Responses to Letter: ‘Retailpocalypse’ Is About To Get Worse

1. Ben Paton Reply

   April 21, 2018 at 10:47 am

   It does not take a genius to work out that there has been massive over-investment in retail and distribution capacity.

   When Sainsbury’s listed on the London Stock Exchange in 1973, supermarkets were the new new thing.

   It was the Stock Exchange’s largest ever floatation with a market capitalisation of around £500 million.

   Now it has some £26 billion in sales and a market capitalisation of some £6 billion.

   The supermarkets put the butcher, baker and candlestick makers out of business on the high street.

   They then became the largest petrol retailers in the country. Then they built their own ‘private label’ products taking margin from the food manufacturers. Then they got into selling clothes as well as food.

   Since the major supermarkets sold shares to the public there has been relentless investment in the sector. Sales have gone up and margins have gone down by at least two thirds. Profits are now flat or falling.

   The internet became the new new thing post 2000. Amazon’s sales now increase each year by more than the annual sales of Marks & Spencer.

   In the last 10 years Ocado has poured hundreds of millions into its home delivery/internet supermarket model.

   Amazon and other internet retailers are eating bricks and mortar retailers’ lunch, just as the supermarkets did before them. In response, Sainsbury’s has purchased Argos.

   Guildford Borough Council seems to wish to continue as before while the rest of the world has moved on.

   Local authorities as a group have invested massively in retail space. Let’s hope they are not moving into the retail property sector just as the smart money is leaving.
   • Mary Bedforth Reply

     May 9, 2018 at 7:50 am

     So now they plan to merge with Asda. The customers are promised lower prices. Pity the growers and the farmers who supply the chain. They will be ground down.
2. Peta Malthouse Reply

   April 21, 2018 at 11:39 am

   So right and we all said it in the first round of consultation.

   I am sick of being called a NIMBY when all I want is for my home town to be a thriving pleasant place to live.
3. Jules Cranwell Reply

   April 21, 2018 at 1:37 pm

   What is really worrying is the GBC executive’s flawed policy of investing our money in risky retail space.

   This will be a financial disaster. What are they thinking?
   • A Atkinson Reply

     April 21, 2018 at 2:41 pm

     I agree Jules, but this is not to be confussed with the plan to massively expand the retail floorspace in Guildford in the local plan.

     I would not be investing in retail space. The brokers are rubbing their hands as councils overpay due to no real demand from within the industry itself. This has another Icelandic bank episode all over again.
     • Jules Cranwell Reply

       April 23, 2018 at 4:32 pm

       Both are of concern, expanding retail space generally, given Toys R Us, Mothercare, etc. And this council’s obsession with investing in both retail and commercial space, at a time when Ericsson is ditching Guildford, due to lack of infrastructure, and the traffic issues.
4. A Atkinson Reply

   April 27, 2018 at 11:55 am

   Another week another CVA and 100 store closure planned. Maybe not in Guildford but the point is that we should not be planning to massively expand the retail space in Guildford.

   poundworld-to-axe-up-to-100-stores-as-high-street-turmoil-goes-on-11347156
5. Ian Cornish Reply

   April 28, 2018 at 4:51 pm

   It’s not just the retailers that are leaving Guildford, it’s [other] businesses too.

   In recent weeks, we’ve seen two major (500-plus employees and support staff) employers announce they are leaving Guildford.

   I’m not aware of any equivalent companies moving in.
   • Adrian Atkinson Reply

     April 29, 2018 at 11:52 pm

     Clearly there are various reasons why businesses leave a particular location and I’m not close enough to the dynamics to comment.

     I doubt making more space available for them will either retain them or attract others.

     If they need more space then other locations have better physical characteristics to cater for larger/large businesses.

     We in Guildford are constrained being a gap town, on the banks of a river, surrounded by hills, confirmed by railways lines, major trunk roads, tragic road congestion etc let alone area of natural beauty, green belt, and so on.

     But what I’m talking about, which is different from businesses leaving for particular reasons, is a strategy to massively increase the retail footprint of the town against: a) a long-term historic decline in the sector, and b): this decline is not going to be reversed and as I suggested, this is going to accelerate at a greater rate than in the past.

