Business Development & Marketing Cash Flow & Forecasting Finance General Rescue, Restructuring & Recovery Turnaround

Austerity fatigue, consumer behaviour and still choppy High Street waters

Tesco’s announcement of a halving of profits for the first half of the year suggests there is no clear sign that its turnaround plan is working.
It seems that any recovery in retail in general and the High Street in particular is still very uncertain.
While there is some evidence that consumers are spending a bit more, this is generally benefiting the “budget” retailers, such as Primark, Aldi and the near-ubiquitous variations on the Pound store theme, but not on larger items such as white goods or furniture.
As a small illustration of a fairly typical High Street, Ipswich has, in the last couple of months lost Gap and Next from its main shopping street, while Primark is in the process of expanding into the space left vacant. Also, with three High Street versions already on the Pound theme, a fourth has just been opened.
All this suggests that while consumers may be spending money, this may have more to do with austerity fatigue and the need for the occasional treat and there are still ongoing worries about job security, low interest rates and the economic future.
The one bright spot seems to be a growth in small niche and independent retailers who are benefitting from a shift to more frequent but lower value shopping by consumers.
The question, though, is whether such retailers can survive in the longer term, given the increasing pressure on their margins, prices and costs.

Finance General Rescue, Restructuring & Recovery Turnaround

The High Street is not dead

Since 2010 there has been a justifiable concern about the demise of the High Street.
This was fuelled by some big chains collapsing due to a reduction in consumer spending, a changing focus towards ‘value for money’ and the growth of shopping online or ‘out of town’.
But it’s not turning out quite like that. It seems we do still like the sociability of the High Street and the opportunity to browse and actually see and touch merchandise.
Amazon has recently announced plans to open its first actual store in New York, expected to be modelled on the lines of Argos, and surviving retailers have become more agile in adapting to what consumers want, so we now have click and collect.
Shopping patterns have changed to limit “brand loyalty” to one supermarket, hence Tesco withdrawing planning applications and selling land it had earmarked for more large stores.
There are also some signs that fewer people are doing a weekly “big shop”. There are noticeably more smaller High Street branches of the big four superstores, but also the rise of the budget stores like Aldi and Lidl because we also like value for money.
Smaller independent retailers are also proliferating according to research from the Local Data Company and the British Retail Consortium. They include e-cigarette shops, barbers, independent cafes and restaurants, clothes, crafts and gift shops.
It looks like the High Street is changing in character but we think it is a long way from being written off yet.
What do you think?