The high street is changing. Time for action retailers!
On a daily basis, we are hearing of retailers facing difficult trading conditions, with downward profit warnings, poorer than expected Christmas trade and reports that major high street retailers are negotiating rent reductions with landlords.
Add to that recent reports that UK house prices experienced a stark fall in December, and news that non-food sales plummeted this year for the fifth year in a row, and you do begin to question where consumer confidence really sits.
As we move into a new year, it seems a natural time to be more upbeat and optimistic; yes, the Christmas spend credit card bills will soon drop on the doormat but one would have hoped that the consumer blues threatened towards the back end of 2017 would have subsided with the last of the turkey and cranberry, and that the full moon at the start of January would have spun us all into a more optimistic mood going into 2018.
But it doesn’t seem so.
For many of us who have spent the past 10+ years helping businesses navigate their way out of insolvency caused by the worst property crash in living memory, the mere mention of retailer profit warnings, downward rent reviews and megastore rationalisations bears an uncanny resemblance of those dark days… and the reality is that it is not that long back at all.
What’s more is that the high street has never really recovered from the havoc it experienced – just look round your own high street. Not that long back Woolworths, Dixons, MFI, Adams and Dolcis were all household names and on many high streets across Northern Ireland; just a few years on, our kids have never heard of them.
But regrettably, there has been no new raft of retailers coming in to take their place.
So what can retailers do to make sure their business is protected and in the best possible shape?
Firstly, are you making a profit? You must know how your business is performing. Are you covering your cost base? If you’re not then someone is funding the losses – your bank, your suppliers, landlords, the taxman or yourself personally. Know how your business is doing real time and if you are not covering your costs, take immediate action to turn this round. You must have cash in the bank.
Cut out the slack. Could you be making a greater profit? It’s time to take control and take tough decisions. This is your business. No one else will care the same way about it as you do. Review all your costs. If you have surplus staff, surplus stock or surplus space, make use of it or cut it out.
Have you an online presence? The social demographic has changed – that’s the reality. And its unlikely to change back – shoppers are buying from their sofa. For you to succeed, you have to get in front of your customers. No website or e-commerce functionality will be a disaster for your business. Guaranteed.
Are you future-proof? All business evolves over time. You have got to move with the times, change your offering in line with customer expectations and make sure you are at the forefront of your sector.
Have a succession plan. You must take time to look to the future and consider your options. Set yourself a plan, work to achieve it and make sure you have a means in mind of how you will extract value from your business.
And don’t be so naïve to think it is only the retailers that may be affected. Remember how the haulage and distribution sector (as just one example) was hit by the last demise of so many retailers. If your business is facing into the retail sector, now is the time for you to make sure your business is insulated as far as possible from a downturn, no matter how slight.
At Gildernew & Co. we specialise in working with businesses and individuals facing financial pressure. We have helped hundreds of individuals get their businesses turned around and back to financial stability. Speak to us today about our Business Improvement Programme and our specialist Business Review service.
Posted on January 9, 2018