     On a national basis bussinesses are not currently declining, they are growing, just their locations are shifting. However, retail is not only a national decline, it is a global decline.
6. Adrian Atkinson Reply

   April 29, 2018 at 8:41 am

   Then we have, within days of my last post, the announcement of advanced talks which would be a game changer of epic proportions.

   https://www.telegraph.co.uk/business/2018/04/28/sainsburys-mulls-asda-tie-up-create-supermarket-giant/

   They are only advanced talks and the deal may not happen but it does show the future of retail. A continuation of struggling retailers to discuss mergers and store closers and if it’s not Asda and Sainsbury’s it will be something else.

   You’ve got to remember Sainsbury’s has already bought out Argos as a way to sure up their bussiness in the light of Amazon’s charge.

   Grocers’ change in the 1990s-2000s was a result of moving to selling everything in addition to washing powder, bakebeans, meat fruit and veg. Amazon and other online players have eaten their breakfast.

   The the other game changer coming is Amazon’s continued march in to home grocery delivery.

   Watch this space, Amazon buying Booths, the Waitrose of the north who is also looking for help. They already own Wholefoods and will be another game changer for internet-based grocery retailing using premium names.

   Then you have the other dynamic in retail: the continued squeeze of the “middle” both Sainsburys and Asda have been struggling to find their place in the market, reflecting in no clear strategy, meaning nothing to people. You have the discounters from Germany, Aldi and Lidl, marching forward at a pace, with continued expansion planned and we have certain consumers wanting, and have the ability to buy, premium.

   Asda and Sainsburys are failing to find a position for themselves. It reminds me of a pub, a bloke at the bar, alone, nursing a pint starts talking to the other bloke, at the other end of the bar, not because they are natural soul mates, they have nothing much else in common other than they are in the same position, pondering very similar things in life.

   As I have said before this will continue but at what now seems to be an accelerated. I do hope the plan is changed to reflect the retail landscape of the future rather the landscape of the past. If this element of the plan is so strategically wrong what about the rest?
7. Lisa Wright Reply

   May 1, 2018 at 4:10 pm

   RBS announces high street bank closures today (May 1) as the internet takes over. I can’t think of an RBS in Guildford but it sets the trend of things to come.

   With GDP grinding to a halt, a wisp of negativity in the housing market and the thousands of jobs the UK has lost this past month, especially in retail, I wonder if this is the best time for any construction company to build anything?

   [Ed: The Royal Bank of Scotland’s Guildford branch is in North Street on the corner with Ward Street.]
8. Colin Cross Reply

   May 1, 2018 at 10:49 pm

   It may well befall Guildford Borough Council that the inspector basically demands that they revisit this flawed policy and look to enhance the town centre residential offering, which is painfully small.

   If they can only accept that this is a very necessary modal shift then the result will be a win-win situation for the council, the town and all of Guildford’s inhabitants, not bad eh?
9. Gordon Bridger Reply

   May 8, 2018 at 11:26 pm

   This flawed policy was pointed out to the council over a year ago by The Guildford Society and we have repeated again.

   GBC employed consultants who based their forecasts on out of date national data but warned that the consequences on the rest of the town needed consideration.

   But it gets worse – as every economic study stresses our future is high-tec professional services not low-skill retail.

   But then it gets even worse – housing is a far greater need than more shops.

   Call this planning? What a disaster.
10. A. Atkinson Reply

    May 10, 2018 at 1:45 pm

    Another week, another retaier calling the high street is in trouble. This time Next.

    https://www.standard.co.uk/business/next-boss-gloomy-over-high-street-s-future-despite-landing-a-sales-boost-a3835491.html

    The take out is Next is in a good place because of on-line sales. Next’s boss, however, sees continued decine of the high street and does not know where it will bottom out.

    In-store sales are down 5% while on-line up 18.1%.

    It wont be long before Next starts to think about store closures if this 23% divergence in performance continues, and there is no evidence to sa that this won’t be the case.

    The advantage for Next is they have massive free cashflow to help prop up an ailing high street, but for how long and how big does that presence have to be?
11. A. Atkinson Reply

    May 10, 2018 at 3:41 pm

    Sir Ian Cheshire, the chairman of Debenhams who used to run B&Q, warned on Wednesday, May 9, that onerous leases in UK town centres are “killing more and more retailers”.

    He told ITV News that the decline of the high street would accelerate unless the government reformed the tax system and landlords showed greater flexibility.

