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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.
This weekend I was out and about with the family and we visited a farm up in rural North Yorkshire where they encourage the children to feed the animals and give you an overview of the farming industry. During the course of the visit I listened to the farmer who owned the business as he talked about the plight of British Farmers and what needs to be done. His explanation of why farming was on the decline was simple “you lot don’t want to pay what the food is worth!” He then listed his neighbours whose businesses had ceased to exist, not down to the recession but down to the fact that the country had traded out of British Foods and preferred the cheaper import with the artistically licensed labelling.
On the way home we debated this point quite extensively and then it spilt into the office in Interim Partners. Is Food too cheap? Has everything become purely price driven now and is there a way for the farming market to return to a profitable existence so our grand children can enjoy a range of foods that is grown and produced in the UK. The clients that I’ve visited in the past month have reported a constant theme, price rises are needed as a matter of urgency to assist the market getting back on track. We’ve had multiple first hand examples of cost cutting Interims we’ve put into businesses that have cut costs back to the bone and argue the way forward is more volume but at prices that mean something to the producer.
Does this mean that the commercial agenda is now jostling for pole position as we come out of recession?. Interims who can drive price rises as well as value add back into the retail trade. The other side to this argument is that the retailers can’t be seen to raise prices in the period of austerity and that inflation needs to be contained. So what’s going to happen first?
I’m going to visit the farm again in a fortnight as the kids loved it and I’d like to take some thoughts back to the chap who runs the place so please get involved, give me your opinions, is there more cost cutting to come, is there more fat in the land? Do the retailers need to give more back?? I look forward to hearing from you and contributing further to this debate.
Simon Gough is Director, FMCG of 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
It’s been an interesting time of late within the consumer market, much has been anticipated with the new financial year upon us, Easter out of the way and the imminent change in government, but what has actually happened? Well not as much as expected seems to be the general theme in the consumer market. There has been a rapid move towards restocking the shelves with regards to permanent hires and change appears to be on its way with the agenda for Interims coming back into play.
Over the past few years the area within consumer that has really driven the market had been the amount of deals that had been done within this space, whilst almost completely drying up in 2009, they have shown some signs already this year of coming back to the table. There have been talks of clients being more aggressive and some strategic deals have already gone through with what we hope to be a significant amount on the horizon. The change agenda following these deals has been one of the biggest users of Interim Managers and will continue to be the way in my opinion. I anticipate that the back half of the year will see us very active in this area and until then we will see the demand in businesses looking to get their houses in order following the great cut backs. Commercial Interims may well lead the way on these changes as clients look to reposition themselves. The most senior part of the Interim market remains tight but it is starting to ease up as deals come back and the top table merry-go-round begins once again.
I’d be really keen to hear your thoughts on where the market is going and the timescales involved in getting there. As our practice progresses we want to be much more involved with the Interim managers that we’re currently working with as well as those that we want to get closer to. Please give me your thoughts and get involved.
Simon Gough is Head of the FMCG Practice 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.
It’s been an interesting year to say the least and one I’m sure a fair few of us will enjoy saying goodbye to. Its not all been bad news as some areas have held up well, but what I really want to know is will we have projects in time for Christmas. The noise and general discussions within the FMCG market would suggest that we will. The last six months have created frustration for the talented Project and Programme managers out there who has seen work streams identified but haven’t made it past the Finance Directors cutting table.
The projects that we have been scoping have largely revolved around efficiency, some integration work and even a return of commercial work coming back on the agenda. So what do the timescales look like? Well from my perspectives we will see projects starting this side of Christmas but with the lion share coming in the new year. There has been a significant of clients getting burned this year by recruiting a low cost option to run a project to keep costs down, its these same clients that are now asking me the question “are these individuals committed interims with a track record”, yes they are.
I’d be interested to hear when you think different areas of the interim market will see a lift and your rational as to why. We have an interesting time ahead of us, let’s enjoy it.
Simon Gough is Head of the FMCG Practice at Interim Partners.
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.
So as we move to the end of the second quarter of 2009 a number of points have become clear in the market of FMCG. In previous Blogs we discussed the fact that it’s not all doom and gloom and people will always need to eat, well this hasn’t changed but the speed of change is becoming more apparent.
First of all the good news. We’re now seeing signs of programme and project budgets being signed off creating a focus on genuine Interim Managers for delivery. The purse strings that we predicted for the start of the new financial year are beginning to loosen. The requirement to differentiate between the “professional interim” and the “candidate between” has never been more pronounced and clients are actively seeking people who can demonstrate this difference quickly and effectively. The current focus on projects has been around operational efficiency, value engineering and supply chain.
A question I’m asked almost every day is should clients be using the current climate to take business off their competitors or to just to hold their own. Well I’m not seeing much with regards to commercial investment from an Interim perspective, though companies are forming commercial briefs to ensure they hold their position with increased challenges coming from the retailers. I can see this trend continuing until we line up for the golden quarter where clients may look to make a point of difference but surely they must be already thinking this?
With regards to the slow news, the business of turnaround hasn’t yet caught fire. I’ve had lots of conversations over the last few months about how the government’s actions have affected the appetite for businesses to seek funds focused on turnaround. Predictions from senior turnaround professionals have ranged vastly as to when this market will start accelerating and I’d be keen to hear your thoughts and predictions on the market as we head into the summer period.
Let me know where you think the biggest challenges are going to be and lets discuss it. I look forward to reading your comments.
Simon Gough is Head of the FMCG Practice at Interim Partners.
