Skip to comments.UK: Retailers face being "squeezed to extinction"
Posted on 01/01/2012 10:37:45 PM PST by bruinbirdman
More shops will collapse into administration or announce store closures in the next couple of weeks, afters suffering from "profits squeezed to extinction" as well as a fall in sales over Christmas, according to the head of Britain's retail trade body.
As many as 40,000 are expected to lose their jobs, with more forced to work on reduced hours, as the full force of the consumer slowdown starts to makes its effects felt on the high street.
After the collapse of Barratts Priceless, the shoe chain, Hawkin's Bazaar, the toy shop and D2 Jeans last week, a clutch of other names are expected to go to the wall, said Stephen Robertson, the director general of the British Retail Consortium.
He said that conditions were worse than at the end of 2008, a period acknowledged to be the worst in a generation for the high street and which saw the collapse of Woolworths, Zavvi and MFI:
"This feels, talking to retailers, that there is more pressure than there was back in 2008. Back then there had been a relatively good run up until that point, and sales were certainly down, but margins were holding up.
"This time, it's not just about the poor sales performance it's about the underlying profitability. We have seen a blizzard of deals and promotions, so gross profit margins will have been punished."
This week is the start of the retailers' reporting season, when chains reveal how well or poorly they have fared over Christmas.
John Lewis will be the first to report on Tuesday, with sales expected to be up a healthy 12pc in December, however this figure masks a likely drop in profits, because the department store chain's "Never Knowingly Undersold" promise means it was forced to drop prices to match competitors.
Later in the
(Excerpt) Read more at telegraph.co.uk ...
60 years ago a good salesperson could enjoy a middle class lifestyle in retail. In those days many stores paid salespeople low base pay plus a commission. A good salesperson would stay with one store for a career and develop a clientele of loyal customers.
Unfortunately as retail shops were bought up by chain stores commissions were ultimately eliminated to save operating expenses. Chain stores have expensive overhead structures and distribution networks to sustain. Plus the senior management of the big chains doesn’t work in the store so it is disconnected from customers and the associates working with customers in local markets. These executives create value by standardizing and streamlining operations, not by tailoring product assortments for a local market. Sales associates to them are an expense item to be minimized, not a resource to be trained and deployed as a competitive weapon.
The American people in mass have voted for the low prices and efficiency of national chain stores versus the high service local store model. When Walmart entered new markets in the 1970’s, 1980’s, and 1990’s the local stores serving a town would be crushed.
Today pure play Internet retailers, such as Amazon, are the latest manifestation of the low price trend. Their distribution networks are highly efficient, smaller, and simpler than national store chains. They require fewer people to operate, and they don’t incur the rent expenses of brick and mortar storefronts, nor do the incur the cost of placing inventory in thousands of stores.
Retailers are not stupid. I’ve worked in retailing and sold to retailers. The the good ones are constantly experimenting with new staffing concepts, new store designs, and product assortments. Unfortunately in most product categories adding to stre staff levels and training rarely delivers sufficient sales to justify the higher cost. Customers consistently vote with their dollars for low price and self service over high service.
If this article is true....
The simple reason is people just don’t have the money to spend. There are a thousand reasons why but money is tight so the retail sector is not getting their discretionary spending. Same thing has hit here but not as bad yet. I can drive around and see malls with lots of occupancies.
America has been over_malled and over_real_estated for years as we turned from a producer economy to a consumer economy. We built way too many houses and shopping malls. We built temples to consumerism instead of productive enterprises and factories. You can blame the EPA and other Gov’t regulators. You can blame free trade. You can blame cheap China imports. You can blame the rise of the paper shufflers and skimmers in the FIRE sector http://en.wikipedia.org/wiki/FIRE_economy You can blame idiot liberals and policy wonks who see Gov’t as the savior.
We have two very productive sectors. Agriculture and energy/oil/gas we should build on them but that’s the last thing the Obama EPA will let us do. So getting rid of Obama is imperative and I could care less if it is Mitt Romney who does it (though I really like Perry and Gingrich)
There are bigger factors than US consumer demand affecting the UK economy, such as problems with its largest trading partner.
“I bought my wife a scented candle that I saw at the grocery store.”
It IS the thought that counts!
