Stick Vat up on online operators….that’ll sort the High Street….Not!

A report has just been published suggesting that the government should raise VAT to 22.5% for online sales and 15% for High Street retailers. The author of said report is a company called Collier International. For those who don’t know who they are , and I didn’t, they are a very large Canadian Real Estate company with property interests worldwide including the U.K. where they are especially prominent in shopping centres. Well no surprise there then. Another report suggests a 1% online tax would generate £5 billion which would enable a 17.5% decrease in business rates. All this and much more besides would even up the playing field. No it wouldn’t. They all miss the point and don’t seem to understand the basic mechanics of what is actually happening out there.

Let’s first of all put aside Amazon. It’s difficult because of their impact but we all know they are big enough and smart enough to tackle any reasonable obstacles that come their way. Incidentally, they are budgeting £26 billion for R&D in 2019 .Many multiple retailers don’t even have a budget for research.

There is a huge assumption that online operators succeed because they have the advantage of lower costs of operation. Well if they are operating from their bedroom they might. Every other operator tells a very different story. I speak to some  form of online operation most days. So I think I get a broad view of what the issues facing them are .

First of let’s look at what they don’t have…loads of costly leases. As they don’t have several trading locations, neither do they tend to have crippling business rates associated with multiple outlets. Because they, generally,don’t have a shop or shops, they don’t have a building shouting their name to their potential customers 24/7/365 . They constantly have to pay(in various ways) to ensure their brand is consistently uppermost in the mind of  their targeted consumer. This cost alone, to the small and medium size operator can be crippling on its own.

What they do have are large costly warehouses, huge stock holdings, constant pressure to keep their IT systems up to date, aggressive pricing pressures, sometimes this is quite literally minute by minute, shipping costs, much higher rates of returns , the continuous drive for even more rapid deliveries and free deliveries. Unless they are working from the bedroom , they have business rates just like anyone else. Few operators make little or no profit in their early years as they have re-invest  to survive .

Politicians, advisors and research bodies seem to rarely pay heed to the results from unintended consequences. If the Government were to heed the advice of Collier International and the policy did indeed re-invigorate the High Street, then more product would be purchased at 15% than at 22.5% or even 20% creating a vast revenue shortfall for the Treasury. Anyway it wouldn’t have the desired effect and it would only make matters worse for all forms of Retailer as well as the Treasury.

Furthermore it is  a discriminatory policy as there are now sectors of society who rely on online purchases. Those living in remote rural areas, the disabled , especially those with mobility issues. Just because a consumer wants to buy a product that shops don’t want to stock should they be penalised with a VAT rate increase? If a consumer buys a product through a High Street Retailers web site and collects it in the store, which rate of VAT would be charged?  The idea is completely bonkers but more importantly misses the point.

On  a micro level business rates need to be reformed and  local bureaucracy needs to be challenged . At the macro level Government(s) need to reassess major organisations ability to legally avoid fair and equitable taxation . Not just the Giants , such as Apple and Amazon, there are those a lot closer to home who seem to escape the Taxation limelight ( the likes of Phillip Green . the Barclay Brothers and the Richard Bransons of this world -my pet tax avoiding dislikes amongst many others within the UK).

The point they seem to be missing is that the Retail landscape is and will continue to change . You can’t nudge it backwards. That benefits no one. Imaginative policy and structures have to be created to accommodate change and not rail against it. The High Street will always  change . Unfortunately, there will be those who suffer but that has never been any different from the advent of the first Supermarket chain, the first shopping centre and shopping malls, the introduction of mail order shopping and even something more structurally basic as when the newspaper industry decided to supply Supermarkets and the consequent closure of many High Street newsagents. I did not see any Government intervention then. Yet I fail to see any overall strategy and understanding as to what has been going on for donkeys years, apart from knee jerk reactions that invariably make the problem worse.


Is this the future of Shopping Centres ?

The High Street maybe dying, Shopping Centres struggling but there others who think differently. And thinking differently being the operative phrase.

Emaar Properties and Dubai Holdings have announced plans for an 8 million square foot of leasable Retail space in none other than Dubai. It will be the largest retail complex in the world . Much of it will be ‘Dubai’ like with water parks, ski slopes and artificial moon landings (joke) , theatres, and numerous entertainment centres. It is, however, the technological retail dimension that I believe could have a bigger impact on shopping centres worldwide.

The plan is to develop the retail environment using very cutting edge technology, including radio frequency identification (for checkouts), specifically designed apps, latest bar code scanning techniques, ability to purchase through desktop pc’s , mobiles and run of the mill checkouts.

