UK Shoppers' confidence wanes

[The Masked Tulip]

Amazon are now delivering until midnight in several English cities and also in Glasgow - says a lot.

Bizzarely, Swansea is not one of the cities despite one of the biggest Amazon depots in the UK being in the city.

[JFK]

I think most people are shopping online and not going out. Certainly when we went out food shopping on Saturday it was like a normal Saturday.  Nipped out chrimbo eve to get a few odds and sods and it was all quiet!

Ridiculous bombardment for sales - looks like disappointment ahead.

[MrPin]

I am now not confident about shopping. There might be something horrible in my basket.

[UmBongo]

On 04/01/2018 at 12:44, MrPin said:

I am now not confident about shopping. There might be something horrible in my basket.

Sprouts?

[eight]

Discovered that Axminster, who I have ordered esoteric wood working gear from online before, actually have a spanking great retail store in North Shields amongst the B&M's and the Pets at Homeses. Looks like a pretty risky venture to me, but I'm probably wrong.

[gibbon]

13 hours ago, eight said:

Discovered that Axminster, who I have ordered esoteric wood working gear from online before, actually have a spanking great retail store in North Shields amongst the B&M's and the Pets at Homeses. Looks like a pretty risky venture to me, but I'm probably wrong.

Sounds risky to me, overhead walks on 2 feet. Then add on all the ancillary stuff, retail rents, light, heating...soon mounts up.

[onlyme]

Having a small number of retail outlets actually probably makes sense, you're not going to get local custom to cover costs but you will get repeat customers and those looking to spec their purchases making a special trip (or in passing) to go and look at the shop. Axminster's demographic must be heavily skewed to the retired - woodworking and metalworking are major retirement pastime, so these people have the time and in many cases the budget to purchase significant quantites of machinery, tools, accessories and consumables. Having a drop in shop  will appeal to this demographic in particular and increase sales, even if the actual sale is later via the internet. These locations can also then offer space for trade show / manufacturer promotion which they will get paid for and also get sales from, enhancing the brand and a major marketing opportunity to keep existing customers warm and attract new ones. Also if you are only looking at one or two retail outlets in the country you can cherry pick the best deals available, so probably have a good deal on the lease too. Maybe benefits in providing customer support and more localised returns / shipping maybe as well savings bit on transport costs as well as shipping out initial sales.

Pretty sure they still do their catalogue too - you could say this is an expensive overhead, but no doubt that leads to more sales and also appeals to there demographic whether that same information could be obtained from the web portal, but it is was a great catalogue and thumbing through it would encourage additional sale and remind the reader of the range of tools stocked and thus drive more custom through their brand that could otherwise go elsewhere.

[This Time]

3 minutes ago, The XYY Man said:

They are getting desperate now.

It's still six weeks until Pancake Tuesday -  and yet ASDA are already selling flour and eggs...

 

XYY

Sainsbury's already had Easter stuff up on Wednesday.

[Ina]

Slightly off topic but the Strada restaurant chain closed 50% of its branches this week.  Mid market chains are in trouble and I suspect more will go the same way e.g. Jamie's Italian.  Interestingly there are Ivy restaurants opening in prime sites in Yorkshire e.g. York and Harrogate.  Restaurant market is saturated.

[One percent]

18 minutes ago, Ina said:

Slightly off topic but the Strada restaurant chain closed 50% of its branches this week.  Mid market chains are in trouble and I suspect more will go the same way e.g. Jamie's Italian.  Interestingly there are Ivy restaurants opening in prime sites in Yorkshire e.g. York and Harrogate.  Restaurant market is saturated.

I noticed that at the rear of the new monks cross m&s, there is a row of chain type restaurants. I did wonder how well they would do given there are excellent local food restaurants all over North Yorkshire. 

[spunko]

I've never been to a Jamie's Italian. Are they as shit his other projects like the Flavour Shaker?

[onlyme]

16 minutes ago, spunko2010 said:

I've never been to a Jamie's Italian. Are they as shit his other projects like the Flavour Shaker?

Been once, OK but nothing to write home about. Does Italian food even lend itself to be haute cuisine - probably not, so safe and reliable. You probably won't get a bad meal there as difficult to completely screw up. Cheap ingredients too, good business model. 