    “What you’re seeing is retail facing more change in the past three years than in the previous 20 … It’s a big structural shift which is basically saying old models have to be reinvented,” he said. “If you’re starting out now you’d have much less space, much more online and much more flexibility. No one will now be signing 20-year leases.”

    Why on earth is our council planning, which has to be based pon based upon evidence, to massvely expand on what we already have in terms of retail space?
12. Paul Bishop Reply

    May 14, 2018 at 10:06 am

    I think the positives for Guildford is the lack of alternative for people who want to see and try goods before purchasing.

    I do buy quite a lot on line, but I still regularly visit real shops to see / try on /test before purchasing items.

    There will always be a need for this.

    Within an hour drive of Guildford (which won’t get you far on a busy weekend!) there are very limited places you can go to physically see items before purchasing.

    There is a big shortage of out-of-town-style shopping centres and the likes of Westfield and Bluewater are a full day trip (normally sat in traffic!).

    It can’t be argued that town centre sales aren’t dropping, but the premises will still need to be available for people to see physical items, more like showrooms rather than retail outlets.

    Just because people are buying online, it doesn’t mean they are choosing online – I’m certainly not!
    • A. Atkinson Reply

      May 16, 2018 at 2:58 pm

      Re Mr Bishop’s comments I tend to agree with some:

      1: Agree, there will always be a place for the brick and mortar offering.

      2: Some of the high street will become, as he said, more of a showroom and will be in effect become more an experience and try before you buy on line.

      For example, The Next store at Manchester’s Arndale Shopping Centre is a prime example of how the high street is evolving. From July, the store, already boasting an in-store barber and florist, will host a Ford five-car showroom where shoppers can test drive vehicles and the keys to new cars will be handed over.

      Stores who are struggling with their retail offer will effectively become landlords. But that florist, that barber, that car showroom has to come from or affect somewhere else.

      The key point I maintain is that we don’t need the expansion “planned” for in the draft Local Plan, it is not evidence based.

      There may be a big list of companies who were looking for sites but hey ain’t now! This is only going to continue.

      With regards to other points I have make further comment:

      A: only massive brands can afford a high street presence whose sole purpose is to try, look, feel before one buys on line.

      There is a point that businesses can’t operate a high street presence which does not generate profit through cash through the tills.

      If there are some that will, it will be very few. I reckon it will be cheaper for someone to come round to Mr Bishop’s house for that experience than running a store.

      B: Regarding the statement “Within an hour drive of Guildford (which won’t get you far on a busy weekend!) there are very limited places you can go to physically see items before purchasing”. Come on, Woking, Twickenham, Richmond, Kingston easily reached, even Reading is only an hour away, but this depends on where one lives.

      We keep on being told we don’t want to be like Woking or Kingston, so let’s offer something different, not just an identikit, closer versions of what they have.

      C: I wonder if Mr Bishop could explain “There is a big shortage of out-of-town-style shopping centres”. Define “big shortage” and what would “not a shortage” do to change things for the better?

      D: I partly agree with his statement “Just because people are buying online, it doesn’t mean they are choosing online – I’m certainly not!” Mr Bishop may not be, he may have time or inclination to browse, but the real dynamic and game changer is the ease and low cost of returns.

      Homes are now the fitting rooms the future, order what you may like and send the ones which don’t fit / like back. Free delivery evenings and weekends means it so easy. This was something that was not there when I was a buyer for an online operator in the early noughties.

      I stick to my main trust, that the high street will survive and will be different. What we don’t need now, and certainly won’t need come 2030 is a massively enlarged retail footprint as proposed in Guildford’s submitted Local Plan. That is plain wrong. If this is so wrong, what have we got in the rest of the plan?

      Nationally, the total number of shops across the UK is expected to fall by 22% from 281,930 to 220,000 by the end of 2018, according to forecasts by the Centre for Retail Research. This figure will be updated in May.

      News from today that Arcadia group is heavily hit too with a 40% fall in underlying operating profit.

      For them capital expenditure will be lower this year around much of it channelled into e-commerce infrastructure such as a new distribution centre and website developments.

      The CEO said: “Our worldwide digital sales were up 11.5% on last year. The increase in digital sales is taking place at the expense of traditional ‘bricks and mortar’ retailing.”

