The latest retail figures indicate that there has been a fall in retail spending in the last quarter. My personal findings reflect this, in so much as many of the retailers within our industry have experienced a very flat March and April. This, in itself, is a milestone as my findings rarely tally with those of the professional analysts.
There are many reasons for this, such as creeping inflation, static wages, confidence in the future , Brexit (who said that ?), late Easter, too cold, too hot, wrong type of dry weather, poor English wine harvest, lettuce shortage and the list goes on. With so many influences, it comes as a bit of a surprise that anyone is buying anything .
The fickle finger of flippancy could , rightly, be pointed, fairly and squarely, at me. Whatever the reason, the consumer is not spending. But then why should they. I blogged before on how I think many developed economies are at a point where constantly increasing retail spend will be difficult to achieve as the consumer maybe reaching a point of they don’t need anything more (this, of course, precludes essential spending such as food and replacement clothing).
What to do? One of the basic principles of a good retail business is controlling cash flow . Consequently, when spending falls you have to scrutinise and manage your stock positions . Scrutinise and Manage being the operative words. It does not mean you don’t buy new product. Without new stock, particularly when you are retailing non essentials, there is an even graver risk of experiencing further declines.
There is an old story about a man who had an apple stall in the market. It went something like this..
An apple sellers son came back from business school and said ‘ dad haven’t you heard there is going to be recession? Buy less stock.’ So the man does. And sure enough the following week his takings are down, so he buys even less stock the next week. Eventually he rings his son ‘ Son, you were right business is so bad I have had to close stall…’
It is a bit of an over simplification but I think it illustrates my point, what comes first the chicken , in this case the apparent recession, or the egg being lack of stock.Even if you reduce your stock levels, there must be new product or else the customer will simply stop coming into the store. There are perfect examples throughout the High Street. One example is M&S. Though it is more an example of the wrong new product plus it always looks the same and doesn’t appear to have anything new.
BHS and Woolworths were perfect examples of not changing quicker enough. The bigger the ship the harder it is to turn around. However for independents, if you let your stock get too stale it becomes increasingly difficult (costly) to refresh it.
As politicians are constantly telling us the immediate future could be bumpy. Possibly after the election, and assuming their are no shocks , confidence may rise, then there maybe a dip , if there is some leak from the press that the EU insists that the negotiations are continued in French. Then another boost as it turns out to be untrue, then its leaked that Trump is planning on draining the Atlantic and so it goes on…but we all still have to trade and be better than our competitors. By offering less of your old stock and nothing new . It is both chicken and egg.
And why am I saying this ? Regrettably, I see a lot of tired old stock both as a consumer and travelling around the U.K. in a ‘professional ‘ capacity. It is not a good look but more importantly it does not augur well for the future of those stores.