easy to gauge how they stacked up against each other.

The Price is Wrong

The first store was arranged all on one floor so my arrival was easily visible to all the staff, who immediately came over and spoke to me. I could also see that other customers were being dealt with throughout the store. Thankfully, there wasn’t too much of the hard sell which can be common in similar stores.

oopsThere was some impressive up-selling going on from the outset as the store manager who had approached me enquired about the status of my current mobile contract. Interesting that these days no one ever assumes that you wouldn’t have a mobile phone!

Mobile phone stores are now gradually diversifying into ancillary products and this particular store had a good range of headphones, presumably for those who also use their phones as MP3 devices. I enquired about the price on a pair that caught my eye and this is where the fun began.

The price displayed said £160 which both I and the sales adviser felt was a tad on the high side. On checking the computer it turned out he was right, the actual price was an infinitely more reasonable £25! Neatly proving the advantage that a human has over a machine generated price tag. It also suggests that this company might need to double check their merchandising procedures! Regular shop floor and merchandising audits have been a feature of my own stores and really should be carried out at least once a month. This neatly demonstrates why.

Overall though it, was a very neat and well run store. A good experience.

ShopperTrak Says – Using retail analytics, it is possible to measure the success of different initiatives, including new customer service programmes and training to make sure your sales staff devote their full attention to engaging with the customer at the right time.

Wall of Death

In store number two, customer interaction seemed like it was top of the agenda as I was greeted by a designated staff member from behind a podium at the entrance.

Sadly, this seemed to be the limit of the initiative as I was then confronted by a human wall consisting of 4 sales staff in a line, each chatting to each other and apparently oblivious to my presence.

This was a store that appeared to know what was needed but was supremely bad at delivering it. Displays were messy and in desperate need of a spring clean. In one corner I noticed a seating area with charging points for phones, presumably there to increase dwell time in the store. A good idea in theory, although the floor was grubby and the chairs looked like they’d seen better days. There were no magazines or other literature for me to read and the idea of any refreshments being available seemed a forlorn hope.

ShopperTrak says – It’s crucial that retailers look at labour allocation in order to strike a happy balance between the number of customers entering the store and the availability of staff on hand to greet and serve. Shopper traffic data provides retailers with their truest measurement of sales opportunity, which is key to effectively scheduling labour. By scheduling the appropriate amount of employees and the best sales staff with the hours of greatest opportunity, it is possible to turn labour from an expense into a strategic sales tool. This includes including identifying when there is too many staff on the shop floor. During our visit, staff far outweighed customers.

I made a hasty exit past the still self absorbed sales staff and headed for store number 3.

Open For Business

On first appearance, my final mobile phone store looked like it was going to be a bit of a wash out. Visual merchandising was pretty weak with a painfully sparse window display seemingly based on an odd cardboard box theme.

break-time-coffeeOnce inside, however, it was a completely different story – an effective layout with lots of opportunities to interact with products and plenty of customers being attended to on a one to one basis. There seemed to be a high number of staff and no one appeared to be kept waiting – a great result! The displays were clear and informative and would have kept me amused for a fair while even if there was a short delay in service.

I noticed there was a downstairs area so I headed off to investigate, finding a similar seating area to the one in the previous store. But that’s where the similarity ended. The execution of the idea here was far more accomplished. There were the same plug in stations for your phone or laptop, but the area was clean with a designer look sofa, plenty of literature to read a tea and coffee station, water cooler and even a well stocked fruit bowl! It looked like a place you could have stayed for lunch, although you might eventually have to buy something for the sake of appearances!

The final touch was the availability of meeting rooms adjacent to the seating area. Not something I’ve ever seen in a store before, but somehow it seemed to fit with the general ethos. It had a real ‘open for business’ feel and I’m sure this area could generate spin-off sales of their technology products. Something other similar stores could learn from.

ShopperTrak says – The break-out area was a real nod to the ‘retailtainment’ trend, going beyond just selling to shoppers, to entertain , and inspire them by providing the best possible shopping experience. In this case, the lounge was the perfect opportunity to say, ‘come on in, stay a while’. By encouraging shoppers to spend longer in the store, retailers increase the likelihood of shoppers making a purchase.

However, the measure of a good window display cannot be underestimated., if potential clients do not feel the pull to come into the there is no amount of entertainment inside the store that will help drive new sales, Being aware of pass by traffic peaks and having attractive window displays can really boost draw rates and as a consequence new sales.

