UK Retail on the up….or is it ?

With employment rising, unemployment falling, real wage increases, low inflation and historically low interest rates, current indicators suggest that the immediate outlook for the UK high street is very good.

Many within our industry may initially agree with this but beneath this sunny picture there are a few clouds. Most of us are aware that the big grocery retailers are having a very tough time fighting falling sales and decreasing margins. No tears are shed but the reasons behind these declines can be echoed in our own market place. New aggressive competitors and ever changing trading environment.

Online operators have been around for a few years now and have experienced continuous growth and good profitability. But even they are seeing the market changing on , nearly, a daily basis. A recent supplement in  a Sunday paper illustrated some of the difficulties facing online traders. They , first, appeared as the new whizz kids on the block. Using technology in a way it had never been used before and catching many traditional retailers off guard. But now when the new kids sit down and devise a plan , the next day (bit of an exaggeration but helps to make the point) they have found that technology has moved on again and their plan looks dated.

Even if sales are looking good, the one area that most players are suffering with is that of margin. Retail rents are the highest in Europe and online operators are experiencing a constant battle with delivery costs and for once this has nothing to do with oil. For the couriers the biggest hurdle is making the first delivery. What I mean here is if the customer is not in for the first delivery they start to lose money. There is huge pressure to make that first delivery and there are numerous ways being looked at, to achieve this target. I shall look at those in a later post. The main point here is that even where the sales outlook looks optimistic the cost of sale through every channel becomes increasingly tough.

There is a whole raft of blicks and clicks modes of sale being considered that undoubtedly change the way we buy but many experts still believe that the ‘shop’ has a major part to play.

Certainly, despite the overheads, retailers in general might well favour real stores, in part because when people shop online they buy less, so incentivising them to get back into stores is important. “There’s no serendipity online and actually online is difficult to browse,” says Mr Perks. “And clearly people still want to go to shops, although the high street of the future may not be a place to buy, but more a leisure outlet.”John Miln, chief executive of the UK Fashion and Textile Association,

I spoke to a customer last week and asked him ‘how was business?’ . He replied that the first three months of the year had been pretty good but the last three had been poor, and he had not the slightest idea why. This is a retailer, who is long established, well stocked and provides a good service. Sometimes there are more questions than answers ( yes it is a song lyric Johnny Nash 1972), but one of my theories is that there is a subconscious confusion with today’s consumer. I think that the retail channels are creating a level of uncertainty and confusion  as to where the consumer can make their purchases. Whilst online is increasing its market share it still is only approximately 11% of the total retail market. The spend in our market place is discretionary. They don’t need party items. They might go into a shop, maybe not see what they want or think they may get cheaper online. They, then, go online can’t find it, can’t get it or find it is not always cheaper or order and don’t get it. Hence, the consequence is they don’t make the purchase and carry on with their lives thinking it has made little difference not having the item.

Party outlets could be described as leisure outlets (as in the above quote) . Not that anyone is going to visit a party shop as a leisure activity in itself but the purchase is primarily for a leisure activity. But, perhaps, we as an  industry, need to make that purchase more of a fun experience, something which the online sellers would struggle with. Yet a ‘bricks and clicks’ operation may be able to achieve. Retail is moving very quickly. Historically change has been mainly driven by major retailers. Now, even they are unsure as to what is really  happening. If we as an industry, have an advantage for once, it is that we are small and can change more quickly than major retailers. We know things are changing (yet more lyrics – Jay and the Americans early 1960’s) the trick is knowing what the changes are.

Legal Highs…Party Fun?

Last week the UK Goverment published a bill to outlaw legal highs. One of those ‘legal highs’ is Nitrous Oxide, better known as laughing gas, whippits or Hippie crack. I can hear the cry ‘…..oh yeah, jolly interesting, but what’s that got to do with the party industry…?’ . Well, I will get to the point soon,there is more to come. Apparently, after Cannabis, in the UK, it is the drug of choice. That is to say it is the 2nd most widely used drug. It is estimated that there are over 500,000 (mainly teenagers , early 20’s) users.

So here comes the really interesting bit, the main way of experiencing laughing gas is using latex balloons . Now there a number of implications, but we will come back to them. Once again,bear with me .First of all, we can take a look why latex balloons are used. The main risk is unconsciousness or death through lack of oxygen, this occurs when oxygen used for breathing is pushed out by the nitrous oxide. Balloons limit that risk as they do not cover the nose and mouth.

I am not going to be judgemental, as it serves no purpose, there are risks, although they are considered low, using balloons, but they like any drug or intoxicant do exist. Moreover, the new bill aside , it is already an offence to sell nitrous oxide to minors , if it is thought it is going to be used for personal consumption. The other level of risk comes from where the majority of this ‘ legal high’ is purchased, the net. As a consequence , the users cannot be certain it is nitrous oxide and have no idea whether it has contaminated and if so with what?,

Ok, we can come back to the implications for the party industry. 500,000 people equals 500,000 balloons. That assumes that they only do it once a year. I will leave the maths to the reader. Needless to say we are not talking about a insignificant Your worst nightmare, is if someone buys balloons from you and has a natural latex allergy. Anaphylactic attack, and substances that withdraw oxygen from your system are not good mixes. If you suspect anyone is buying balloons for this purpose, I, personally, would reinforce the natural latex and allergy warning. 

I don’t know if many of you have heard of head shops. They are shops that sell legal highs and associated paraphernalia. In many such shops, there are party sections, and they can be quite substantial. ‘Why?’ You may ask. I suspect it is because the clientele of such establishments are party types , or they are going to parties hence the connection . However, you won’t see many in the party hall at the NEC. Not strictly true, you may stumble across a few.
Where I am going with this and do I have any advice. Nowhere and none, are the answer to both. But the reason for this blog is to flag it up and should any of the media think there is an angle here and approach you, I would propose the ‘…. I know nothing….I am just a party shop that sells balloons like every other party shop, that has been doing so since the nineteenth century…..’ approach.
For those what who want to know the day job of nitrous oxide, it whips cream. Not in a ‘fifty shades of grey’ whipping, but in a jelly or ice cream sundae whipped cream way. So completing the circle. You can have jelly and whipped cream , then round off the party with a short legal high. I said I would not be judgemental.