Do I think this will be emulated in the U.K.? Do I think the Metro centre and Meadowhall in Sheffield are going to reinvent themselves and suddenly deter tourists from flocking to the Middle East ? No, ‘cos Sheffield and Gateshead ain’t figured out the sun and sand bit yet. However, much like the High Street but for slightly different reasons Shopping Centres will have to reinvent themselves.

There are signs that this has started to happen, as many have cinemas, numerous restaurants and in some cases casinos and hotels. Yet, I don’t think this is enough and the developers will have to be a lot more inventive to curb the current decline. As Department Stores are closing down at a rapid rate , the Centres are loosing their corner stones. For many years the attraction for many retailers looking to lease in a shopping centre is who are the anchors eg John Lewis, Debenhams,House of Fraser etc. much of the problem with shoppping centres is they have often been a reflection of a Department store trying to be many things to many people and in the end not really offering anything that anyone wants.

Shopping centres face further challenges to that of the High Street. The issue of high rents is, as I understand, underpinned by the Landlord and its investors. The financing of the Centre is based on the rent returns based on historic high values. Until this changes there is going to be no reapraisal of rentals anytime soon. Consequently they are going to have look at what they offer . For the foreseeable future there are not going to be more Retail stores, or certainly not in their current format. Hence they will need to attract new revenue streams from the entertainment and leisure markets.

There is, currently, one example in the U.K. which maybe gives a hint of what is to come . I am not sure they have got the mix right plus it is a bit of bolt on job to existing facilities but at the NEC near Birmingham, you,now, have an exhibition centre, entertainment centre , retail shopping centre, casino and this year Merlin entertainments have added the Bear Grylls adventure park. Because of its bolt on , ad hoc development nature of the NEC, it is all a bit higgledy piggedly. But nevertheless, it is an interesting direction of travel.

Another issue they face is that there is a fundamental structural problem, which is, perhaps a far bigger wall to climb, and that is their Structure. They are huge great monolithic beasts. It is like turning an oil tanker on a ‘sixpence’ (look it up if you don’t know what that is- and shame on you). In their present format there is little that could be done to adapt them for the next thirty years apart from knocking them down. In a way they are much like their historic cornerstones, the Department Store. They tried to be all things to all people and for a long time and whilst there was no alternative it worked. The alternatives are here and they are beginning to not work (Shopping Centres that is). Or certainly not as much the owners would like.

It maybe that some will be completely redeveloped. It is more likely that they will have to be more like the Dubai model. They will have to be cutting edge in terms of the experiences they offer and far more in tune with tomorrow’s retailers. Currently they can do neither. Redevelopment alone will be not enough for most . If the Meadowhall’s and Metro Centres of the future are to be successful and last another thirty plus years they will have to be completely rethought

If zip lining from the car park to Primark, having your purchases delivered to your home on your return, dining at a vast variety of international cuisine, losing fifty quid at the black jack tables , followed by a virtual concert of Elvis Presley, Aretha Franklin and David Bowie and returned via a completely dry water Shute to your electric auto thing, does not float your boat. Then you’ll probably have to stick with shopping at your local Amazon store.

Brexit Update ……….Utter Tosh !


This is a rant ! I have made it clear from  the beginning that I am a remainer who accepts the referendum result, consequently I am not going to drone on about whats good or bad. However, I will rant on about the one constant head line or title throughout this exercise and that is ‘Brexit Update’.

From Day 1 or 2 (depending on how you count it), there has been a continuous flow of absolute garbage. No matter what side of the fence you may sit on it remains as garbage. Nothing has been updated because there is little to update. Nobody really knows from day to day what is or has happened. If it does, a week later it is denied, changed or the other side says something like ….that is not quite what we meant….

Before, I go any further, there is something even more distasteful and that is ….what Brexit means for you…..all the media, journalists, politicians, social media, on a daily basis offer advice as to what it means for me and sixty five million other Brits. So how do they know ? They don’t , they haven’t a clue, it is all hypothecation at best. And each and everyone of them has a different proposition. Is it helpful? Is it heck. More to the point it is distinctly unhelpful. The majority of politicians, journalists and bureaucrats of all hues, are following their own agendas and have no concerns for the wider populace.There will be those who take notice, only to be completely confused because shortly afterwards they are told something completely different, by the very same person who told them something completely different the day before.