This more positive experience marked the end of my survey of the mobile operators. Overall they seemed a mixed bag. Some good ideas in terms of design and add-on services, but in a few cases this wasn’t backed up by staff with enough engagement for my liking. The other interesting aspect was the expansion into other categories which seems to be a common factor in many retail sectors these days. With the merger of Dixons and Carphone Warehouse still fresh in our minds I wonder how long we’ll continue to see mobile phone stores on the high street dedicated only to this one narrow aspect of technology.

In an attempt to answer that question, I’ll be taking a look at how the wider technology sector is faring in my next report in a few weeks time. So don’t touch that dial folks!  For more information on ShopperTrak’s full range of analytic services by click the link below.

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Hope or Hype? – Why I Never Trust Economic Reports

Economic reports seem to be like buses. You wait for ages and then four turn up at once.  Last week they seemed to leave the depot together, all promising to take us somewhere nice for the summer.

Nielsen’s report on consumer confidence was the first to pull up to the kerb with figures that seem to back up those released last month by GFK. Both showed consumers looking at the high street with a more optimistic gaze, with Neilsen putting consumer confidence at a 9 year high as opposed to GFK’s more buoyant outlook of a 13 year peak.

Then came the CBI’s quarterly Distributive Trades Survey – a measure I’ve never been particularly impressed by – reporting expectations for June riding on a 27 year high, although in reality orders were only growing at their fastest pace since 2010.

Footfall monitoring company Springboard also announced footfall on the high street over the bank holiday weekend eclipsed that of shopping malls with an increase of 4.4% as opposed to an almost equal drop in retail parks and shopping centres.

Finally Asda’s income tracker proclaimed that us lucky Brits now have around £17 a week more in our eager mitts than we did this time last year.

Rosy View

If we’re to believe these statistics, high street store operators can at last cast the rose tinted spectacles from their reddened eyes and peer at the horizon with renewed hope. We now just have to for wait for those armies of revitalised shoppers to beat down our doors with fists so full of cash we’ll barely be able to fit it all into dusty till drawers previously inhabited only by moths and a few dog-eared copies of the last set of reports that promised us roughly the same thing a few months ago.

You might guess from my barely disguised flippancy that I don’t personally put a great deal of store by these reports. And you’d probably be right.

Nielsen’s epistle for example was carried out using a sample of respondents from online shoppers. A group who are already looking to buy (or why are they on the internet being asked about shopping?) so will naturally be pre-disposed to making a purchase.

The CBI’s survey is a constant source of bemusement to me, and many of my own suppliers that I have conversations with. They appear to have their heads in much loftier clouds than most of us, being twice removed from the actual consumer transaction. In my mind the impact on the high street of an estimate about probable orders is tenuous at best, and has been proved to be such on many previous occasions.

In terms of footfall I’d say that Springboard are one of the more accurate companies out there, but a broad headcount usually leaves me shrugging my shoulders, as such a number isn’t much use without the associated conversion data.

Wet Seaweed

Income trackers are the statistical equivalent of the wet seaweed barometer, based as they are on a set of constantly fluctuating, notional measures. And in the end is a figure like £17 a week really going to make that much difference to the behaviour of the average consumer? Not if other analyses are to be believed which suggest that people are more likely to remain in their current pre-programmed behavioural loop of saving more and spending less after being ingrained with fiscal paranoia for the past 7 years.lf-WeatherRock

And to a large extent those people are right. There are so many factors in the shifting economic landscape right now that basing any predictions, let alone business decisions, on these sorts of analyses would be somewhat precarious.

This was neatly demonstrated on Friday when the comparison between Neilsen’s and GFK’s figures seemingly evaporated after GFK released new numbers showing consumer confidence fell to a 5 month low in May, ostensibly dented by uncertainty surrounding the General Election.  And as the pollsters showed us in that election, predicting outcomes based on what people tell you in surveys is a very tricky business.

Optimism Vs Realism

I’m all for a bit of optimism, but it seems like we rarely have realism in terms our business expectation these days. A few years ago I was bemoaning a similar level of ill-founded pessimism as being the harbinger of more doom and gloom than was healthy.  I’m equally sceptical about skeins of upbeat predictions.  Is a happy medium too much to ask for?

With rent and rates still at record levels and unrealistically low interest rates just waiting to be let off the leash, I think a healthy sprinkling of caution needs to be infused into any ideBus_Twitas that we’re about to see a renaissance in high street retail.

I could be wrong. In fact I hope I am, but in the end the only reliable statistic for a business is that figure on the bottom of your profit and loss account.

Personally I’d prefer to see what’s in the emergency budget before I invest in any bunting. Or maybe wait for the next report to see what that has on board. And just like the Clapham omnibus, I’m sure there’ll be another one along any minute.