[Ina]

2 hours ago, spunko2010 said:

I've never been to a Jamie's Italian. Are they as shit his other projects like the Flavour Shaker?

Went to the Leeds one.  Not bad but gimmicky - lots of plywood balancing on tins of tomato purée.  Suspect closures go on leases and particularly break clauses in leases, a subject I'm bizarrely obsessed with.

[eight]

On 1/7/2018 at 10:46, spunko2010 said:

I've never been to a Jamie's Italian. Are they as shit his other projects like the Flavour Shaker?

I'm guessing every single dish tastes of olive oil and lemon juice.

[One percent]

Mothercare: nobody cares it seems 

http://www.bbc.co.uk/news/business-42602030

[Byron]

I like the vague sort of language these people use,

'Shoppers confidence wanes.'

What they mean is that people are not spending so much money, they do not need confidence to buy, just money.

So much has been bought on cards and the cards have just reached FULL.

Game over.

[SNACR]

On 06/01/2018 at 13:32, onlyme said:

Having a small number of retail outlets actually probably makes sense, you're not going to get local custom to cover costs but you will get repeat customers and those looking to spec their purchases making a special trip (or in passing) to go and look at the shop. Axminster's demographic must be heavily skewed to the retired - woodworking and metalworking are major retirement pastime, so these people have the time and in many cases the budget to purchase significant quantites of machinery, tools, accessories and consumables. Having a drop in shop  will appeal to this demographic in particular and increase sales, even if the actual sale is later via the internet. These locations can also then offer space for trade show / manufacturer promotion which they will get paid for and also get sales from, enhancing the brand and a major marketing opportunity to keep existing customers warm and attract new ones. Also if you are only looking at one or two retail outlets in the country you can cherry pick the best deals available, so probably have a good deal on the lease too. Maybe benefits in providing customer support and more localised returns / shipping maybe as well savings bit on transport costs as well as shipping out initial sales.

Pretty sure they still do their catalogue too - you could say this is an expensive overhead, but no doubt that leads to more sales and also appeals to there demographic whether that same information could be obtained from the web portal, but it is was a great catalogue and thumbing through it would encourage additional sale and remind the reader of the range of tools stocked and thus drive more custom through their brand that could otherwise go elsewhere.

It’s an appealing concept but the risks are very large once you move away from mass market it’s also easy for the inexperienced in bricks and mortar retail to drastically underestimate risks and costs even wining a lottery jackpot might not be enough to buy you out of one lease. 

To link in with Mothercare, being mentioned above, and as an example, they lost loads of business to online retailer Kiddicare.com. Morrisons bought Kiddicare for £70m they then acquired 10 out of town units which were the defunct Best Buy units that Carphone Warehouse were desperate to offload the leases on, and were offering big incentives to any potential assignees of the right covenant strength, so likely Morrisons would have benefitted from this. Even so, three years later, to exit the business Morrisons lost pretty much its entire original £70m and was forced to write off another £100m on top. 

There was probably quite a lot of mismanagement there but it does highlight how the figures can rack up on just one online business spreading its wings to 10 out of town units, albeit very prime ones. Even with more secondary out of town schemes just a handful of stores merely underperforming and you’d probably need a couple of million in online sales to pick up the slack. If they moved from underperforming to heavily loss-making with none even stretching to 50% of break-even you’d probably struggle to make it up at all as the truth, even now, is the volumes online aren’t all that.

I would say for online retailers it might make sense to have one store, effectively attached to their distribution centre to leverage the stock sat on the warming pallet racking there and that’s about it. It’s a bit strange how retail concepts, that wouldn’t have been thought of as viable, before the internet, are now seriously considered because someone in the market sector is doing quite well online.

 

[Wight Flight]

Agreed. A 15 year fully repairing lease is one of the most deadly 'assets' a business can own. 

[The Masked Tulip]

19 hours ago, SNACR said:

It’s an appealing concept but the risks are very large once you move away from mass market it’s also easy for the inexperienced in bricks and mortar retail to drastically underestimate risks and costs even wining a lottery jackpot might not be enough to buy you out of one lease. 

To link in with Mothercare, being mentioned above, and as an example, they lost loads of business to online retailer Kiddicare.com. Morrisons bought Kiddicare for £70m they then acquired 10 out of town units which were the defunct Best Buy units that Carphone Warehouse were desperate to offload the leases on, and were offering big incentives to any potential assignees of the right covenant strength, so likely Morrisons would have benefitted from this. Even so, three years later, to exit the business Morrisons lost pretty much its entire original £70m and was forced to write off another £100m on top. 