Please will somebody out there tell me, what is that makes this large group of uninformed (because there is nothing yet to know. The playing field keeps changing and who, as in been involved with any serious negotiations, tells all around what they are actually discussing ) think they are being helpful?Perhaps, there are some who can pre-plan and need to. A bit like Y2K ( the millennium bug,that wasn’t) there be a host of ‘consultants ‘ who will profit handsomely, from universal ignorance. Journalists revel in the ability to write about bucket loads of ‘ifs and maybes’ because there is nobody to prove them wrong. Politicians are having a ‘hay day ‘ as they keep their heads down whilst all around them chaos reigns.

That’s it I have ranted ! But I have one last question, and I want to underline that I am asking this question as a remainer….

Dear Mr Barnier, why are you conducting these negotiations on the premise that you cannot allow the U.K. to leave on too good a deal as everyone else will want to up-sticks and leave . Surely, if the EU were that bloody wonderful, your strongest hand would be that the U.K. can leave on favourable grounds and remain confident that the remaining members will just wave goodbye, being delighted that there is one less to share the goodies

If he can’t answer, why not ?

Sorry Mr B, here’s one more. If the EU rules, regs and norms must be adhered to. No matter what, how come Germany was the first country in 2003 to break the deficit rules that apply to all Euro Zone countries and they agreed with France , that the rules did not apply. And since 2007 it has broken the EU Current account rules concerning the size of its trade surplus vs economic output.

one last thing Mr B , have you seen this table……

So I will leave it at that. Sorry, ‘ leave’ only refers to the rant.

Numbers are not ‘fake news’ but they are used to ‘fake news’.


All of us were taught at an early (some may not have listened ) that 2+2=4, 3+3=6….and that these were irrefutable facts . In other words, numbers do not lie. Or rather, as very young children that is how we interpreted these, apparently, simple sums . Whereas, most of us were told not to speak to strangers, even if they smiled, as a smile did not always = ‘Good’.

The number bit was a lot more easily absorbed . So as we grew up , it was in the security that if we were given ‘numbers’ it equated to a fact. What we should have been told is be very aware of numbers given by smiley people.

I, suddenly, became aware of this whilst talking with a friend about his chosen PhD subject ..the study of ‘numerical quadrature and cubature processes‘. Yeah, well, what is that you ask, which I did , ask that is. It is something to do with the measurements beneath a curve. He, then, proceeded, to show me his leather-bound copy of his 250+ page thesis, an image of which is below…

Courtesy of Corbett Morrow PhD. Bsc.

It occurred to me (well something had to) that perhaps numbers aren’t always the ‘absolute’ facts we believe them to be. If it takes two hundred and fifty pages to prove (and I don’t know if it did. No, I didn’t ask ‘cos I wouldn’t have understood the answer) what numerically happens under a curve , probably somebody has written another two hundred + , showing something different.

How does this have any impact on the way we go about our everyday life, working. or otherwise? Apart from, of course, maybe knowing what’s going on with the numbers in our curves beneath our umbrellas (they have a curve underneath them).

To clarify my confusion (an oxymoron, perhaps. If I clarify my confusion, then I am no longer confused?), I’ll start with percentages.

Fact: 100% of £1000= £100

Fiction: 50% off what ? I have spent much of my working life being asked

What is my discount?

My answer was frequently along the lines (in the last five years, it has been less of an issue….)

It can be anything you want it to be …..surely you would like to know what the real  cost is? I can double the real price and give you 50% off ,or leave it as it is and you get 0%


But what is my discount?

Retailers constantly bombard consumers with 50% off!, up to 70% off …. leaving the consumer completely confused as to what the percentage really means, being uncertain as to what real price should be.

The number 1. Generally, considered quite a lowly figure particularly when used on its own eg 1p. To the vast majority 1p on its own (1 cent for those more acquainted with Euros) is pretty humble and of little value.

Up until about three years ago there was a discount store chain called 99p stores. As they started to grow that 1p became very critical . On reaching £100 million turnover! The CEO, obviously , stated the store name cost them £10 million a year.

1p increase in income tax raises approximately £5 billion in additional revenue . This is a perfect example of confusion and why I use the word ‘approximately ‘, as the figure varies by as much 25% depending on where the information comes from.

1 is small , 0.5 is even smaller. 0.5% being the current bank rate is still generally considered to be small. If it were, increased by say 0.25% , to equal 0.75%, still on the small size when looking at bank rates , yet  the new rate  equates to a 25% increase. Not so small.

Here is one final number 1 example. One second is what us  mere mortals consider the lowest unit of everyday time. £5k would be considered a tiny amount in terms of the National Debt. Stick them together ie £5k every one second is how much the National increases. Suddenly both become a huge number. Or so I believe from one website National debt clock. I really don’t if this true ‘cos I can’t work it out.