This article was also published online as one of my regular columns for Retail Week Magazine

 

Selling Democracy by the Pound

for-sale-democracySome of my more regular readers will have noticed my absence from the these pages over the past coupe of months as I took some time out from retail cogitation to try my hand at politics.

My nomination came at a transitional point in my career as my company had just closed it’s last high street store after making the decision back in 2013 that we would move our business into other channels. I’m also looking at more ethical areas of retail so again the Green Party seemed a good fit.

I had actually intended to take a few months off to relax before launching a new business, and really accepted the candidacy as a paper exercise. But as with so many things I become involved in, I couldn’t just go through the motions.

Many people found it odd that I should have stood for the Green Party in one of the safest Conservative seats in the country. Firstly because The Greens aren’t generally known as great lovers of business, and secondly because I had about as much chance of winning as I had of joining The Spice Girls on their next reunion tour.

But I didn’t go into the campaign expecting to win. I did it for the experience and to make a point. The point being that business can be a force for good in society. I’m currently exploring a concept that I, and a few others, have come to call social capitalism. It’s a movement I believe small and medium businesses should be an integral part of, and a party like the Greens, being so far untainted by the guiding fist of big corporates, seemed like a good place to start.

Familiar Ground

Political campaigning felt strangely familiar to me as a retailer. And really that should have been less of a surprise. An election is essentially a marketing exercise with yourself as the product. So it soon became obvious that many of the skills I’d learnt at the helm of a multi-channel retail business could be easily applied to the more esoteric ideals of politics.

This was an election that many people predicted would be won online, with social media playing a big part in the campaigning process. It certainly seemed that way to me as Facebook, Twitter and Email accounts became integral to my political routine using software that was obviously based on CRM systems that would be familiar to any customer service manager. And I did indeed find these channels to be an essential element to getting the message out there, just as I do in my retail business.

I also saw many other candidates fall foul of not paying enough attention to these avenues, as well as some that used them entirely inappropriately. Branding has also become an important aspect of any political party and The Green Party really seemed to get it’s act together on standardising the look of logos and marketing material, which was encouraging.

Hustings were no different in my mind to a simple sales pitch and I even found myself back standing behind a market stall, although this time my stock in trade was leaflets, manifestos and my own personality, such as it is.

Too Big Data

The other familiar aspect to all this though was that frequently cited phenomenon – Big Data. This is a buzzphrase I’ve never been entirely comfortable with. To me it should really be called ‘Too Big Data’.

I’ve always been suspicious of the idea that the more analysis you do, the more data you have, the more accurate your forecasts will be. This is self evidently not the case. And the plethora of polls, super-polls and polls of polls during the election on served to underline this point by being so spectacularly wrong. Not a single published poll correctly predicted the correct result. Although there are reports that some pollsters did have results that reflected the actual outcome, but they were so far adrift from others that they were nervous of publishing them.

As many retailers will attest, analyses are all very well, but ultimately there’s nothing remotely predictable about the great British public, as voters or consumers. In that context I suppose it was a stroke of genius on behalf of the Conservatives to employ a former market analyst as their campaign manager. One who arguably used these inaccurate polls in a feat of misdirection worthy of any accomplished prestidigitator.

Or maybe it just goes to prove that it’s not how much data you have, it’s how you choose to interpret it that counts.

Money Back Guarantee!

article-1279806-09A92C17000005DC-437_634x369So there you have it. My brief political career dashed on the rocks of our rather arcane electoral system and a bit of good old fashioned market manipulation.

With so many unexpected parallels with the worlds of marketing and retail, it has left me wondering even more about what really constitutes democracy.

If we’re increasingly going to be sold ideology and aspiration like packets of soap powder, maybe there should be the same sorts of checks and balances as there are in the world of consumer protection.

Perhaps if politicians were made to operate under the same stringent regulations that retailers have to abide by every day, we may see a few less un-kept promises and bit more attention paid to customer satisfaction.

In which case will we be entitled to a full refund if yet another government fails to perform as advertised?

The Undercover Analyst – Luxuriating In Manchester

main logo blueAs part of a project with retail analytics experts ShopperTrak, I’m continuing my look at the retail landscape in areas around the UK and sharing some insights through regular blog posts.  Taking a broad cross section of market sectors and visiting unnamed stores, I comment on how they fare on specific operational areas I and ShopperTrak regard as being key to a successful and customer responsive store.  I’m looking for good and bad practices, innovative ideas and exemplars for all of us to either follow or avoid in our own businesses.  This time I’ve been looking at high end luxury stores in the centre of Manchester.

One could define luxury as any product that isn’t an essential. In that sense anything other than one pair of shoes at a time would be seen as excessive, unless of course you’re a centipede. But of course we all buy things we want rather than need, and in that sense we all indulge in luxury to some extent.

