Link, share, join, listen ...
Link, share, join, listen ...
I was thinking recently of an Institute For Turnaround (IFT) lecture I attended in the summer of 2008 where Sir Stuart Rose was inducted as an Honorary Member and made to ‘sing for his supper’. On reflection I wonder if Sir Stuart is in possession of a crystal ball as he made what have turned out to be some frighteningly accurate predictions on the retail sector and economy as a whole. I won’t go into the negatives because you’ll be more than familiar with the bad news in retail in recent times but if his predictions continue to be accurate then I’m going to share some good news with you……….he talked about four years of pain before things got better and by my calculations that makes it this summer – hooray!
On the subject of predictions, I recently presented my business plan to our team at Interim Partners and BrightPool and highlighted the areas I think will be most prevalent for interim managers operating in retail this year. On the proactive side I see roles for interim managers who can look at opportunities for retailers to diversify and create more reason for consumers to spend. Sir Stuart summed it up nicely by saying M&S was continually trying to ‘persuade you to part with every pound that we can’. There is also the continued growth of on-line retailing. I spoke with a major parcel delivery business who have more than doubled the amount of parcels delivered in December over the last three years. Retailers will continue to invest in on-line and need operational support to make sure the growth can be supported by their supply chain. On the reactive side there is going to be continued work around Finance (cash management) and HR (business re-organisations).
I’m interested to hear your predictions for the sector in 2012. Are the good times going to return to UK retailing in time for the Olympics?
Jonathan Flynn is Head of Retail at Interim Partners.
Click here to read other blogs on the Consumer sector
Almost every interim manager or client I meet these days is talking about the ‘customer experience’ and often when discussing who is getting it right, one name always comes up…….Apple. Interesting then to see that Morrisons have just appointed an ex Apple Director to lead its online food launch as it takes its next steps into etailing. Simon Thompson who has joined this week was Worldwide Strategy and Customer Experience Director for Apple and prior to this he worked for lastminute.com. Earlier this year Morrisons bought a 10% stake in US grocery etailer FreshDirect and since then a team from Morrisons has been embedded in the US business to learn how to etail and build the business for the UK market. Recent figures show the UK online grocery sector is worth £4.8bn and is expected to double by 2015.
Morrisons is also close to launching its non-food internet offer with Scott Weavers-Wright (founder of the acquired Kiddicare) at the helm. With these two appointments Morrisons is taking a serious but considered step into etailing, and with Dalton Philips seemingly not putting a foot wrong since taking over at Morrisons it will be exciting times ahead for the business.
With the other big grocery multiples already established in online retailing, have Morrisons left it too late to make a major impact in the sector or with the expected growth are there going to be even more reasons to shop at Morrisons?
Jonathan Flynn is Head of Retail at Interim Partners
Click here to read other blogs on the Consumer sector
Despite the recent collapse of Focus DIY, the rescue of All Saints and the on-going fight for survival at HMV I’m still optimistic about the opportunities in the retail sector for interim managers this year. I spoke in an earlier blog about the opportunities for interims coming from Private Equity investment, turnaround specialists and the middle-ground retailers who haven’t yet changed their focus (no play on words intended).
Despite a slow start to the year and a slow-down over the Easter / Royal Wedding period, it’s been a good start for the retail interim manager and the signs are looking better for the back half of the year. A number of private equity businesses I have met with have funds burning holes in their pockets and are eager to spend and I’ve made placements across a number of disciplines in retailers who are performing well and are hungry for growth and investment. The focus has changed from ‘09/10 where interims were predominantly used for cash management or business reorganisation projects. I’ve met with a number of businesses this year and while all will say it’s challenging out there, those are still ‘battening down the hatches’ seem to be missing a trick.
These retailers are either in denial or have a head-in-the-sand approach. Having a ‘me too’ offering and hoping that a business is going to trade its way out of trouble just isn’t enough in the current climate. You might be able to get away with it when times are good and consumers have more money. Unfortunately for businesses in this predicament I see less innovation and more procrastination. Businesses claim that it’s costly to reinvent or reinvest, but surely they can’t not afford to do so? Whilst interim management can be an expensive resource, I work closely with senior level industry specialists who are committed to delivering a return on investment from day one. This surely is a better option than throwing money at consultancies to try and fix the problem when the horse has already bolted.
There will be a number of second tier operators looking at Focus and wondering if they might be next. Wouldn’t they be better looking at the retail success stories and trying in some capacity to emulate their success? This change will require experienced, sector specific knowledge and fast……..but what will it take for the penny to drop and for these retailers to do something now rather than reflecting on it when it is too late?