Graphics…oft used by business ,politicians  and the media alike to completely change the perception of the same set of data.

For example

These two graphs show exactly the same data. The difference is that the one on the left does not start from Zero. Numbers the same, but the perception is totally different.

You just gotta love this one


This was from the Times newspaper last week, illustrating influences on inflation. As it clearly describes the slowing in increases of the price of beer. All numbers are accurate and true . Yet they show the price of Beer in 2017 rising but the price of lager dropping in 2018. Lager did drop but Beer in 2018 has actually increased by 3.9%. Not earth shattering but intentionally misleading. And why is that green arrow so much bigger than the red one, when the actual percentage is 600% smaller .

What I am trying to say is that it all adds up (dropped that in nicely, albeit pure chance) to the way numbers are presented and the way we perceive them. Numbers , themselves, do not lie but the context in which they  are given will suit the ‘Giver’ be it politician, journalist, advertiser ,media or just the person standing next to you in a bar. Your job is to work out if they relate to your context. Unfortunately, many of us don’t have the time or wherewithal to do that and more often than not the ‘Givers’ know that.

Finally, when you next have to consider a number, whatever it be price, percentage, fraction, quantity, or any other format, consider the its context and the type of smile of its source.

There is a future for independant retailers …


East London, the home of notorious gangsters, England football captains (Beckham & Kane) Boy bands (East17), The Olympic Stadium and Europe’s largest urban wetlands , now includes two step brothers who are  creating (at least I think) one of the most innovative Independant Retail models in the U.K.

The main Walthamstow store combines everyday convenience products with Eat17’s bakery, patisserie, restaurant and locally produced ready meals. The Bishop’s Stortford site includes a street food market where space is rented out to third parties. It includes a fishmonger and a florist with a barber and a tattooist to come for those who crave something different with their pint of milk. The Hackney site has a working Art Deco cinema and a trade kitchen.

They currently have four stores with another two planned for 2018. No two shops are alike. Yet they have not completely thrown the ‘ baby out’ with the bath water as they are members of the Spar buying Group.I have only been into one of their stores (Walthamstow) and suggest it is unlike any other Spar you will have been in.

We have also eaten in the restaurant , by no means easy, because of its popularity.

They have created a retail concept that is unique, in the purest meaning of the word. It would be very hard, if not impossible for a large chain to replicate. They are the first to admit it has not been easy getting there and they believe ten stores are their maximum.

Not satisfied with all that it is involved with such a complex project they have created an additional revenue stream. Some of the products for sale in the shop are their own creations which they are selling to other retailers (e.g ‘Eat17 Bacon Jam’ which is sold in Waitrose) providing an alternative income stream and reinforcing their brand.

All this has be done since 2006, when they opened their first store. Furthermore , they have done this during the worst financial crisis in modern history and the during the most turbulent retail environment within the last forty years, yet with very little retail experience of their own.

I believe they have developed a retail concept which is

  • innovative
  • creative
  • provides high service levels
  • understanding and meeting the needs of the  individual local market place
  • unique product
  • alternative revenue streams

None of this has been achieved by sacrificing margin. They don’t compete with discounters and make no pretence to do so.

Here are some of the awards they have won in recent years (from their own web site)

  • The Grocer Magazine’s Best Store in the UK 2012
  • Finalists for Best Store in the World 2013
  • The Good Food Guide 2015
  • Tripadvisor Certificate of Excellence 2014
  • Time Out Love London Award Winner 2015
  • Shortlisted for Best Newcomer in Food & Drink Observer Food Monthly Awards 2014
  • Nominated in both Producer and Retailer categories 2014 Urban Food Award
  • Voted favourite local restaurant by Gary Lee (Head Chef, The Ivy) London Foodie Guide, 2013

It is not a panacea of all retail ills. But it is a bloody good footprint for good independents in all sectors to look and examine how it could be translated to work in their own markets.

Eat17 are not alone. The Ginger Pig butcher shop chain ( eight I think) , the brainchild of a farmer and near bankrupt proper developer (Yorkshireman this time), again with no retail experience. Yet have developed, expanded and succeeded within the same turbulent times. There will be others, but what I find interesting and I believe significant is that neither of these two models were created by those who had any experience within the traditional retail market. I am not suggesting that the only future for independent retailers is for those who do not have any retail experience. But I do firmly believe that an independent retailer will only have a successful future if they look beyond the traditional model.