Seriesly, we have gone overboard at Christmas, and I like to do that, but I think any little gift can be just grand.
A couple of years ago hubby gave me a set of stainless steel steak knives. I have some dental issues and I’d gotten into the habit of always using a sharp knife at table. Well these are very nice and look fine with the rest of the silverware, they don’t have that steak knife look.
It was my fave gift that year and we use them ALL THE TIME.
Hubby had gotten me a lot of jewelry and stuff over the years, and I love my jewelry (don’t get me wrong) but that gift was so thoughtful and useful.
I must thank him for them again tomorrow!
I surmise from your rant that the threat of “cap and trade”,huge health cost increases and volumes of new regulations both on the state and federal levels, corporate income taxes which close to the highest in the world and many other costs have nothing to do with outsourcing. If labor costs were the only reason for outsourcing, outsourcing would shrink to a trickle.
A great cartoon of years ago said, "If we live in a service economy, how come I can't get any?" Go to any major retail store and search for the answer to your qeustions. I spent nearly 30 minutes with two guys at Home Depot trying to find the correct nails for a nail gun to do a cedar fence. I could ahve done that on the web in half the time. But I thought they could help...wrong - until soeone came along with some skill and wisdom.
You should use screws on your cedar fence.
Thanks, that’ll be 15%
Cap and trade, Obamacare, socialist taxation does impact businesses to move overseas. I agree with you on that. If all that did not exist, corporate America still wants to go overseas if a Chinese worker and Indian worker can do the work of an American at fraction of costs. Why? One percent are money junkies. Liberals can never answer what is a fair percentage for taxes, one percent types can never answer when is enough when it comes to making money. If they make enough money that it takes 100 life times to spend, they still want more. In fact psychologists just finished profiling US CEO’s and find at least 20 percent of them exhibit sociopath behavior that will eventually lead to the companies ruin.
Regulations have been effective used by corporate PR to excuse for moving overseas once Main Street Americans start to protest politically. Just like Wall Street bankers spin that the 1 percent produces most of the jobs in America when they already since 2008 killed 11 million American jobs with their reckless investing and leveraging. Problem is CEO are money junkies. Why? Remember in the old days if you went to a prestiges college, morality (religion) was part of your training. God has been removed from all of our education. All we now graduate is educated menaces. Talented, but amoral men who move up the ranks of gov and corporations who would lead nation and corporation to ruin. Unfortunately Main Street Americans are forced to pay the consequences of their evil.
When did you return from OWS?
Never was OWS. Just a numbers man. If you know the debt our nation piled up on, the losses on derivatives our banks got the taxpayers on the hook for and how the world is wobbling from the international dealings among the banks of every major nation as they brought leveraged derivatives on sovereign debt and other toxic assets, the situation will get worst not better. When large EU countries like Italy and Spain default, the central bankers and banks of the world will act out of desperation and seize customer money to plug the gaps to prevent a worldwide implosion. As more and more people lose their savings, 401k, mutual funds and etc, people will no longer ask are you a Democrat or Republican, do you believe in large or small government, they will latch onto anyone who had the guts to go after the bankers who took their money. Right now only the OWS is willing to fill that role. If the central banks and world banks at the behest of desperate national governments do what I think they will do, the OWS movement will grow.
Oh yea - like I have an extra 7 hours to install them vs. a nail gun. I used screws in another section which was “only” 40 feet and it took all day. This fence is 120’ - screws ugh.
One aspect of the financial collapse that has not been mentioned is the FDIC which was also involved in the earlier savings and loan scandal. By insuring deposits financial institutions can make more risky investments and most of their customers would not lose anything.
Whenever some risk is covered by insurance, risky behavior and fraud will follow like a shadow. Once Obamacare kicks in fully fraud will become a way of life for many. People will bemoan that shady people are scamming them but few, if any, will blame the government.
BTW I have an engineering degree, a MBA in finance and a JD so I can manipulate numbers with the best of them. Banks in any flavor of economy play a vital role and just like in any other profession are honest and dishonest people. Indeed, the Catholic Church is still reeling from its scandal.
Running an economy like that is a bit like fueling your open hearth real fire with wads of paper. It burns very quickly and very brightly, but it soon fades away, because there is no substance to it.