Having run a chain of jewellery stores for the past 20 years, it seemed like a natural step for me to look at this sector for the next of my occasional blogs in association with ShopperTrak, and for this outing I chose the city centre in Manchester on a busy Saturday afternoon.

Since the horrendous bombing of 1996 which wiped out nearly a third of its retail space, there has been a positive renaissance of retail offer in the city. Luxury stores are very well represented and I found a good range of mid to high end opulence to choose from. I went to three stores. Two within what has become a luxury enclave within the mainstream shopping locale, and one in the more business orientated sector.

I think I can speak with some authority on how luxury shopping should be done. It’s not really a complicated proposition. You provide a cosseting but inspiring atmosphere and you have on hand a team of well trained and well-presented staff that have all mastered the art of engaging with customers without pestering them. The final ingredient is to have a good range of aspirational products at the right price. It’s pretty much like any other retail proposition except maybe the price issue isn’t quite such an imperative.

Quick off the Mark

The first store I visited was that of an iconic British brand. Stock was principally aimed at women with what appeared to be an afterthought nod towards menswear.

Of late this company has been struggling somewhat which might be why the sales staff seemed so eager to see me. I was the only person in the shop at the time, and as a result, I was approached by 3 sales advisers inside 5 minutes. They were well presented and pleasant, but their patter sounded slightly scripted to me.

runners+starting+blockThere’s nothing wrong with attentive staff, but you do need to give customers room to breathe. The rule with my own staff was always to greet customers when they entered the store and then leave them alone for at least a couple of minutes. There was a high ratio of staff to customers here though, so perhaps they needed to co-ordinate more.

In a luxury environment it’s easy to over-staff. Apple stores, for example, have a deliberate policy of no signage to encourage customers to ask for help. This works well but you have to be on top of your game in terms of availability of advisers. People paying these prices don’t like to queue!

The store layout was rather self defeating, and seemed to be largely making the best of a pretty lacklustre job. A stairwell that took you to the second floor was located very close to the entrance, which I imagine diverts a fair number of browsers away from the sales area on the ground floor. Also, considering this was a store obviously aimed at women, it seemed incongruous to me that their target demographic had to plod up a flight of stairs to get to the merchandise. Not a great strategic move and something I would have expected to have been re-modelled during the fit-out.

Visual merchandising was on the poor side, and there was no opportunity for direct digital interaction. One member of staff was toting an iPad, although it was unclear if this was for a customer service role, or just internal use.

Considering this company has recently invested heavily in omnichannel, it was odd that this didn’t seem to be heavily integrated into the store. One other peculiarity that struck me was the lack of in-store music. Something I would have thought would be de rigueur in any similar retail environment.

ShopperTrak says: The nature of the luxury sector means that the ratio of shoppers to staff can, on occasion, become unbalanced. Location based analytics can help retailers to identify their busiest periods, highlighting when there are too many – or too few – staff on the shop floor as a result. This helps teams to allocate resources effectively, ensuring that the customer is only greeted once. Each store has a unique DNA and knowing when to greet the customer depends largely on the nature of the store. Armed with this knowledge, retailers have the power to make decisions relevant to their own environment.

iPads are an increasingly important sales and transaction tool within the physical store, with staff now able to offer shoppers the opportunity to buy stock that may not be available in-store, there and then. Luxury retailers can measure the impact of in-store technology by carrying out test periods, tapping in to data to see what effect these periods are having on conversion rates. Brands can also use location based analytics to monitor the success of digital screens and displays by seeing how long customers are lingering in areas with digital features.

A New Dimension

The second store on my luxurious odyssey was only a short distance away from the first but it was like stepping into an entirely different dimension. It was obviously a fairly new fit out and had taken advantage of many of the contemporary twists now available. There was an impressive open aspect design, well thought out with a much more focussed approach to merchandising and display. This store showed just how much impact a well thought our environment can make to your experience, assuming you have the budget to spend.

in store screenVisual merchandising was well implemented with window displays cleverly arranged so that items in the window grabbed your attention and directed it towards matched displays further inside the store. This had the effect of drawing you instantly in. Digital was well integrated throughout, with screens showing footage of the merchandise featured in runway shows. You know you’d arrived at fashion central when you stepped into this store. These aspects also caught customer’s attention and increased general dwell times.

The fit out was heavily weighted towards experiential aspects that engaged you with the brand rather than pointing you towards specific products. It has that quintessentially unhurried atmosphere, enhanced by nice touches such as a chill-out area near the changing rooms, with sofas, magazines and hot drinks available. This echoes stores such as cycle Mecca Rapha, where customers are encouraged to simply hang out rather than being pressurised to buy.