There was probably quite a lot of mismanagement there but it does highlight how the figures can rack up on just one online business spreading its wings to 10 out of town units, albeit very prime ones. Even with more secondary out of town schemes just a handful of stores merely underperforming and you’d probably need a couple of million in online sales to pick up the slack. If they moved from underperforming to heavily loss-making with none even stretching to 50% of break-even you’d probably struggle to make it up at all as the truth, even now, is the volumes online aren’t all that.

I would say for online retailers it might make sense to have one store, effectively attached to their distribution centre to leverage the stock sat on the warming pallet racking there and that’s about it. It’s a bit strange how retail concepts, that wouldn’t have been thought of as viable, before the internet, are now seriously considered because someone in the market sector is doing quite well online.

 

 

 

So basically the cost of renting shop space in the UK is so prohibitive that it can screw even multi-million pound companies?

[Frank Hovis]

It does sound like town centres are heading to being a much smaller area of commercial outlets and their forming a mix of leisure outlets (pubs, restauarnts, coffee houses), convenience stores and the odd Factory Shop / Poundland type general cheapo retailer with the vast bulk of purchases being made in out of town supermarkets (not just food) and online.

Which will mean:

• Commercial property values in town centres will plummet; especially anything at all off the main drag
• Business rates take by councils will do the same
• People will start living in town centres again (retirement flats probably)
• The hobby shops (crystals, paintings) will move online

The only thing I can take from that is don't touch subprime commercial property in town centres however cheap it appears as you are probably looking at a liability.  Also I won't buy big retailers such as Debenhams, House of Frazer and probably not M&S either owing to their big in-town stores.

[gibbon]

On 1/7/2018 at 13:08, Ina said:

Went to the Leeds one.  Not bad but gimmicky - lots of plywood balancing on tins of tomato purée.  Suspect closures go on leases and particularly break clauses in leases, a subject I'm bizarrely obsessed with.

Didn't he close loads end of last year? Hopefully they'll all close down the smug cunt. 

On 1/7/2018 at 08:58, Ina said:

Slightly off topic but the Strada restaurant chain closed 50% of its branches this week.  Mid market chains are in trouble and I suspect more will go the same way e.g. Jamie's Italian.  Interestingly there are Ivy restaurants opening in prime sites in Yorkshire e.g. York and Harrogate.  Restaurant market is saturated.

The continued hollowing out of the middle. Same thing going on with gyms.

 

20 hours ago, Cunning Plan said:

Agreed. A 15 year fully repairing lease is one of the most deadly 'assets' a business can own. 

 Amazing people willing sign up to repair the landlords roof. I look around at all these vanity businesses opening up in decrepit buildings and wonder how mental the business owners must be to not only take on a landlords building maintenance for something about to fall down but also sky high rents and business rates.

[Ina]

14 minutes ago, gibbon said:

Didn't he close loads end of last year? Hopefully they'll all close down the smug cunt. 

The continued hollowing out of the middle. Same thing going on with gyms.

 

 Amazing people willing sign up to repair the landlords roof. I look around at all these vanity businesses opening up in decrepit buildings and wonder how mental the business owners must be to not only take on a landlords building maintenance for something about to fall down but also sky high rents and business rates.

You are so correct. Dilapidation clauses are the biggest drain on businesses.  My last law firm rented premises in a very unfashionable part of Yorkshire.  They restored the offices.  Dilapidations were £48k.

[Wight Flight]

On 10/01/2018 at 20:21, Ina said:

You are so correct. Dilapidation clauses are the biggest drain on businesses.  My last law firm rented premises in a very unfashionable part of Yorkshire.  They restored the offices.  Dilapidations were £48k.

I think most firms manage to go bust before the dilapidation claim becomes reality.

As an aside - £75 per week for a shop in a busy holiday town seems like a bargain. If you can't make a profit with that you probably need shooting.

http://www.wightbay.com/ryde/for-rent/114-high-street-ryde-shop-to-rent-5596086/?utm_source=websiteemail&utm_medium=email&utm_campaign=auto_email_alerts