talking trade Sea change?
Industry commentator Michael Weedoncasts a critical eye over the big retailers’ trading results for the crucial festive season
which its CEO described as marked by “an unprecedented level of discounting”, there was simultaneously shock that even e-tailers could see revenues under pressure - and schadenfreude that e-tailers are subject to market conditions, just like retailers with actual shops. Again, some big retailers have reported good
outcomes. Selfridges posted record results. Joules ticked up double digit growth. Zara continued to expand strongly. So did Ted Baker. JD produced like- for-like growth, guardedly describing UK results as “positive”. Aldi, Lidl, Tesco, Morrisons, ASDA and the Co-op
all enjoyed Christmas cheer in turnover. It helps that food and drink businesses are still getting some wind in their sales from food inflation at 1.3% (food inflation has been positive for the past two years) and that the population grew again in 2018. Perhaps we need a new metaphor to use around
T
he press expressed some perplexity when December retail results turned out not to be as unremittingly gloomy as
widely expected. There were actually some good results among the bad, in a season following a Blackvember that leſt even the bullish Mike Ashley claiming: “November was the worst on record, unbelievably bad”. ‘Death of the High Street’ headlines have disappeared (for now). So I’m wondering how best to interpret all of this - and if we need a new metaphor to help us do so? Steamer Trading Cookshop has been an exemplar
for the housewares industry over many years. But the New Year has seen it fall into the hands of rival ProCook. House of Fraser has crashed. Debenhams has been in turmoil from the till to the boardroom. John Lewis & Partners has a great reputation as a
well-managed business, beloved by shoppers. But the two big pieces of news from this department store group in the last year - that profits had collapsed by 99% and, post-Christmas, that its partners [staff] might not get a bonus for the first time since 1953 - seem to have been taken as evidence that if even virtuous retailers can ship water, then there’s a bigger story to be told. At the same time, Dunelm entered 2019 predicting that earnings would beat expectations. Take clothing and footwear retail. For years, the
worst losses in shop numbers have been in this sub- sector. Department stores have reported steep sales downturns. Primark, the fashion discounter that eschews e-commerce, let it be known that while September and October had produced growth, year-on-year turnover for November was negative - cue concerned headlines. When pureplay online fashion retailer Asos issued a profit warning after a Blackvember trading month
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housewareslive.net •
HousewaresLive.net •
twitter.com/Housewaresnews January/February 2019
High Street/retail/e-tail issues. ‘Death of the High Street’ has been flogged to, well, death, and doesn’t really offer much as a tool for understanding and expressing the mechanics of change. We humans prefer our explanations simple and causes pure*. Unfortunately, as Oscar Wilde put it: “The truth is rarely pure and never simple.” So how do we make proper sense of patchy reports of retail results - and does the available information tell us anything reliable about the current heading for UK retail? There seem to be two broad approaches to commenting on trading results. One, most often heard within the industry, is the “it’s all down to the
company” view. If retailer A is steaming ahead but company B is becalmed and sinking, then it’s down to bad seamanship aboard B. Evidence for this is that a sinking retailer can still go under in good conditions. On the other hand, the best-captained businesses stand the best chance of bringing the results home safe and sound. Looking just at the retailers, not the sea, it’s
reasonable to ask: is ship A better captained than ship B? Is A simply more buoyant than B? Is A perhaps a newer and better type of ship? Is A less burdened by a cargo of, say, debt than B? Then there is the environmental view. Is it simply that A and B are just bobbing up and down on different waves? Are the currents and the weather in the area of the sea that A sails different to the conditions that apply where B travels? Is the tide raising both A and B, but B is shipping water? Or, in the even bigger picture, is the whole level of the sea changing along with the global climate? “A rising tide lifts all boats.” asserted John F Kennedy. It’s not true. Some boats leak and are less buoyant than others. An ebbing tide, on the other hand, drags them all down. We are always scanning the horizon and checking out the prevailing winds. Is it Brexit on the (increasingly near) horizon causing that change in the breeze? Or is it the slowdown in China and the knock-on effects of the Trump trade war? Or is it all just about the normal ups and downs of the sea? Conclusions about what’s happening depend
greatly on the period of time over which you do the sums. The number of vacant shops went up in 2018.
Monday February 4 2019 THE NATIONAL MOTORCYCLE MUSEUM, BIRMINGHAM
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