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There never seems to be a good time in Interim Management to go on holiday. I’ve heard from a number of interims this year ‘……I’ve had to cancel due to work commitments before, if I cancel this one my wife / husband / significant other will leave / kill me’. As an interim provider you’re always thinking, if I book this particular week will the big change programme I’ve been tracking since last year kick off while I’m baking in the sun, lathered in factor 50 looking for a deckchair without a towel while the kids nag for an ice cream.
The ‘Great British Summer Holiday’ has changed dramatically in recent years and the demise of several tour operators in recent months is testament to this. In the last couple of months we’ve seen Goldtrail, Sun4U, Kiss all collapse leaving many stranded abroad and bearing the cost of getting home. Why would you bother? Well it seems this year that many aren’t and are choosing to stay in the UK to go to one of our own seaside resorts or as I’ve seen more commonly this year go on a family camping holiday. There are more people I know who have families, relatives or friends with holiday homes in Europe so getting abroad via a budget airline and quick transfer at the other end is hassle free and cheaper.
With more people becoming internet savvy and the rise and rise of sites such as Expedia, Last Minute and Trip Advisor planning and booking a holiday and almost knowing what to expect before you get there is more bad news for the operators. Among my friends and peers, it’s almost become an integral part of the holiday experience; sitting down with your family and laptop to choose a destination, find a hotel, read the reviews and book cheap flights. Is this why we hear of all the ‘last minute deals’ with only 2 weeks of the summer holidays remaining?
While writing this blog I’ve notice a news article on the Wall Street Journal with the headline ‘More UK Tour Operators to Face Insolvency’. Large companies like TUI Travel and Thomas Cook will survive the downturn but smaller, lower-budget operators working on tight margins are under huge pressure. So what is your opinion on package holiday operators and their future? Is the demise reversible with people opting to book their own via budget airlines and discount websites or choosing to holiday in the UK? Holidays are close to all of our hearts so I would like to hear some interesting comments and debate on this subject.
Jonathan Flynn is Head of Retail at Interim Partners.
It’s been an unpredictable year so far regarding interim management opportunities in the Retail & Leisure sector. The year started in a more optimistic mood with people glad to see the back of 2009 and looking forward to a more buoyant year. It was widely claimed that despite small economic growth that the retail recovery was on track and all eyes were on which businesses would be investing in change. Then came a series of events that encouraged procrastination; the financial year end came and went, the snow crisis (!), volcanic ash and finally the General Election and the formation of a coalition Government.
The recent emergency budget and the VAT increase to 20% from 2011 hasn’t derailed the recovery. A rise in VAT was widely expected and retailers seem to have prepared accordingly. They now need to decide how much of the VAT rise they pass on to consumers – ASDA has vowed to absorb all of the 2.5% increase but other retailers will struggle to do so having taken as much cost out of their businesses as possible already. The increase is more bad news for the sector, especially as non-food retailers are also being hit by the weakness of the pound against the dollar and rising product costs.
I’ve spent a lot of time out meeting retailers in the past few months and the consensus will come as no surprise to you; trading is tough, cash is king and cost cutting is still top of the agenda. So where are the investment budgets? Well they seem to be there, vastly depleted from what they were even last year but they’re not being spent………..yet. I’m concentrating more on activity than predictions, but I’d like to open this up to our interim management community for discussion on your thoughts on the sector and views on the next few months – it’s time for change but who has the appetite and more importantly the budget or is it going to be a similar run in to Christmas as seen last year? As industry leaders and practitioners many of you will have seen similar conditions before, weathered the storm and come out the other end.
Is retail the football equivalent of the England Football Team – high expectations from the outset, struggles through with a series of disappointing results but ultimately fails to fulfil potential. Fortunately we haven’t been knocked out but as we’re running out for the second half what is our tactic – sit back and defend or take the game to them?
Jonathan Flynn is Head of Retail at Interim Partners
The votes are in, deals are currently being struck and we will shortly know what the make up of our new Government looks like. The party leaders talked a good game during the campaign when it came to recognising retail’s role as a generator of jobs and prosperity. David Cameron spoke of postponing the National Insurance rise (or “jobs tax”) and this is essential for the sector to continue to grow. The sector has had its fair share of incremental costs from minimum wage to business rates and it can not keep absorbing them forever.