Staff were equally laid back, but all seemed to be busy and focussed on key areas of the store. The location of sales advisers at any given point seemed strategic, so that they could move seamlessly from housekeeping activities to customer service when needed. I was approached after 3-4 minutes browsing – A much better timeframe for initial interaction. I felt like I could take my time, but someone would be available as soon as I need them.

Overall this store was an example of exactly how well a store can be laid out and operated, assuming money is no object.

ShopperTrak says: The shopping experience is constantly changing with the brick and mortar store no longer just somewhere to purchase products. Rather, it is now an environment in which to be inspired, entertained or just to relax, with the ‘retailtainment’ trend high on the agenda for much of the luxury sector.

The chill-out zone in this particular store is a fantastic example of this and a great initiative that encourages shoppers to spend substantial time in-store. However, it’s important that retailers monitor the success of these initiatives to see if they are driving more traffic to correlating zones, i.e. the changing rooms.

Location based analytics also enables retailers to analyse the optimal length of the in-store experience for each store location. For example, how long is the dwell time when it starts to negatively impact conversion rates? Longer dwell times are seen as a positive when the client is engaged and conversion rates are increasing, but when the conversion starts to drop it may mean that customers are spending too much time waiting or queuing for example.

Not a lot of help

My final outing was to another iconic bastion of the luxury sector.

In operational terms, one bad mark against them was that after being in the store for nearly 15 minutes, not a single sales adviser had spoken to me. This was also the smallest store I visited so there really was no excuse for the lack of attention, especially as I was the only person in there at the time. Perhaps I just didn’t look like their kind of customer.

InIgnore some ways being given the freedom to browse unmolested by staff was a blessing, but being completely ignored is just as bad as being bombarded with offers of help. It’s a perfect example of how important it is to get the balance right.

That said, the store itself was well appointed and had a good designer feel about it. The window display was impressive with some clever lighting effects. Merchandise in the store was placed across a number of different levels meaning that customers were encouraged to look up towards smaller items, whilst clothing was within easy reach lower down.

It seemed this store was aimed at local businesspeople browsing in their downtime, and in that sense the clothing offer and the environment were perfectly pitched to that market.

Certainly not a bad shop, but in my opinion not really hugely inspiring either. But then perhaps I’m not in their target demographic, which might also explain why none of their staff seemed to notice me.

ShopperTrak says: Window displays in this sector are often designed to be ‘showstoppers’ that reflect the opulence and fashion-forward approach so synonymous with luxury. It’s key that retailers measure the success of visual merchandising to understand the impact it’s having on draw rates, i.e. the number of people entering the store.

So a real triumvirate of an in-store experience. Something I’m itching to characterise as the good, the bad and the ugly, although that’s perhaps unfair to at least one of them. It was certainly an eye-opener in terms of the wide range of approaches to what is undoubtedly a narrow market sector. Some of the stores radiated an obvious nonchalance towards customer interaction, whereas others were falling over themselves to engage. From an experiential perspective I think stores number one and three could benefit from a proper independent mystery shopper report, with store number one needing a really fresh eye cast over the shop-floor design and customer experience perspective.

For my own part I saw some great ideas in shop number 2 that showed just how well things could be done, not just in the luxury market, but across the board. Factors that I’m sure will inform the way I approach such things in any future store environments I set up or advise on. Just like haute couture designs eventually filter down to the more mass market, we can all take aspects of these stores to use in our own businesses, even if we maybe can’t afford the full outfit.

Join me next time when I’ll be looking at electronics and tech retailers.  For more information on ShopperTrak’s full range of analytic services by click the link below.

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Oxford Finally Flips The Switch On The On/Off Shopping Centre

westgateoxfordOxford is an ancient city.  Even by medieval standards things move slowly here.  So after what seems like centuries of wrangling, planning applications, withdrawn projects, hand shaking and head banging, Oxford is finally set to join other cities with a giant shiny shopping centre nobody really needs any more.

Having experienced the damage that these behemoths can do to small local retailers, myself included, this is a moment I and many others have dreaded.

The council of course has applied a heavy spin on the whole project, whilst ushering the developers and large multi-nationals into the city with wide-eyed certainty that a new shopping centre will solve all the problems we now have.

We know at least one of those problems – that of affordable housing in the city centre – won’t even be dented by this grandiose project.  In a move that is frankly baffling from a socialist led council, planners have dashed all hopes that the accommodation element designed into the revamped centre would be for social housing or affordable homes.  Whilst Green councillors opposed this move, others apparently felt that poorer people won’t be able to keep the new apartments up to the standards they expect to be demanded.