Ps…(for those who are interested)

Walthamstow Dogs image at the top , sadly (not quite sure why I say that . I have been about half a dozen times and won sod all, so I am not that sad) only the facade exists , behind which is a housing development. The owners – the Chandler Family (of Walthamstow Dogs) sold up some time ago. One of the family members is Victor Chandler who created one of the first online betting operations ‘BetVictor’ so another East end boy ‘done’ good.

The sticky toffee pudding of retail !

I offer a confession. I love sticky toffee pudding, but it would not  need much to take me over the edge….and hate it . Well actually a lot would make me hate it,’cos’ it would me fat and very sick. Sick coming first, so it probably wouldn’t make me fat as I don’t like being sick.

But it is not the eating of it that is my real issue, it’s the proliferation on every other bloody menu in restaurants and hotels . No, correction every menu plus the assumption it is a traditional British dessert . It is not ! Unless, of course, you count it’s invention in the 1970’s as a long enough period to qualify as a tradition. In my books it has replaced the sixties ‘perfect menu’ dessert of Black Forest gateau, which at least dates back to the 1930’s. Still hardly a tradition.

Am I loosing you or have you  already gone ? Well, the parallel I am drawing is that Retailers seem to think that because loads of people quite like something they should all sell it . That might have worked twenty years ago but it ‘don’t’ work today . If consumers believe that they know what is going to be in store why would they bother to make repeat visits . This is a pattern repeated by many multiples and independents. There is a continuing belief in the need to stock the ‘must have’ brands. That’s all well and good but if everybody has them what is your point of difference ? It maybe price, and for the independent that is very difficult and costly direction of travel. It maybe service or range but it is not enough to keep the shopper coming to look as they will always think they know what you have and don’t need to come into look for anything new .

This is not only an issue for theRetail Store, the same problem contaminates online operators. I cannot begin to recount the number of times I have sat infront of a potential new account to be asked

what are your best sellers?

My teeth start grinding, I squeeze my car keys in my pocket until my hand starts to bleed, I start pull on clumps of hair with my free hand (all metaphorical but internalised nonetheless) . Yet, it is invariably , the first question asked. The consequence, of which, is the pursuit to the bottom (in terms of profit and price) . The potential, that online accrues and the Store doesn’t is that niche markets for online can still be big and certainly a lot more profitable. Yet it is seldom their first port of call. they dont like dsifferent (or at least most of them)

The irony ( I think this is the right word, never sure with ‘irony’) of the ‘The Sticky Toffee Pudding’ metaphor (crumble should also included ! Love it as well but don’t want it on every menu)  is very evident with Restaurant outlets. I believe the travails of operations such as Zizzi, Prezzo, Jamie’s Italian, Byron Burgers et al are all trying to serve up the same products in a variety of ways, but in a mediocre manner that makes the consumer look elsewhere. There are plenty of good ‘alternative’ desserts out there . Try them !

Rich retailers …are there such things in the U.K ?

A large chunk of this post comes directly from the 2018 Sunday Times Rich List. For which I make no apology. I have gone through all the 1000 in the list and extrapolated the U.K. retailers (online and bricks and mortar) plus relevant wholesalers as they are part of the retail chain.

Here’s the listy bit…in order of wealth ….the ranking does not reflect their ranking in the complete list. I have also omitted any who have either completely sold out or inherited their fortunes ie one the Ikea family lives in the U.K. but plays no part in the business . The Sainsbury family sold out long ago, no longer in the business. The Hoyle family founders of the Card Factory, greeting card chain , sold out no longer involved.

1. The Weston Family …Associated British Foods…empire including Primark & Selfridges, plus loads of leading brands as diverse as Twinings & Ryvita. £10.05 billion

2. Barclay Brothers….Shop Direct among many of their companies £7.4 billion

3. Tom Morris…Home Bargains..started with one shop , now over 500, Merseyside’s biggest employer £3.49 billion

4. Sir Anwar Perez…Bestway Cash & Carry..largest cash and carry operation in the U.K. serving over 100,000 outlets. The family crops up a number of times in the Rich List…. £3.02 billion

5. Mike Ashley…Sports Direct.. £2.44 billion

6. Arora Bros….B&M Stores….over 600 stores. They have sold a majority stock but are still significant shareholders…. £2.3 billion