Maintaining low interest rates and inflation will help the sector but it’s crucial that the new Government thinks long and hard about tax increases because of the knock-on impact on UK shoppers. The public deficit being what it is makes tax rises inevitable but needs to be administered carefully for consumers to keep their nerve at a time when the UK economy is more reliant on the sector than ever.
I would be interested to hear your views on how the new Government can help support growth in the retail sector.
On a personal note, I am undertaking a 174 mile Coast to Coast bike ride over 3 days and aim to raise £1,000 for our Company Charity, St. Michael’s Hospice. If you would like to support me and pledge a donation please do so by following this link www.justgiving.com/Interim-Partners-OnYourBike
Jonathan Flynn is Head of the Retail Practice at Interim Partners.
I would be interested to hear your views on how the new Government can help support growth in the retail sector.
On a personal note, I am undertaking a 174 mile Coast to Coast bike ride over 3 days and aim to raise £1,000 for our Company Charity, St. Michael’s Hospice. If you would like to support me and pledge a donation please do so by following this link www.justgiving.com/Interim-Partners-OnYourBike
Jonathan Flynn is Head of the Retail Practice at Interim Partners.
We’ve been through the toughest recession most people can remember, but UK retailing has proved its resilience and emerged in good shape. It’s not been easy, but by focussing relentlessly on the customer and continuing to innovate, the majority of the UK’s retailers have come out the other side stronger.
The winners at this weeks Retail Week Awards in London were businesses who have focussed on investing on improving the customer experience – often across multi-channels – and going further than ever before to meet the ever-increasing expectation of today’s shopper.
There is a feeling of quiet confidence in the network of retail interim managers I regularly update with and although we’re not out of the woods of uncertainty (a possible double dip recession or hung-parliament) it’s time for retail businesses to continue to innovate and invest in change. There is still going to be a demand for interim managers that can value engineer – those who can identify opportunity in a business and by returning a significant return on investment can show that a retailer can get a lot back from not a lot of financial commitment. So, lets look forward to a more buoyant few months as the recovery continues.
A third of consumers intend to spend less on Christmas than they did last year. Retailers will now need to be at the top of their game to reap the rewards during the traditional golden sales period. Recent research by ICM shows that consumers are reluctant to spend frivolously which is more bad news for the sector with last Christmas being the worst recorded on record with like-for-like sales down 3.3%. The third of consumers looking to spend less is roughly the percentage of the UK population that have been directly affected by the recession, either by having lost their jobs or having their hours cut.
Online retail continues its upward movement unabated. The UK online market increased to £17.5 billion in 2008 compared to just £3.9 billion in 2002. Online retail is now growing at a rate eight times that of the overall retail market. In the ICM Poll the results for retailers with on-line capability is encouraging with 13% of people polled saying they will buy a lot more on-line, 19% a bit more and 43% buying about the same as last year.
So what does this mean for interim managers in the retail sector? With businesses focussed on trading and cash management, projects still shelved and the turnaround market still not prevalent in the sector it looks like a difficult time for Interims focussed on retail and it could well continue into 2010.
I would welcome your thoughts on the above and look forward to keeping in touch with you all in the run up to Christmas.
Jonathan Flynn is Head of the Retail Practice at Interim Partners.l;”>
So what does this mean for interim managers in the retail sector? With businesses focussed on trading and cash management, projects still shelved and the turnaround market still not prevalent in the sector it looks like a difficult time for Interims focussed on retail and it could well continue into 2010.
I would welcome your thoughts on the above and look forward to keeping in touch with you all in the run up to Christmas.
Jonathan Flynn is Head of the Retail Practice at Interim Partners.