So no comfortable inner-city pied-à-terres for the ordinary folk of Oxford then.  Which is a shame considering Oxford City Council provided virtually nothing for that sector last year, despite claims that this was a priority policy.

Jobs are not the only thing to consider

Judging by the analyses carried out over the past 10 years it looks highly likely that the new Westgate extension in Oxford will have a significant impact on other retail destinations both in the immediate vicinity and county wide.

The council has claimed that 3400 jobs will be created by the opening of the new centre, which seems like a rather optimistic number to me.  Even if one accepts that figure, previous analyses have suggested that the number of jobs created will be far outweighed by those that will be destroyed elsewhere in the city and the surrounding areas.

It’s very easy to focus just on the number of jobs created, but when similar centres have opened there have been many casualties in other areas. This doesn’t even take into account the damage that’s likely to be done to trade during the building and infrastructure works and the impact of additional competition for small retailers that attracting large multi-nationals into the area will provide.

Until the council addresses the systemic issues with people visiting the city, such as parking, local transport and city centre management, a revamped shopping centre isn’t going to add that much prosperity to a town encircled by much better alternatives.  There’s also some question over likely losses to the council in terms of business rates which could run in to hundreds of thousands.

The new shopping centre will likely have some novelty value for a few months, but once the realities of trading in Oxford begin to bite, I doubt it’ll be anything more than another usual-suspect clone-town brand zoo.

Years of disruption

According to a recent article in the Oxford Mail, a scrutinising committee of city centre councillors are due to meet to discuss ways of keeping businesses alive during the hugely disruptive infrastructure works needed for the new extension.

roadworksSo Oxford City Council wait until AFTER the works have begun to think about how to mitigate the problems that will inevitably be caused by the works?

Another great example of the forethought and careful planning we’ve come to expect from our wonderful city council!

I was at a meeting with both the city and county council leaders over a year ago where I highlighted the potential damage that will be done by the infrastructure works required for the Westgate extension. Having already experienced the same in Bristol a few years before, it was clear to me and many others that the likely upheaval required for the Westgate works were going to do more damage than they were likely to be worth in the current climate.

Seems like it all fell on deaf ears. As usual.

Empty shops

My business in Cornmarket Street closed it’s doors for the last time after 20 years last year. Despite numerous pronouncements in the press that the city council was eager to support local businesses, we got zip-all support, even after asking on several occasions.  Indeed, at one point their planning department were very close to scuppering the only deal we could achieve to sell the store. Had they not done a last minute U-turn there would have been one more empty and un-lettable shop in the city centre.

In an era where many retail chains are looking to reduce their portfolios, the time for this centre has been and gone.   At the end of this year, 40% of retail leases nationwide will come to an end, sparking speculation that many large and medium chains won’t renew them.  The costs of retail space in many towns, Oxford included, is now at odds with likely returns on investment.  A new mall plonked into the middle of that scenario risks hoovering up any viable city retailer, leaving the existing shopping areas a wasteland as companies let leases lapse and move on.

There’s already plenty of retail space in Oxford city centre, some of it lying vacant even now.  Not least the huge former HMV store, empty for most of last year in what should be a prime location on Cornmarket.  The new Westgate development will seriously shift the focus of the town away from the existing shopping areas with the main anchor store, John Lewis, being located well away from the current main shopping destinations.  Again this is a very similar scenario to Bristol’s Cabot Circus development, which saw most of the legacy retail locations abandoned en masse by any store that could afford the move.

Councillors are also now apparently worried about the growing number of empty shops in the city, despite previous claims that there were queues of businesses eager to take space.  Perhaps news has started to filter out that retailing in Oxford is not what it once was.

In that context one has to wonder who is going to populate the new cathedral of consumption when it is finally completed, and for those that do take up residence, what kind of trading environment will they find?  With one of the worst December trading periods on record just behind us and radical changes in consumer habits continuing apace, it really does beg the question about how much space will be required when the Westgate centre is completed in 2017.  Moreover what will the rest of the city look like once all the remaining viable stores have de-camped into the waiting warmth of a lovely new mall?

910484_23238014With council plans to push up the cost of parking YET AGAIN and the negative impact of roadworks, and the city centre looking like a building site, it’s likely most consumers will continue to go elsewhere to shop, surrounded as we are by much more attractive and easily reached locations around the city and the county.  And once again, experience tells me that once people find better alternatives, they’re unlikely to return, other than for a quick nose around the new development.

A committee composed of councillors with absolutely no idea how businesses in Oxford operate, setting out to ‘examine’ how to deal with these issues now, is tantamount to closing the door after the horse has bolted, lived out it’s natural life and ended up in a dog food tin.  This project as has been in the planning stages for so many years it’s truly staggering that the implications are only being discussed now.

