Flight to value has its impact on the Charity Shops
There is good news and bad news for the charity retailers here. First the good news. Oxfam reports that its like-for-like sales are up by 5% compared with 2008. This includes a 7% increase in sales of books, and £2.4million of sales due to its online sales drive - a 70% increase in the year. This is very much in line with teh ‘flight to value’ during the recession, experienced by many other retailers of low-cost goods such as New Look, Primark and Asda which the Guardian reported last week is leaving retailers like M&S and Next stuck in the middle of the market.
On the other hand, Oxfam are also feeling the pinch over the donations that they receive in their shops. The same consumer caution that has caused their sales to rise has also led to fewer donations, which have fallen by 15%. Families are, they think, buying less and replacing fewer clothes and household goods, so they have less to give away. Mr McCullough, the charity’s director of trading, suggests that this could be taken as an indicator of whether the economy is really recovering yet. “Discretionary spending remains low, big sales are starting earlier and discounting harder, and we’re having to work harder than ever to maintain the high quality of donations.” Donations to Oxfam’s shops have “long been a barometer of retail trends in the UK, rising and falling in direct parallel with the strength of the high street - the current mood of optimism may be misplaced”.
Retailer performance - interactive resource
A big hat tip to Tracey Bell for spotting this great interactive resource from the Guardian. The guide to high street winners and losers is updated with the latest trading statements from all the best-known retailers as they let shareholders know how the crucial Christmas period went.
Amazon to move onto the High Street?
What an irony - Amazon may have been responsible for the demise of thousands of book shops, including Borders last week, but are now looking at opening high street stores themselves. As one of the few survivors of the dot com boom, they have fantastic online sales statistics - the international arm, which includes the UK, increased sales by 33% to $2.6 billion in the three months to September 30 and the US group has forecast growth of between 21% and 36% in its final quarter across the business. However the suggestion in this report from Times online (read it while you can, before it ceases to be free!) is that while they only sold books and CD’s, which could easily be delivered through a letter box, postal delivery was fine, but now that you can buy anything from a bicycle to a food processor, delivery is more complicated. Also, other retailers who use online sales as well as stores, like Argos, John Lewis and Tesco, suggest that many customers prefer to order online but collect from the store rather than wait for delivery. So perhaps we will see Amazon moving in to the stores recently vacated by Borders.....
Video Case Study - The Supermarket Bullies?
Many thanks to Janis Thompson at Bristol GS for suggesting this terrific 3-minute video on the battle between supermarkets and their hard-pressed suppliers. A great range of business topics in here, including an obvious starting point for discussing the ethical issues raised in the clip
Download student worksheet (including video link)
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Providing What Customers Want?
Asda yesterday launched a new range of clothing under it’s well-established George label.
What’s unusual about that, you might ask.
Well the 13-piece range is “the UK’s first mainstream range of traditional Asian clothing” - not just for supermarket clothing, but for the big high street names.
read more...»The tills are alive with the sound of Woolies
It doesn’t seem that long ago that we were musing on the fate of the 800 stores that closed following the collapse of Woolworths. A new report estimates that over 60% of the former Woolworths stores are now trading again…
read more...»Starter Activities - UK Retailers
Here are some puzzle-style starter activities based around a collection of well-known UK retailers…
read more...»Instore Takes a Pounding
Knowing what your customers want is key to the success of any business. This is particularly true for so called “pound” shops; their customers are focused on value and price.
The importance of this is perhaps reinforced by the tale of two retailers who operate within the value market. Poundland has gone from strength to strength, as shown in earlier blog articles, and is set to open at least 30 new stores over the next 12 months.
InStore, on the other hand decided that their customers should move upmarket - and replaced the familiar £-stretcher fascia with the less familiar InStore fascia.
Video case study - the effect of deflation on businesses
The latest data on inflation, as measured by the Retail Prices Index (RPI), sbows that prices are falling. What are the effects on the turnover of retailers? What is the impact on workers? A great video from the BBC provides ideal stimulus material for looking at this topic.
read more...»Product life cycle - can independent record stores extend their life?
In case you missed it, last Saturday was Record Store Day. Around 100 UK independent record shops participated in a “worldwide” programme of events which included in-store gigs and one-off vinyl releases. But will sales promotions like this help extend what seems to be a rapidly shortening commercial life for the record store?
read more...»Q&A - Why is the cash flow forecast so important?
If a business runs out of cash and is not able to obtain new finance, it will become insolvent. It is no excuse for management to claim that they didn’t see a cash flow crisis coming.
read more...»Credit Insurance and Retailer Cash Flow
A fantastic 8-minute video from Newsnight is ideal for A2 students looking at the causes of cash flow problems - particularly for retailers…
read more...»Improving cash flow by reducing stocks
An excellent piece in the FT yesterday focuses on how businesses are destocking as part of their cash-flow management in the downturn…
read more...»Q&A - What is revenue?
A business exists to provide products (goods and services). Those products are sold to customers. When a customer buys a product, that transaction becomes a sale for the business. That’s what businesses do – they make sales. The value of sales made is the revenue of the business.
read more...»Price war on the way - with chocolate as the winner
Great news for those of us whose Easter is never complete without overdoing the milk chocolate egg consumption....
read more...»Q&A - What is a brand name and what are the advantages of having a strong brand?
