Retail Sales Rise ...
Retail sales are rising but restructuring is taking place. More sales are now online in food and non food sectors. The number of stores required for "national footprint" is shrinking. Portfolio stores with marginal or negative profitability are no longer justified by high street presence and national marketing rationale. Rising rents and business rates merely exacerbate the pressure on profits from lower sales per unit.
The proportion of food sales on line has doubled to over 10% over the past year. It is expected to double again within three years. 29% of all retail sales were online according to the latest data for July. Almost one in three transactions in non food have been lost to the high street and shopping centers. The success of Asos, Boohoo and Misguided attests to the expansion of clothing sales on line. AO is becoming the dominant player in white goods sales.
Online marketing and logistics are the Key Success Factors. As The Hut Group heads for a listing, it was interesting to see the deal signed with Homebase. The ten year deal will provide a "digital transformation partnership" for the home and garden retailer. The multi million pound deal will fast forward the plans for web development, hosting, logistics, payment and delivery.
This week, the Centre for Retail Research estimated the number of retail jobs lost in the UK in the year to date had risen to 125,000. Almost 15,000 stores have closed permanently. Approximately 95,000 jobs were lost over the same period last year. Debenhams, Monsoon, Oasis, Warehouse, Cath Kidson have fallen into administration as the perfect storm continues.
Fallen retailers are vulnerable to the asset strip in which brand, stock and online presence are retained. Stores and staff are abandoned in a quick fix CVA. Batching a number of brands under the same logistics umbrella provides further economies of scale.
Recent figures indicate the number of empty shops on the high street has risen to the highest level in six years. London footfall has suffered as tourists stay away and office staff levels remain well below normal. The British Retail Consortium has warned of more pain in September as high street sales remain below pre-pandemic levels.
The Chancellor will have to make a difficult decision to determine if the retail sector is a suitable case for treatment, if the furlough scheme is to be extended. The decision on job retention and store closure may well be out of his hands anyway ...
That's all for this week! Have a great, safe, week-end ...
John The Next Saturday Economist Live will be in October in our Brabners Quarterly Economics Update. We have been working on our "New Show" format. Looking forward to that.
We will also be speaking this year at the Annual Hotel Conference also in October. This event, normally held in Manchester will be virtual in 2020. We will be filming early in October in Chessington, no not the zoo!
Worried about the level of national debt? Don't be ... check out our article below ...
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