Oxford is of course known as the city of ‘dreaming spires’.  It seems that in terms of strategic planning, many of our councillors have also been asleep on the job.

Pressing The Reset Button On The Commercial Property Market

reset-przyciskI have this annoying habit of confusing two recently formed organisations.

Firstly there’s the Future High Street Summit, set up by high street campaigner Clare Rayner to bring together experts and activists concerned about the state of the great British town centre. It currently takes the form of a conference, open to anyone, but especially grassroots imagineers looking to contribute to process of re-building communities around a social and commercial hub.

Then we have The Future High Street Forum, set up by the government, supposedly to build on the work of the 2012 Mary Portas review. They have a smattering of academics and some fringe involvement from trade bodies, but largely it’s composed of vested interests, property investors, large corporate retailers and politicians appointed by a government department with no readily apparent clue about what is actually needed to deal with the problems in our town centres.

As you may be able to tell, even though they have similar names, there is a big difference between the aims and achievements of both bodies. I was fortunate enough to be invited to the first Future High Street Summit earlier this year and found it a very interesting experience. Rather fittingly held in the futuristic environs of the National Space centre in Leicester, it comprised of two days of speakers, discussion groups and networking opportunities.

A number of knowledgeable speakers shared experiences and insights over the two days I was there. Some I agreed with, some I didn’t. But overall there was a good cross-section of exemplars and I’d imagine everyone found something to inform their own activities and responsibilities. I certainly enjoyed the networking sections, chatting with people I already knew and making a few new acquaintances, some of which I’m still in touch with.

Where’s Brandon?

One notable absence though was the then Minister for High Streets, Brandon Lewis. He’d been billed as a speaker for some months, and having missed my opportunity to fire a question or two at him at his whistle stop visit to Retail Week Live conference a few weeks earlier, I was looking forward to getting a second chance in Leicester.

Brandon-Lewis_2886856bSadly though, at the last minute he discovered he had to somewhere else to be on that day. An important matter of state perhaps, or maybe it was just his turn to polish the Westminster cat. I remember checking his Twitter feed on the day to find out what could have been so important for him to break such a long standing engagement. I can’t remember it being anything earth shatteringly important. Certainly not as important as a conference bringing together people to discuss options for the very thing he was supposed to be responsible for at the time. Perhaps, like me, he got the two similarly named organisations mixed up and only realised his mistake at the last minute. That might have been an embarrassing admission for him, considering he was the chair of the government forum.

Whatever the reason the DCLG sent along a polished civil servant stand-in to read a prepared speech in impressive cut-glass tones. Rather more of a political treatise than an engaging presentation, it sounded like a lecture he’d already given a dozen times to the politically faithful. The questions piled up on my notepad, poised for moment when he would finally shut up. But, as his boss had done a few weeks before, he scuttled off with no time for in depth discussion of government policy. In the final analysis, perhaps the lack of engagement with attendees on both occasions speaks volumes about the government’s genuine attitude towards the issues.

We’re All Forum

Over the past year or so we’ve had a number of announcements from the Future High Streets Forum. Last year Government Minister Nick Boles suggested that hard to let stores could be re-tasked as residential properties, thus neatly erasing the problem of abandoned high streets and giving property developers free reign to make a lot of money out of the plight of inner cities.

No matter that the Forum was set up to help get these areas back into retail and other community uses. Let’s just solve the problem of over-rented, over-rated retail locations by turning them into luxury pied de terres. In one fell swoop this would provide hope to perfidious landlords who’ve backed themselves into a corner with fantasy loan to asset values and reduce the pool of available retail properties, thus inflating the market even more.

Their latest wheeze yet again involves the property hue of their spectrum of responsibility. A joint announcement from the Forum and the British Property Federation set out a plan for what Liz Peace of the BPF called a ‘collective ownership scheme’. The driving principle being that the disparate nature of property ownership on our high streets didn’t lend itself to the same sorts of controls available to the operators of shopping malls. Unusually for me, I agreed with Liz on this point. We do need curation on the high street. So many towns now are clogged up with the same usual suspect operators. from the ubiquitous mobile phone stores to the omnipresent coffee bars, many high streets are just plain boring.

