Gotta giggle at Google….

The UK’s HMRC have just done a deal with Google for £130 million back taxes for the last ten years. Some would say you ‘you gotta have a laugh…’ and most would look aghast at that figure.   I don’t think the UK differs much from most other European states in using American ( and most are American giants) as political tax footballs. They are big and easy to kick, Google, Apple, Amazon, Facebook, Microsoft and Starbucks to name but a few .

I left Starbucks last as all the others have not inconsiderable links to our industry, in so far as most of us rely upon their services or products in order to operate. Starbucks has rather more tenuous links, but at least there are competitors. I,for one, have had meetings in Costa Coffee. That’ll teach Starbucks for not paying their taxes !

The point is they do pay their taxes, or rather they use legitimate ways to minimise their tax obligations. This may not appear right or socially just , but then that is the fault of European Governments. There is the belief is that Europe should had some form of uniform approach , but reality steps in as the companies would only seek alternatives. It all starts to get very political , which is perhaps a legitimate approach if it were not for the fact that it is mainly American companies that get bashed. In the UK it would not be difficult to look to our own venerable establishments. Our esteemed press DGMT owners of the Daily Mail, are in turn owned by a trust based in Bermuda, the noble Rothermeres, are non doms . Another, bastion of Britishness, the Daily Telegraph, is owned by the Barclay Brothers, once again based offshore. The Angel of British business , Richard Branson, a non dom, plus most Virgin companies are under a web of offshore organisations. Phillip Green, Top Shop supremo neither disguises nor apologises for being a non dom. The lists are endless.

Google are currently building a 750,000 sq ft (approximately 75,000sq m) office site in London. It will house 4,500 employees and is generating 1250 jobs in its construction. Amazon created  over 10,000 jobs in Europe in 2015. It plans to increase the UK workforce in 2016, by over 2,500. The other much overlooked fact is that many of the mechanisms are the creation of the Brits, the Channel Islands, Isle of Man, more exotic locations such the Banamas, Bermuda, and the Caymans. We  have to be very careful what we wish for.

Not only do these organisations have a direct link with the structure and future of our industry. They also have very close links in terms of creating additional consumers. By the nature of the demographic of their typical employee it would very likely be close to that of a ‘party’ consumer. The issue of the fiscal status of multi national organisations will not go away , any day soon. Whilst none of us , within our little industry , could even contemplate such complex and sophisticated financial mechanisms. What I do know , is there have been a fair few , individuals , fairly close to our market, who legitimately benefited from such legitimate offshore arrangements. 

My blogs will never be party political but occasionally they maybe a little political about those of us in the ‘party ‘ industry.

The question we have to ask ourselves, if given the opportunity to legally minimise our tax obligations, do we take it ?

Mass Migration…..

In the first two months of every year, flocks of party buyers and suppliers seek the warmth of the various worldwide exhibitions, in order to discover what is happening within our market.

Not all suppliers exhibit and not all buyers (actually most) don’t buy . They use them as an opportunity to look, talk, network, consider , sometimes decide and occasionally eat and drink .

Having personally exhibited over many years, I am somewhat ‘gob smacked ‘ by how some of the larger exhibition organisers treat their customers ie exhibitors and visitors. The various organisers of the Spring Fair have been extraordinarily arrogant to exhibitors (particularly the small and medium sized) . The Spielwarenmesse (Toy fair) in Nuremberg, comes out not much better. When was the last time you payed to get into your shopping centre ? Well, you will if you go to Nuremberg. A show pass for every day will set you back €49 on the door(it does give you free local public transport for the duration of the exhibition). And if you want to stay in downtown Nuremberg, a 2 star hotel will cost you more than central London. Very pretty town , but does not quite warrant these prices.

Putting that all to one side, as an industry, we have very little influence in that direction, they should provide an invaluable tool to every business involved in the party market , big or small. The NEC, I chock saying this, provides a unique opportunity for those within our industry to spend some time looking outside. Because of the huge variety of product shown, it’s possible to look at other market places, and see if there any similarities, trends, products and ideas that may work or impact in our own industry. In Nuremberg, the opportunities are different. You can see and possibly meet other European and non European buyers and suppliers. There will  be products and suppliers, that your competitors won’t know about, but above all it is the only opportunity to take a comprehensive overview of what maybe happening within a broader retail perspective.

Don’t ignore the Halloween and Party show in New Orleans. Oddly the overall size of the show makes it the smallest of the three . However, as a great many of our industry’s influences come from across the pond , it should not be ignored, as an increasing number of Europeans are discovering.

It would be easy to carry on knocking show organisers. Apart from saying that it would be nice if they were to have put something back into the industry outside of showtime. In past years they have earnt a great deal from their customers, though undoubtedly this would be less likely over the last six or seven years. Some support during the good years may have paid off as things got tougher. Yet we are where we are. Our industry is not really big enough to support a party show , particularly in Europe. Even so, I am not so sure that it would be a good thing. I think we benefit from being with others. We are in a rapidly changing market place ( sorry, I say this a lot) and we need to see what is going on around us, as well as what is happening within us.

The biggest pressie goes to…..

It would seem be that Amazon won Christmas. Or at least that is the view of most analysts.

In common with most Christmas holidays when journalists seem to loose the will to write anything intelligent, opnion on what is happening on the High street seemed to change daily. It went from anything up to 5% down to a ‘sudden rush on the last three days’ to record boxing   day sales . All the indicators pointed to a good Christmas, wages starting to rise, low inflation, falling unemployment, fair economic outlook, but none of this seem to translate into the festive spend.

I think the reality of what happens at Christmas changed a number of years ago even pre-dating the impact of online retailing. The festive season is undoubtedly the most important consumer spend. However, a few years ago , when ‘Boxing Day ‘plus sales started to have an impact on pre Christmas shopping habits, the consumer started to become more canny. In the last three years Black Friday has exacerbated this trend. I feel that consumers are tempted to spend on things they really don’t want, but that is irrelevant as the money is taken out of the spending pot.

Whilst ,apparently, online  still only accounts for approximately 10% of retail spend, though I suspect this is much higher in the last quarter, this is very significant in the scheme of things. Many retailers say they only make their profit in the last three months of the year. That 10% could well be their profit. Hence many retailers,big or small, are feeling the pinch.

It is not all plain sailing for the online operators. There are a number of significant players who have had a tough Christmas eg The Home Retail Group (including ARGOS). Ocado shares have just taken a hit because Amazon is increasing its food offering. But Amazon is a different beast. Like it or loathe it, it is a trusted brand for the consumer. The consumer knows that can order what they want, get it when they want it, at a price they want, and if they don’t like it send it back at no cost . All with very little effort. There  are very few market place brands that curry so much consumer support. Whilst Amazon is seen as the site to go for price , it is much more than that, it’s  primary driver is to satisfy the needs of the consumer.

I am no apologist for Amazon, and I might refer to it an awful lot but that is because I strongly believe it is and will be for the immediate future the key ‘shaper’ of not only our own market but that of most other retailers. We might not like it, and there are many of those within our industry who don’t, but we cannot ignore it. If anyone were to ask for a prediction for 2016(nobody has yet) it would be that our changing market will continue to change , albeit quicker, and Amazon will have played a part in those changes.. The secret will be knowing what those changes are going to be. 

A very happy, healthy and prosperous 2016 to all.