7. Sir Phillip Green…Arcadia,Top Shop etc..reluctant entrant (is he really a retailer?)£2 billion

8. Chris Dawson….The Range….150 stores…£1.96 billion

9. The Perkins ….Specsavers…. 1846 stores (opticians) ..£1.7 billion

10. Adderly family….Dunhelm….£1.2 billion

11. Phillip Day….Edinburgh Woollen Mill amongst others…£1.2 billion

12. Kamani family ….Boohoo…fashion internet retailer…£723 million

13. The Fenwick family….Department stores….£730 million

14. Matt Moulding …The Hut … Internet retailing …£550 million

15. Chrissie Rucker & Nick Wheeler…The White Co & Charles Tyrwhitt shirts retail…£452 million

16. Nick Robertson..Asos …£372 million

17. Angus Thirwell …Hotel Chocolat….£130 million

18. Wilkinson family …Wilko’s ….£252 million

19. Rashid Tayub…discount retailer…Poundstretcher among others….£244 million

20. John Roberts…. internet retailer £257 million

21. Smyth family …toy shops…£182 million

22. Richer family…Richer sounds….£155 million

23. Dhameca family  …Cash & Carry wholesalers…£150 million

24. Michele Harriman-Smith- internet retailer of luxury kids clothes ….£110 million

25. Tim Steiner….Ocado…£120 million

26. Bruce Robertson-Trago Mills retailer ….£124 million

27. Wing Yip-Yip Cash & Carry £110 million

28. Joshua Stevens …internet …..£30 million

Listy bit done. Undoubtedly the accuracy of the numbers is questionable as the value of their share holdings frequently accounts for large part of total valuation and this, of course, can vary day to day . But the principle remains the same and generally so does the order.

What drew my interest was to see what the split was between bricks and mortar and online operators . With the intense pressure on the High Street , I was expecting to see a greater proliferation of internet entrepreneurs, yet this does not seem to be the case. An Internet entrepreneur does not appear until no 12. The figures will be a little cloudy as many of High Street operators are online as well. Yet in the first ‘eleven ‘ the online percentage of the businesses is relatively small.

Despite continuing store closures amongst the less successful, many of the top retailers in this are still highly successful and very profitable eg Tommy Morris, the Arora Bros, Mike Ashley, the Adderly Family, Phillip Day….on the other hand the internet entrepreneurs are not yet creating real wealth. For example Ocado, until recent years traded at a loss ploughing everything back into the business. Steiner’s wealth is much elevated by their share price. John Roberts of is struggling to make any profit , saying that their European operations won’t make a trading profit until 2021.

Whilst online is taking chunks of sales off the High Street, and consequently retailers margins and profits, many are creating revenues but struggling to turn this into a profit. There is much evidence to support this such as Tesco Direct being closed down. The fact that it took so long for Ocado to show an operating profit and the likes of AO yet to show a profit. Even the ‘beast’ Amazon, did not show a profit for many years. Jeff Bezos is fabulously wealthy by dint of the company stock value being so high. Yet I, also, believe there is a further rationale to the problem in turning a profit for online entrepreneurs . For many years Amazon ploughed back their profits into the development of the organisation. This, in itself, created a very high bar for competitors to attain. And still is. You will find many online retailers state their marketing cost are enormous and constantly rising.

So it is my belief that it will be some while before the internet ‘sales’ entrepreneurs will start to impact on the more traditional wealth within the world’s Rich lists. Furthermore, I suspect that the current members of the list will be very different in the next five years or so. The change will happen, of that I have no doubt. I just think that the interlopers are not currently among this list.

So there are a Rich retailers in the U.K. but I suspect it will be a very different picture within ten years.

Is the monster on the move …..?

It is very difficult to write about anything to do with Retail without constantly mentioning Amazon. I cannot think of any other phenomena in modern retailing history that has such an impact worldwide.

In my last last post I mentioned that an approach by Amazon had been rebuffed by Waitrose in the U.K. This weeks rumours suggest they maybe looking at Asos and Ocado. They have the resource and they have the motivation .

Whilst most of us are quick to condemn there are some positives attributable to its existence. For starters they have created thousands of wealthy independent entrepreneurs by dint of the marketplace . I can think of no other retailer (with the exception of the likes of eBay and quite possibly Alibaba) that has been a wealth creator for third parties.

It has shaken up the traditional mega retailers, in a way that none of them expected. They have put the consumer at the forefront of their model, offering convenience, breadth of range, access to much product that was only available to a few, highly competitive pricing and above all extraordinary levels of service . All of which has led to a level of consumer confidence that I believe is unprecedented with any other retailer. The opening of a world market to small traders who would not been able to previously, penetrate.

