finance 23 Tough times for retailers and wholesalers


Retailers and wholesalers are facing one of the toughest times for generations. Slow growth in the economy is combining with faltering consumer confidence, rising unemployment and sharp increases in prices to create a ‘perfect storm’


At a time like this retailers need stability, and that is what Barclays Corporate offers its clients operating in the sector as it works closer with them to meet the challenges ahead.


Take a walk down any high street and the signs of a struggling retail sector are obvious. In some areas one in four shop units are vacant – and it may stay that way for several years. The economy may be slowly recovering, but the impact of the downturn on retailing and wholesaling has resulted in a fundamental shift in the way businesses in the sector operate.


There have been some high-profile casualties, but for every victim there is a success story of a business that has adapted to the changing economic environment and, through strong management and a sensible approach to its finances, is performing well.


Despite the common misconception that banks aren’t open for business, Barclays Corporate retail and wholesale team at Heathrow is ready to work with forward-thinking retailers and wholesalers in the area to help them on their path to growth.


Eric Thetford, one of the team’s specialist relationship directors, can draw on his 27 years’ experience to help businesses in the area.


“This has been a pretty tough year so far for retailers, particularly in the non-food sector. But there are good businesses out there – well- managed ones that have built up a war chest of cash so that when the market picks up they will be well-placed for growth,” he says. “We want to hear from these businesses. We know there are opportunities in the market and we can help businesses reach their potential.”


Thetford sees niche players doing well in the current market. “You are more likely to if you have a unique selling point. A lot of the businesses we see around here are very community-focused. They operate in, and are an integral part of, the local community. They can’t compete on price, but they can on customer service and they will go that extra mile to meet and exceed customer expectations.”


Corporate director for Heathrow Jagdeep Rai adds: “In this area we have a high proportion of Asian business owners who may have started out as corner shops many years ago but are now in the second or third generation of the family and have changed dramatically over that time.


“They are resilient businesses and they have ridden the storm. While there are still real challenges, we see many businesses that are doing well. They have good management teams and they are controlling costs well which means that they can compete.


“From starting out as traditional corner shops, many of these businesses had the foresight to expand and diversify into owning property or wholesaling, including importing and exporting.


THE BUSINESS MAGAZINE – THAMES VALLEY – MAY 2011


“For them it’s been a combination of good forward planning and a strong, effective management team – which is often where the family and cultural factors come in. There’s an emphasis on building trust and relationships with customers – and that is also how we operate. Our clients told us they wanted continuity and we listened. So as a Barclays client you are likely to see the same relationshjp director when we visit you which means we build up an understanding of the business and the challenges it faces.”


Rai and Thetford point to the fact that Barclays launched a dedicated retail and wholesale team more than 10 years ago – demonstrating, ahead of many of its rivals, a clear commitment to businesses operating in the sector.


“We can draw on that expertise to help our clients,” says Thetford. “We hold regular industry events such as conferences and seminars where our clients can hear first hand from experts. A recent event in the area focused on the clothing sector, which is facing a difficult time recently with inflation running high on the back of a major increase in the price of cotton.


“At the seminar we were able to show clients what’s happening in the market, who’s doing well and why. There isn’t much these businesses can do about the increasing price of raw materials but they can offset the rises with good forward planning and cost management.


“We know that time is precious to our clients so to be able to sit them down in front of experts who can help their businesses with these challenges and give them up-to-date market intelligence is very powerful.”


For Rai, the difference between Barclays and other lenders is their understanding of the local market, backed up by an ability to structure innovative funding packages to suit their needs.


“We can add value. We’re more than just a bank who can talk to them about their financial position. We understand the sector and we understand the local community,” she says. “Consumers are changing and no business can take them for granted. Our clients in the retail sector understand that and so do we.”


With little new retail space likely to be opening in the high street or shopping centres this year, much of the focus will be online.


“It’s an area we are highlighting,” says Thetford. “It’s a great opportunity for small, niche players to take on larger retail establishments.


“The internet is a great leveller – the customer doesn’t know how big or small you are, they just see your site and if it’s a good one they will do business with you.


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“The debate about online versus the high street has changed. People go online to look for goods then go to a bricks and mortar shop to buy them while others look in the shops first then go online to try to find them cheaper.


“You have to be aware of changes in consumer spending patterns and the wider market and because we have a depth of knowledge of the sector we aim to give our customers an inside track.”


That knowledge and their own experience of closely working with clients ranging from small independent shops to major wholesalers means Rai, Thetford and their team recognise the potential in the sector.


“We’ve helped our clients achieve more efficient cash management over recent years, supporting and advising them on their cash collection cycle,” says Thetford. “Now we want to hear from businesses that have got the fundamentals right and have a track record but also a vision for growth.”


Details:


Jagdeep Rai , corporate director 07775-545251 (mobile) jagdeep.rai2@barclays.com


Eric Thetford Relationship director 07775-545960 (mobile) eric.thetford@barclays.com


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