Attack Of The Clones

The principle of the clone town is not new. It was identified some years ago and the phrase has long since slipped into the national lexicon, in many cases without much concern for what it actually means. Shopping centres have been quick to capitalise on this phenomenon and have applied fairly rigid tenant mix policies within their specific fiefdoms. I say ‘fairly’ rigid as it’s not unheard of for a big bucks offer to banish all concerns over duplicate use. You only have to look at Covent Garden and count the number of multinational perfume and body products brands selling virtually the same thing to see that.

p1060068-480x321But this more ordered approach to the shopping experience has paid dividends for mall operators and their tenants so it’s sensible that the idea should be applied to the high street. Of course the stumbling block is still the fractured nature of property ownership. Ultimately each landlord is more concerned with getting the best deal from a tenant, regardless of the type of use. What do they care if there’s already 6 other mobile phone store in town. If number 7 is prepared to a ludicrously speculative rent they’ll take their money.

The BPF’s solution to this is a system whereby landlords would pool resources and agree a common lettings policy. In one model being proposed they would each have shares in an overall property portfolio, shifting the focus away from individual lettings to a more holistic trading environment.

Curated High Streets

The idea of a curated high street is something I’ve long championed. But I’ve always proposed controls via more detailed planning laws. Instead of broad brush usage classes being factored into local plans, I’d have specific operator types defined by an elected team of high street managers, drawn from various parts of the property spheres. Town planners, local retail groups, landlords, property advisers and local consultants, maybe something like the town teams we already have, but with more accountability. There would be zoned areas within a well defined tenant mix policy which any new tenancy would have to comply with. This would prevent disconnected property interests simply chasing the money, regardless of duplicated use.

Of course this is something that could be handled by a self regulated body of property owners, but there would be a risk that vested interests could ultimately over-ride the what’s best for the local trading environment. Even if the income from these property groups was pooled by way of a shareholding collective, as suggested in one proposal from the BPF, There would always be potential for larger shareholders to dominate the group. And as I’ve described above, self regulation becomes rather malleable when there’s enough money on the table.

The other danger that I see from allowing such a collaboration between property managers is the possibility of terms fixing. Rents and other leasing policy issues could easily become entrenched, leaving tenants little room for negotiation in a target area. Instead of dealing with one landlord, they’d be dealing with a cabal. Lease negotiations are already skewed enough in favour of the landlords. We don’t want to be fomenting conditions for the construction of a cartel in all but name.

The Big Idea

Fellow town centre campaigner Dan Thompson and I have recently been kicking about a more radical solution to the problem of restrictive practices on the high street. We’ve posited the idea that empty properties could be purchased by a retail property trust and let to independent operators on a non-profit basis. That’s not to say the rents would be at giveaway levels – the idea would be to generate funds for other local projects as well as to expand the property portfolio – but rents would be kept sustainable with respect to other costs and the profitability of tenant’s businesses.

There would be some element of profit sharing involved along with principles of tenant mix, competition, and the curation of the overall trading environment. But small businesses and a variety of uses could be encouraged to keep an area varied and vibrant.

Rents would be pegged to factors other than the usual relentless pursuit of asset valuation. That way we could ensure some longevity for both the local trading environment and the businesses within it. Moreover pioneering entrepreneurs who move into the poorer trading zones, and then revitalise them through their own creativity, innovation and bloody hard work would get to reap the benefits when the locale becomes trendy and profitable. Rather than landlords immediately following the money and moving in yet more coffee bars, mobile phone shops and anyone else who dangles a big wad of cash in their general direction.

Ultimately the goal would be to press the reset button on the commercial property market, providing some alternative dimension to the rental tone and thus undermining the closed shop rent review stitch ups that usually lead to ratcheting rents and more literally closed shops.

Rising-RentI’m proposing a return to the days when landlords and property owners worked in conjunction with tenants to foster a long term relationship. Both were happy to receive realistic returns on their investments and were able to plan for the future, rather than constantly watching over their shoulder waiting for the next rent review or feverishly calculating the chances of your own survival when the shop next door is let at a blue sky rent that you know you’ll never be able to afford.

You can call me naive – indeed somebody did on Twitter shortly after I revealed this idea in my Retail Week column last week – but I really believe that if we’re to encourage future generations of high street pioneers, we need a cultural shift away from the idea that commercial property is the investment gift that keeps on giving.

In my view, the day landlords swapped the value of a solid reliable tenancy for beliefs in such fairytale concepts as upwards only rent reviews and ever increasing portfolio values was the day our high streets started to die.

So there you have it. A brief taster of my idea of a high street utopia. Somewhat different from that proposed by the future High Streets Forum and the BPF, but something that would be about long term, sustainable revitalization, not just a valuation on a balance sheet.

I believe that if the high street is to have a future, in whatever form, we need to be thinking these seemingly impossible thoughts. And if the government and their various advisers are serious about revitalisation they should be encouraging concepts that do more than prop up the property status quo. If anyone else wants to get step outside that box with me, please get in touch.

This blog was originally published as a guest article on the Future High Street Summit blog