Jonathan Flynn is Head of Retail at Interim Partners.
Click here to read other blogs on the Consumer sector
It’s disappointing to hear that HMV, an iconic retail brand has decided to close 60 stores following poor Christmas trading. I would have thought that being the only music and entertainment retailer on the high street would be a saving grace for the business but the competition from on-line retailers and supermarkets combined with the increase of digital downloads and music streaming is proving too much. Despite diversifying into live music venues, ticketing, cinemas and widening the product proposition, the future looks tough having just appointed KPMG’s debt advisory team.
Ordnance Survey have recently compared 27 million retail addresses between now and October 2008 when the financial crisis began. It found that banks, recruitment agencies, estate agents and pubs were increasingly leaving the high street while the prevalence of betting shops and hairdressers grew. The data showed there were 280 more betting shops on the high street compared to before the recession, representing a 5% rise. The change represents a consumer shift to the internet for shopping, and services including job searches and travel bookings. However services that cannot be accessed online have seen their presence grow on the high street with a 3% rise in hairdressers and a massive 28% increase in the number of car washes.
Demand for pound shops, pawnbrokers and bakers are also in evidence from the figures, “demonstrating the increasing social stratification of the high street as wealthier shoppers drive to out-of-town retail parks and malls”. Known as the “doughnut effect” in the US, where shoppers migrate from the centre of town to the periphery, Britain’s high street is fast becoming boarded up with the national high street vacancy rate soon to exceed 15%.
I’m hopeful that HMV doesn’t ultimately go the same way as Woolworths. The Chief Executive of the British Property Federation commented that “there is no point harking back to the old high streets we claimed to love. We need to be more creative in looking for new roles and uses for these empty shops”. I’d be interested to hear your views on what the high street is going to look like in the future, surely we’ve reached saturation point with mobile phone and coffee shops and with the big chains finding they can cover the county with 50 stores and a decent website what is going to fill the increasing number of vacant buildings, after all aren’t we supposed to be a nation of shopkeepers?
Jonathan Flynn is Head of Retail at Interim Partners.
Click here to read other blogs on the Consumer sector
Having spent much of the last few months on the road visiting consumer businesses or people with a vested interest in retailers it struck me that there is an odd air of optimism surrounding the sector……but for different reasons.
The retailers themselves whether trading well or not have a dogged determination to trade hard in the ‘golden quarter’ and very few will be sad to see the back of 2010. What a year they’ve had with so many events having a detrimental effect on consumer confidence and trade; from volcanic ash to budgets all under the storm cloud of a recession and credit crisis. At the forefront of everyone’s mind now is Christmas trading and January sales. Projects have been shelved and it’s time to ‘sell, sell, sell’. Fortunately for the retailers, we love Christmas and the countdown has begun – every second advert on the TV is Christmas themed and it won’t be long before we hear Noddy Holder screaming ‘It’s Christmas!’ as the tills ring in the background. Oh joy!
The Private Equity players have begun to look over the trenches and ‘are shopping for retail deals’. There have been 11 private equity-backed deals in 2010 and in the peak of the buyout market in 2007 it was the largest sector for private equity interest. In the context of the uncertainty of this year, one might expect investors to shy away from sectors reliant on consumer spending but many in private equity believe this is the dawning of a new age for retail. Businesses that emerge from the recession relatively unscathed will have survived for good reason and it’s these that will be targeted in 2011.
At the other end of the market, the so-called ‘zombie’ or ‘walking dead’ businesses! I had to laugh when I heard the analogy but it makes perfect sense. It refers to the retailers out there who are so highly leveraged by debt that they are just managing to keep up on the interest payments. While interest rates are low they are surviving but their investors will not sell the debt for anything less than the full amount. The restructuring firms are getting ready as some of these businesses will inevitably fail and there will be deals to be done in buying whole businesses (or divisions) investing in the profitable bit and getting rid of the rest, providing finance / purchasing debt or looking at store closure / stock clearance programmes.
So, over the next few months I’m predicting more investment in retailers, whether it’s from the business itself or from outside parties which will mean budgets for projects and inevitable changes in management. This, finally has got to be good news for all of us in the consumer interim management community…………doesn’t it?
Jonathan Flynn is Head of Retail at Interim Partners.
Click here to read other blogs on the Consumer sector
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.
Click here to read other blogs on the Consumer sector
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
Click here to read other blogs on the Consumer sector
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.
Click here to read other blogs on the Consumer sector
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.
Click here to read other blogs on the Consumer sector
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.
Click here to read other blogs on the Consumer sector