A student asks:
What is a brand name and what are the advantages of having a strong brand?
read more...»Working with suppliers - the grocery battle
The relative bargaining power of retailers and suppliers is sure to be tested during the recession, particularly in the highly competitive grocery supermarket sector wher consumers have demonstrated their preference for better value for money.
read more...»Retailer Survivors Like a Deep Recession
A timely and thoughtful piece from Jeremy Warner in the Independent argues the case that retailers who survive the recession / depression / slump will emerge much stronger…
read more...»Fixed-price retailing takes off in the UK
Another excellent piece on the changing nature of UK retailing - this time in the Independent - charts the rise of “fixed-price retailing"…
read more...»A Great Overview of the UK Retail Sector’s Problems
There is an excellent analytical piece in the Observer this morning which looks at the challenges facing the UK retailing market…
read more...»SWOT analysis for Britain’s leading high street retailers
A great piece in the Independent this morning does some crystal ball-gazing for ten of the UK’s leading retailers. As the economic downturn bites with vengeance in the Spring, which of the retailers featured are best placed to take advantage of the opportunities arising in a tough retail environment? Which retailers face more threats than opportunities?
Measuring consumer spending and retail activity on the high street
There is a significant media focus on the problems facing high street retailers in the UK. The intensity of the media scrutiny is bound to increase further after the Christmas break. Which retailers will fail? Which will survive? Which retailers will do better than the competition and perhaps even grow their sales? And how on earth do we get a feel for the overall level of consumer spending in retail outlets?
read more...»Bracing ourselves for a series of retail business failures?
A bold (perhaps reckless) prediction in the Sunday Times today. “Up to 15 national retail chains are predicted to go bust before the middle of January 2009"…
read more...»Shoppers desert the department stores for an online Christmas shop
I’m preparing for an enjoyable and relaxing morning Christmas shopping with her Ladyship, and I’m pretty sure we’ll pop in to a couple of Leeds’ department stores. But our visit will be to pick up those last few present ideas rather than work our way through a long list. For, in our household, online shopping is the “go-to” method of ensuring we get what we need.
The tutor2u office is currently piled high with deliveries from a variety of online retailers (Amazon.co.uk probably accounting for about half of the total pile). The presents were delivered on time, at great prices. No car parking charges or stress from an evening jostling with crowds of late-night shopping. For us - and perhaps like you - online shopping has created much more time and space to enjoy Christmas.
According to retail sales data released by the ONS on Friday, it looks like one of the big losers from the migration to online shopping is the traditional department store. Despite the allure of heavy price discounting, customer numbers (measured by the retail concept of “footfall") are well down. Sales made predominantly at low margin spell trouble when it comes to calculating the profit made in a crucial Christmas trading period.
This week sees the traditional quarterly rent payments due by retailers to landlords (Christmas Eve I think). Watch out for some high profile business failures amongst retailers who just couldn’t persuade enough of us to swap the comfort of our kitchen table, laptop and Internet connection for a 5-hour shopping marathon on the high street.
A tale of two retailers with contrasting fortunes in the slump
Two pieces of contrasting news from well-known retailers provide a telling insight into the effects of the economic slump…
read more...»Quick starter puzzles on the high street retailers
Here are a couple of starter puzzles that focus on well-known high street retail brands…
read more...»Supermarkets under fire for price promotions that focus on fatty foods
A mini-row has broken out between the grocery retailers and the National Consumer Council over a report criticising supermarkets for offering too many sales promotions on unhealthy food…
read more...»Price wars are the milky way for supermarkets to fight for market share
In an economic downturn, the battle for market share amongst grocery retailers becomes even more intense. Look out for some good old-fashioned price wars…
read more...»Insights into the private affairs of Britain’s largest retailers
A great new series in the Telegraph profiles Britain’s largest private companies. The series starts with lots if useful information on the ten largest retailers still in private ownership (i.e. shares not available for sale on the Stock Exchange)…
read more...»Marketing mix - the online retailers have never had it so good
An interesting article in the Sunday Times highlights the strong sales growth being achieved by online retailers who have got their business model right…
read more...»Cash flow problems could mean its a wrap…
Are we about to see the return of the dot.com bust as online businesses also struggle to handle the consumer downturn?
read more...»Which businesses will benefit from the baby boom?
Britons are having more babies than at anytime since the 1970’s. So which business sectors are gaining from the baby boom?
read more...»Credit Crunch - will you stay loyal to your favourite shops?
The sound of consumer purses (and wallets) tightening is being heard around the UK as recession looms. A survey from Verdict suggests that one casualty of the downturn will be customer loyalty.
read more...»Heavy losses in focus at struggling Jessops
Lots of news every day about how the economic downturn is affecting UK retailers - but the problems faced by Jessops seem to be more fundamental than just a decline in consumer confidence…
read more...»An A to Z of UK High Street Retailers
Here’s a little exercise that your students might find interesting. The challenge is to come up with an A to Z of well-known retailers operating in the UK. The task is much harder when done alone and without research materials (aka wikipedia). It would make a good timed group exercise. Which group can complete the list first? Or which group can complete the most letters with legitimate retailers in a specific time (e.g. ten minutes).
read more...»
