New Retail Parks

Despite this economic downturn there have been plans recently unveiled for new retail parks and shopping centres, and even extensions to existing ones.In the east of England, Braintree has plans, in the south west, Trowbridge has plans, in the midlands Leicester also has plans, in the North West, Macclesfield intends to develop a 500,000 sq ft Centre with Debenhams as the anchor. Even Ireland has plans, with Cork in the south, and Belfast in the north looking to develop new retail space. Trowbridge is possibly the only one we will see over the next two years or so. That's not to say the others won't happen.

Meanwhile LxB's 50,000 sq ft deal with Marks & Spencer has allowed it to start one of the few out-of-town retail developments that are likely to go ahead in the current market. Specialist out-of-town developer LxB has received detailed planning permission for a proposed 110,000 sq ft retail park in Tunbridge Wells, Kent. And with almost half the space pre-let to Marks & Spencer, construction is due to begin in March 2009 for an Easter 2010 opening.

Most retail property pundits will tell you that having a plan, even approved, is one thing, finding the funding to build it and then letting the retail space to any retail operators is another.

Inflation Drop

The fall in inflation was far less than expected, down to 3 per cent from 3.1 per cent in December.

Consumer prices dropped to 0.7 per cent on the month after retailers heavy discounting, the effect was diluted by big pre-Christmas sales. Analysts had expected the Office for National Statistics to report a slide in annual consumer price inflation (CPI) to 2.7%, although 3% was still a nine-month low. It had been as high as 5.2% in September.

The largest contribution to the slowdown in the RPI came from housing costs, particularly mortgage interest payments and house depreciation, the ONS tell us. It is that factor that provides some comfort to all retailers. There is a whole sub-sector of consumer who are benefiting from being on a SVR or Tracker Mortgage, we know family consumers that have gone from £1200 a month repayments to just over £400, this leaves them in a cash-positive situation, and as retailers our task is to provide them with reasons to spend their new ‘spare cash' with us!

Uncertainty in the economic future, job security and negative press is blocking the way forward to these consumers spending, but, be assured there are hundreds of thousands of consumers who are in a better disposable cash situation than they have been for years. Our job as retailers is to give them reasons to spend this money in our stores.

Bank and lending institutions continue to see retailers as highly unattractive. In a recent discussion with one lender his view was that it could be five to ten years before they will see lending levels to retailers back to any significant level. But Northern Rock has stepped up to the mark and has fourteen billion pounds ready to invest in business. It's a drop in the ocean for what's needed, but it's a start in the right direction, and RBS looks set to follow.

Good News for Budget Retailers

There are however some signs that some good retailers, or those at least with a point of difference that meet new and emerging consumer demands can grow in these most difficult times; budget clothing chain Primark has just announced a 5% increase in sales compared to this time last year, and is planning to open seven new stores. Fast food chain KFC has announced it is to create 9,000 new jobs in 300 new outlets over the next five years, reckoning it will steal market share from competitors. People are drawn to spend on cheaper goods and food.

Retail chain Cash Generator has posted record annual profits and announced plans to expand into Europe as it underlined how it is benefiting from the recession. Their biggest growth came in pawnbroking. Managing director Julian Urry says, ‘Cash Generator performs well in all economic climates; however the current financial difficulties have altered shopping habits considerably, with the focus firmly on the consumer demanding value for money goods'.

These examples provide an insight into how some retailers can adapt and capitalise on the changing economic environment in which we all trade. Meanwhile let's look at what's going on with a name in the children's retail arena that has been around for seventy plus years, Adams.

Adams has been bought out of administration by former owner John Shannon, the entrepreneur who rescued it from collapse two years ago. The deal sees Mr. Shannon buy back a slimmed down version of the company. Adams, which was founded by housewife Amy Adams in Birmingham in 1933, called in PricewaterhouseCoopers on New Year's Eve after a tough year of trading left it unable to service its debts.

So where do you and the likes of John Shannon find the funding for any such acquisition or expansion? Traditional routes are no go at present, but there are avenues available to those who have a sound retail concept, with proven trading ability. There are those ‘angels' - high net worth individuals and investors who still are prepared to take a risk with good sound retailers who have a proposition that shines. If you have a retail business that fulfills this criteria, don't despair for there are possibilities!

It is said that if you always do what you've always done, you'll always get what you've always got. In these tough times it's time to consider doing better things, not things better!

Graham S Hoyle

Managing Partner of Retail Performance Improvement

Tel: 0161 973 3052

Graham is a senior retail operator and consumer specialist with over 3 decades of experience in retail management, store operations and business development. He has been a director of a number of companies ranging from high street retailers to consumer marketing companies, with considerable UK experience as well as working in mainland Europe and America. Over recent years, Graham has been deployed in ‘hands-on' roles in a number of differing trading environments to deliver improved performance.