That’s the upside. Amongst its many vices(? What is a vice to one is a virtue to another) have been the enormous turmoil created within retail markets. The likelihood that it has created a net loss of jobs (almost certainly within the retail sector) . The enormous pressure it has put on margins. The enabling of dodgy dealings ( the ease of selling counterfeit product, or less poor quality product). Despite Amazon’s attempts at reducing ‘dodgy dealings’ it is not difficult such product on a daily basis.

As to the future , there will always(well for some time anyway) be an ‘Amazon ‘ or it’s like. We have to live with it and adapt. The difference is that as it was the small retailer being hit hardest it is now the biggies who are most concerned.

Ocado recent success in the USA with it its tie up with Kroger (the world’s third largest retailer) only makes an approach by Amazon more likely. It has the war chest, it has the motivation, and the wherewithal. It may not be Ocado, but I am quite certain their next acquisition will make the major retailers wonder that they have got to do next to defend their status quo , let alone grow and develop.

It is a strange beast that attracts our consumerist psyche yet strikes fear into our commercial psyche. I suppose we can look back at previous monsters …..dragons, King Kong, Frankenstein, orcs et al…..we tend to get the better of them eventually. Meanwhile it is on the move and there will be more casualties before someone in shining armour comes riding in cuts its head off and saves us all, or more likely just creates an alternative.

Shop a lot…or Shop not ?

There are big issues facing our retail High Street. Yet they are not as simple and as straightforward as our much beloved media would have us believe. Should the list of retailers facing closure include the likes of Next, Tesco, John Lewis, as opposed to the likes of Toys r Us and Maplins then there would be greater cause for concern. There is no doubt that even the former are facing tough challenges, loads of people still shop there, spend loads of dough and they make profits.

One of my customers who has outlets in Meadowhall, Sheffield, White Rose, Leeds and the Metro Centre, Gateshead, was recently told by Centre management that there had been a drop in flow of approximately 15%. This could, of course, mean either a drop in the number of visitors or a reduction in the frequency of repeat visits. The biggest fall has been the fall in the number visiting during the evenings. Something that is of much greater relevance to shopping centres as opposed to High Streets. I suspect that among the many possible causes for this drop , this suggests is that the idea of spending an evening wandering around a shopping centre is losing its allure.

I have long been under the impression, for such a small geographical country, that we have long been over represented by retail outlets . There are close to 290,000 retail outlets within the U.K, which equates to one retail outlet for every two hundred people, and there are approximately 2.8 million(nearly 10% of employment) employed within the sector. A crude measurement yet nevertheless gives some form of perspective . As does retail spending which is approximately £360 billion , or nearly twice the spend on healthcare. Even with the present retail closures retail spending since January 2017 has not actually dropped. This chart does include fuel but the only month where there was zero growth was October.

For too many years many of the multiples sought growth through store openings, as opposed to innovation, better offerings and improved experiences. Independents have suffered because of multiples, poor local planning, and lack of investment. Both are suffering from a drop in footfall and lower basket values increasing the cost to serve and reducing margin.

Without wanting to repeat previous posts and stating the blinding obvious, online has had a huge impact but it is not the whole story. Waterstones , the booksellers, one of the first retailer to feel the impact of the likes of Amazon , was on the verge of closure in 2011. Yet they have just posted healthy profits.

The latest twist is the planned merger of Sainsbury’s & Asda. Initially, This was a real surprise but after a bit of thought , it made a lot of sense. There has been some slightly daft comments from some parts of the media about taking on the likes of Tesco, as if they haven’t had their own travails. With Sainsbury’s Argos operations it is much more of an opportunity to expand this in Asda and compete in the future with the likes of Amazon , who are becoming increasingly interested in bricks and mortar stores and food. So much so that it now transpired that at the back end of 2017 that they (Amazon) approached the board of John Lewis with a view to buying Waitrose ! According to the JL board they flatly refused any talks. Whatever was said the signs are there.

High Street retailing is undergoing a massive transformation there are undoubtedly going to be winners and losers. Those at the top rarely loose, those at the bottom ie employees, invariably do. As to what happens will depend upon two components . The entrepreneurial retailer and the consumer. There are retailers,who are creating new and exciting retail outlets , but the U.K. total will continue to decline . That is a given. The other component is the consumer. If the consumer wants to continue to ‘go shopping’ as opposed to ‘surfing for their shopping’, they will have to keep shopping a lot….and stop bemoaning the closure of their local retailer which they like being on there on their High Street , but never go in. Retailers have to attract and consumers be attracted.

No skin in the game…

Warren Buffet popularised the phrase ‘to have skin in the game ‘ when referring to high ranking executives within an organisation who used their own money to invest in that very same organisation.To have ‘no skin in the game’ is a book written by an American (former investment banker)called Nassim Nicholas Taleb, about the complete opposite . I haven’t actually read the book as it is above my intellectual pay grade. However, the outline got me thinking..