      During the year, the group closed 46 stores whose leases expired, while securing rent reductions on a further 25.
13. A. Atkinson Reply

    May 14, 2018 at 1:53 pm

    The number of customer visits to shops has fallen by the greatest amount on record for March and April.

    Springboard, a retail research business that has been monitoring footfall in Britain since 2009, said that a 3.3% fall was recorded in April that, after a 6% decline in March, had resulted in an “unprecedented drop” of 4.8% over the two months.

    Retailers on the high street had the greatest decline with a 4% fall in April. Shopping centres dropped by 3.5%, while footfall at other retail sites fell 1.8%.

    An astonishing stat also came out that almost one in 10 shops on “the highstreet” was vacant in April.

    Smiggle’s group managing director John Cheston said a following recent spate of store closures “CVAs (Company Volutary Arrangements) are creating ghost towns,”

    “We’ve seen incredible growth online, something we didn’t anticipate, which has been driving sales,” Mr Cheston said.

    The group has about 130 UK outlets and had been targeting 200 stores, but Mr Cheston said Smiggle may now not need that many, partly because of growth online.

    But Mr Cheston said that retailers also have to “fix their own mess”. He said: “They need the right number of properties with the right web offering.”

    Further evidence that an expansion in retails footprint in Guildford is a flawed planning policy. Let’s make sure what we have is fit for purpose rather than expand.
14. John Perkins Reply

    May 15, 2018 at 9:07 am

    Lease costs are only half the problem, the other is business rates. Councils seem to regard retailers as a golden goose.
15. Valerie Thompson Reply

    May 15, 2018 at 2:22 pm

    News today even more stores closing, several of which have outlets in Guildford.

    Yet more empty shops!

    Come on GBC, just get on with building some low-rise flats.

    If you actually used the central brownfield sites efficiently you would not need to invade the green belt.
16. A Atkinson Reply

    May 17, 2018 at 1:22 pm

    I have re-read the 2017 Guildford Retail and Leisure Study

    I had to give a gallows chuckle at “summary of some of the key trends driving changes in the food and beverage sector over recent years: Restaurants… Recent successes include Jamie’s Italian, Bill’s and Cote, with branded restaurants increasing their share in the market.” But 12 months later bye bye Jamies Italian restaurants and Cote may be going soon.

    The proposals are based upon constant market shares – internet sales are not going to remain the same as they were in 2015, and the share of bricks and mortar is going to decline.

    But it sounds like the council are charging on, regardless, with a plan, in a contracting market, for an addition 30,000+ extra square meters of retail floorspace in Guildford town centre. That is the equivalent of 30+, yes 30+ Aldis (not saying it will be Aldis, just to give a comparison.)

    The base on which this increase is calculated from is what we had in 2015. So you have to take into consideration the closures since then and the ones widely reported on the horizon to cose to get a true base. These closures are going to accelerate. Out of all the towns’s large anchor stores, it’s probably only TKMax and the Sainsburys Local that are safe bets to be still with us this time next year. So the sheer scale of the net increase through the plan in floorspace come next year is going to preposterous.

    It is clear in the report that these are just forecasts at the time but the sector has reached a tipping point where historic movements do not predict the future.

    The report is very clear: “Finally, it is important to restate that capacity forecasts beyond five years should be treated with caution, as they are based on various layers of assumptions and forecasts with regard to the trading performance of existing centres and stores, the growth in population and retail spending, constant market shares, etc.

    For example, if the growth in internet and multi-channel shopping is stronger than current forecasts suggest, then this could reduce the future demand and capacity for new ‘physical’ space over the long term. Guildford Borough Council should take into account these margins for error when assessing the need for new retail floorspace,
    particularly post-2025”

    But never mind post-2025, there is an argument we don’t need any more space now with the recent changes and more to come.

    Forecasts are just forecasts. The report was forecasting “comparison goods” (items not obtained on a frequent basis eg clothing, footwear, household furniture, electrical etc) at an annual growth averaging at 3% over the short to medium (up to 2023), with growth averaging +3.2% per annum for remaining forecast years.

    So, in addition to an inaccurate base, the forecasts cannot be right, otherwise, why would the Government launch an inquiry into saving the High Street if these forecasts are to be believed?

    Nonetheless, our council ploughs on regardless.