ANOTHER ONE BITES THE DUST . .
A brutal few months for the High Street
by Chris Biddle, Consultant Editor
 
Chris Biddle

The past few months have been pretty brutal for the High Street. Well known retail chains such as Toys R ‘Us, Claire’s, Multi-York, Maplin, Conviviality (owners of Bargain Booze etc), Countrywide Farmers, and garden centre chain Home and Garden have hit the buffers –following hard on the likes of Jaeger, Staples and BHS.

Each will cite a raft of different reasons for their failure. The inexorable move to on-line shopping, high business rates, squeeze on consumer spending, poor exchange rates triggering higher pricing and in some cases, outdated retail models.

The ‘High Street’ is a misnomer. Many of these companies will have been on retail parks. And of course, all these failures preceded the impact of the ‘Beast(s) from the East’ in March when shoppers stayed indoors – and certainly didn’t venture into the garden, preferring to shop online instead.

With the all-important Easter weekend a wash-out (some garden centres are predicting a 25 -30% fall in turnover for the first quarter), are there lessons to be learned by independent GM specialists from these retail failures?

Whilst Countrywide and Home and Garden will draw obvious comparisions, it is the demise of Maplin that could provide a few wake-up calls for specialist retailers.  In many ways Maplin was at the forefront of home technology along with the likes of Tandy (remember them). Yes, they attracted ‘hobbyists’ but also a significant number of ‘techno-virgins’ who used the shop as a browsable advice centre, before beetling off home to order from Amazon. Sound familiar?

Their prices for consumables, cables etc were invariably much higher than online (a hidden cost of advice?), they had dived off heavily into areas you could lump under the phrase ‘The Internet of Things’ (connected devices for the home) at a time when it was still a relatively niche sector – and only stocked a limited range of high ticket whole goods.  You are unlikely to cover many overheads today through the sales of HDMI cables and LED lamps.

Of more relevance, look no further than the current problems facing Wesfarmers, the Aussie owners of Bunnings, who bought Homebase just two years ago for £422m.  They have just had to write down the UK arm by £506m, after a £97m trading loss which has resulted in a whopping 88.6% drop in profits for the parent company for the past six months (and before even the inevitable downturn in sales of sandpaper to Aussie cricketers!).  No wonder Wesfarmers are already reported to be planning an exit strategy from the UK.

The harsh lesson they have learned is that what works in one market, doesn’t necessarily work elsewhere.  In its previous guise, Homebase had differentiated itself from the likes of B&Q by installing external concessions such as Habitat in its stores which attracted a significant female following.  Those went almost immediately and if my local store (still branded Homebase) is any indicator, then it’s a total mess, hand-written signs and displays more like a jumble sale. Everything price-driven which provides no flexibility for strategic marketing.  All of which might work in Townsville or Toowoomba, but not in the UK. Don’t they ever do their homework - or was it a case of WE know better?

So what lessons can the humble, switched-on, single-outlet independent dealer learn from all this?

From the Maplin saga, value and sell the ‘vive la difference’ factor. Create a showroom that excites , interests, prompts and promotes sales across your whole range, from machines to parts and accessories. Keep a good spread of relevant products offering good margins, and make sure the advice you dish out is appreciated and acted upon (there and then!)

From Bunnings/Homebase. Know your place in the retail market, never try and act other than as a knowledgeable purveyor of quality products and support service, where price is a factor - but not the only the only factor. Stick to your principles and use weather variations to your advantage by utilising nimble and proactive marketing.

Importantly, learn lessons from the successful retailers. Loyalty schemes are an underused business builders for many dealers. Try and make your showroom something of a destination, explore ways in which you could add interest.  If you’ve the space, encourage local artists to display their works, stage gardening talks, explore links with other local retailers in related but not competing sectors, think outside the 'lawnmower-box' and set up your showroom as a lawncare centre selling everything to enhance to lawn and garden - in other words a one-stop lawn shop

The possibilities are endless with a little creative – and lateral – thinking.

Steve Gibbs is away in the US for a couple of weeks

      

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In this issue
EDITOR'S BLOG
ANOTHER ONE BITES THE DUST . .
NEWS
TRACTOR REGISTRATIONS
GARDEN TRADER OWNER MAKES INDUSTRY PLEDGE
EQUIPMENT WORTH TENS OF THOUSANDS STOLEN
HONDA TEASES NEW MEAN MOWER
KUBOTA ADD TO GROUNDCARE NETWORK
NEW HEAD OF SUZUKI ATV DIVISION
TECHNICAL & WARRANTY ROLE
VICON EXPANDS DEALER NETWORK
YOUNG ENGINEERS TRIUMPH
REELED IN
JOBS
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CURRENT ISSUE
March / April 2018
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