He widens the scope of those having ‘skin in the game’ to Surgeons , nurses, teachers, bus drivers, police on the streets, soldiers on the front line , farmers ploughing the field, brick layers. In other words any job or activity where there is a stake in the outcome (positive or negative).

Having ‘no skin in the game’ relates to the likes of politicians, journalists, academics, bankers, religious leaders(of all faiths) et al…. in other words whatever their musings, pontifications, espousing, directives it is others who experience the consequences.

Both descriptions are generalisations, yet the more I think about it, the more , I think, it makes sense. In every day commercial life it occurs on a regular basis. From the newly appointed buyer of a large retail organisation who decides to change the supply chain because they can and then moves on six months later oblivious to any consequences through to the mendacious consumer who can ruin a local business from a spiteful social media campaign.

Politicians, in most democracies, are subject to party policy and their own ambitions . Of course they answer to the voter, but many career politician are too canny to know that staying in power is not always the same as representing The electorate. This is often illustrated by senior ministers, who, when retiring or are retired from main stream politics speak a completely language to when they were in power.

Ambitious journalists will pursue stories at whatever cost. Even the biggest and most noble stories have unintended consequences. Even the guilty protagonist of a crime investigation will have innocent family or acquittances who will have been pursued relentlessly for the sake of the story.

Who knew that the bankers (this is not about banking bashing ) involved in the banking crisis of 2008, were not using their own money ?

Why do so many religious leaders of all faiths pursue dogma often at the expense of the individuals who make up their followings?

How many company chairman and CEO’s spend real time talking to those at the ‘coal face’ and really understand the consequences of their decision making within their own organisation ?

Within recent years , certainly within the U.K , failure at the highest levels both in private and public life, have often ended with rewards. There is an endless list of CEOs, both of private and public organisations who failed yet sailed off into the sunset with a fat cheque. Contractual, we are told. Quite possibly but this form of contract only distances them further from the ‘coal face’, in that they do not suffer the consequences of their decisions. They have ‘no skin in the game’.

Academics are amongst the worst offenders, as often, they really do live in ‘ivory towers’. Yet politicians, bankers, educationalists, industrialists , health specialists, to name but a few, rely heavily on their thinking processes . Their experience of the ‘front line’ is at worst non existent, at best limited. More often than not the consequences of their thought processes are far reaching , yet they seem to have little or no realisation (nor I suspect ‘real concern’) of the end result. If their theories (which is often all they are) prove to be incorrect they just move on.

Despite all this, in every aspect of our lives we expect to be advised and to a point led, by what we consider as those in the ‘know’. Perhaps that is part of the political turmoil that most democratic nations are experiencing. The individual is questioning whether those who lead really know what they are doing and are they aware of the consequences of their actions. Recent voting history in many nations would suggest not.

But should we be bothered? Bloody right we should . As the retailer opens up their store every morning struggling with crippling business rates, an inept local authority with a punitive town centre parking policy and no real town centre planning policy. The salesman who bought his diesel car a couple of years ago, thinking they were doing the right thing , now find they , apparently, drive a chemical weapon. The distributor who has committed to a certain product only to be told by his major customer that they no longer require it because they feel it has too much plastic. Supermarkets (Iceland)not stocking anything with palm oil(Explosion in palm oil demand has led to deforestation) potentially leaving many small farmers in areas such as South East Asia, with shrinking markets. Or as in the U.K. the public servant who has been limited to a 1% annual wage increase for a number of years whilst their political masters , ensuring they were subject to an ‘independent’ pay review in 2014 and voted themselves nigh on a 10% increase. In 2018, they are getting a further increase of 1.8% above the 1%.

And as everybody toddles off Home after their daily grind they have to consider whether this weeks academic masterpiece suggests that four glasses of red wine with your dinner will shorten or lengthen your life. Followed by a litre and a half of coffee with either keep you awake all week or prevent heart disease.

Possibly right decisions in essence but made and executed for the wrong reasons by the wrong people, at the wrong time, and who are unaffected by the consequences .

Perhaps, this is what Gandalf meant. We expect to be protected and advised by the elected leadership and guided morally and physically by our intellectual superiors . Yet we are frequently let down or confused . The problem is that the ordinary folk all have the ‘skin in the game’ but they have to let others who don’t , do all leading and advising because they got bugger all else to do and it doesn’t really affect them if they get it wrong.