Retail businesses are more than ever wanting to get closer to consumers and the contents of their pockets. In the last 48 hours I have watched the hour long Sainsbury’s programme on Channel 4 (I’m Running Sainsbury’s, Tuesday 9pm), seen ASDA kick off a price war on school uniforms through the social networking website Twitter and watched Oasis become the first retailer to launch an application through the Apple iPhone. In this competitive market cash, more so than ever is king. Behind the scenes, retailers are tentatively talking about allocating budgets to programmes and projects but they are not rushing to spend money on development programmes. For the majority of retailers there are still substantial cost reduction opportunities to be had.
Most retailers are aware there are inefficiencies or areas for cost reduction and have embarked on some sort of cost reduction initiatives. However, they are often not deep enough and are not embarked upon early enough and there is hesitancy to implement them because of the fear that the cost of finding and resolving the saving may outweigh the value delivered. I believe the last few months of this year will be predominantly about turnaround and distress situations where businesses are focussed on finding immediate cash in order to survive. Tactical value engineering projects that can deliver a disproportionate return on investment must now be high on retailers agenda – otherwise the next few months may see external influences (and investors) move projects from ‘tactical’ to ‘distress’.
Jonathan Flynn is Head of the Retail Practice at Interim Partners.
Finally, a hint of some good news in the retail sector. A quarter into the year which was expected to be the worst in memory, the much feared retail meltdown has failed to materialise. At the recent Retail Week Awards I spent much of the evening discussing the current retail climate with leading executives from the sector and was encouraged and slightly surprised by the quiet confidence and optimism. Retailers ranging from the big players to the more specialist were talking about encouraging trading figures but there was still the need to look at tighter cash management and more efficient stock inventory management. However, what was particularly interesting was the number of people discussing project and change management – projects poised internally to go but waiting for one obstacle to overcome, Financial Year End.
Now that the Financial Year End period is well and truly upon us and many retail businesses reporting and publishing results (and Easter behind us) there are many in the sector predicting that the level of activity with regards to interim management assignments will set the scene for the remainder of 2009. The market for retail interim management changed in 2008 with businesses either ‘battening down the hatches’ or looking at restructuring / turnaround. Is it now time for another change? With retailers waiting for approval for budgets following year end for internal projects and the urgency to get experienced sector practitioners in place to deliver these projects I am confident that despite a shaky start that it will be a good year for experienced interim managers in the sector. I would be interested to hear your thoughts on this.
Jonathan Flynn is Head of the Retail Sector at Interim Partners.
Happy New Year and welcome to Interim Partner’s Retail blog.
The Retail Sector is in trouble. The worst Christmas BRC trading figures since records began, more household name retailers failing by the week and according to some industry experts the downturn in the sector has only just begun. Obviously there were economic factors outside of these businesses’ control but is the economy solely to blame for these failures? Stuart Rose recently commented that because of Marks and Spencer’s coverage of the UK market that the business was a barometer for the state of the retail sector. After they announced the worst Christmas trading figures in 10 years, Mr. Rose commented he could see the current retail slump lasting well into 2011. Others have commented that this is optimistic.
Shoppers may have flocked to the sales, but are heavily discounted goods really going to help the balance sheet? Will it prevent the inevitable? Even with recent interest rate cuts it appears the consumer is paying off debt rather that splashing out on non-essential items. Shoppers are now more than ever looking for cheaper alternatives – the value retailers are trading well and a recent article commented on the amount of premium branded cars parked outside Lidl and Aldi Stores. The consumer is not responding well to Government encouragement to spend our way out of a recession. We are more savvy than ever and sceptical about paying RRP – this is dangerous territory for retail businesses particularly if they are in the middle ground in the sector. The value retailers will thrive and the luxury retailers will always be there – it’s businesses in the middle who need now to be asking themselves;
“How good is my stock inventory?”
“How lean are my processes?”
“Do I have the right people?”
“Am I poised for growth or just survival?”
Unfortunately I predict the majority of activity in the sector to be in turnaround and restructuring. Although 2009 will be a challenging year these times must become times of opportunity. Interim Managers will have an important part to play in the recovery of the sector, both in turnaround and building for the future.
I would be very interested to hear your thoughts, views and opinions on the above or any other issues you would like to address in this dynamic but turbulent sector.
