Last week the BBC reported on the continuing problem of high street retail shops going out of business around the UK. Business correspondent Emma Simpson explained:
Because neither the landlords nor their creditor banks are willing to sell off these properties at a loss, they're often struggling on with idle or dilapidated retail space. To investigate the full extent of the problem, the British Retail Consortium, the British council of Shopping Centres, the British Property Federation and the Local Government Association as well as Lloyds, RBS and the Booksellers Association have set up the Distressed Retail Property Taskforce to research the issues and come up with some concrete solutions. The DRPT's remit is “to address issues of physical degeneration, falling footfall, reduced investment and associated social decline in towns and cities across the country.”
Chairman of the task force, Mark Williams, warned that it wasn’t just a problem of the economic cycle, but that the high streets "are going through a structural recalibration, rather than an economic cycle from which we will emerge over time.”
The situation is more dire for some towns than for others, but according to research for the British Council of Shopping Centres, one in every five shopping centres across the UK is in breach of its loan agreements and therefore potential at risk of administration.
This amounts to more than £10bn worth of real estate. Mark Williams explained, “the negative knock-on effect on the wider area is physical degeneration and social decline.”
According to a snapshot of 500 UK town centres by PricewaterhouseCoopers and Local Data Company (LDC), there have been more than 3,600 chain shop closures in the first half of 2012, most from the insolvencies of Peacocks, JJB Sports and Clinton Cards. In their place have opened bookmakers, pawnbroker, payday loan stores and charity shops.
According to data compiled by the LDC, the proportion of shops lying empty has increased in every region in Britain except London between January and June for a national average of 14.6% of shops remaining empty due largely to lower consumer spending, higher online sales and retail space expansion. LDC’s findings were based on visits to 145,000 shops in the first half of the year. They found that retail parks had the lowest overall vacancy rate at 8.1%.
Though the criteria for establishing town centre boundaries has been criticised, many of the findings are instructive.
As a complement to Mary Portas’s report on high street, the Government’s report, Understanding High Street Performance highlights the pressures currently faced by town centres and retailers. These include rents, rates and material costs which have risen significantly while at the same time facing tough competition from supermarkets and online retailers and diminished demand due to the recession. Between 200 and 2009, the UK lost 15,000 town centre stores – which means that one of every six shops lies vacant.
[8]
It is unlikely that the regeneration of the British high
street will come about without some innovative changes in terms of their
function, so that high streets will become destinations that include not only retail but provide for public open spaces, leisure and residential use.
And the retailers themselves will need to offer innovative products and
services to attract an increasingly demanding clientele. According to Tym & Partners, a planning and economic consultancy who was commissioned by Richmond Borough to undertake an
economic assessment of the area:
A clear picture is emerging of a network of large dominant superstores, and corresponding decline/diversification in the traditional smaller centre. This means that to succeed secondary or smaller centres must distinguish themselves from the larger destinations by providing an offer that cannot easily be found elsewhere to attract footfall and increase turnover. This might include the provision of specialist or niche shops, the provision of an enhanced customer service (i.e. home delivery) and generally contributing to a pleasant shopping experience (i.e. convenient parking, a pleasant environment and a range of different town centre uses).
Despite the fact that I’m very blessed to be able to live in
such a lovely area as Kew, I’ve nevertheless noticed a large number of shops
which have gone out of business with nothing taking their places for months on
end. However, there have recently been a
few rays of light in the gloomy high street recession. I went to visit as many of these as I could
find in the Richmond and Kew area to find out what these entrepreneurs are
doing: what innovative products and/or services they’re providing, what
obstacles they faced in setting up, whether they sought or received any
assistance and their hopes for the future.
The message I heard from the
entrepreneurs I spoke to, reiterated by academics, artists and businesses is that it is possible to fill these empty shops – public or private, permanent or temporary –
in order to make the high street healthy again. Ian Golding, customer experience specialist, believes a prosperous high street will be
one which offers consumers a positive, memorable experience, one that includes these
three components:
- Functional: Does it do what people want it to do?
- Accessible: How easy is it for people to do what
they want to do?
- Emotional: How does it make people feel?
He believes that the only way to help address the issues
facing the British High Street is for “the key stakeholders to start working
together – central and local government; local people –unless the high street
can start to complete from a functional and accessible perspective, the only
emotional element of the experience that the consumer will remember is not likely
to be positive.”
Despite the economic gloom and severe challenges facing high street businesses, there are some courageous and innovative entrepreneurs out there risking a great deal to bring their dreams to fruition. Dan Thompson, specialist in start-ups and entrepreneurship
at Stanford University, says that in order to succeed in one's retail endeavour, “you only need one
thing: bloody-mindedness…It’s knowing you’ve got an idea and you want to make
it happen and going out and doing it.”[11] This is the fearless attitude I sensed from all the shop owners I spoke with over the past few weeks.
1 Start-Up
Britain
On Sat the 13th of October I had a look round the
pop-up shop across the street from Richmond station on Kew Road. What caught my attention was the high quality
photos in the window showcasing the six temporary stalls within. These included a display of posh chocolates,
organic makeup, men’s clothing, silver jewellery, large-sized women’s shoes and
hand-designed speciality greeting cards.
The entrepreneurs who’d brought their wares to the shop were all very
welcoming and allowed me to take photos of their goodies and have a short chat
– not easy to do on a busy shopping day.
The shop is part of
Start-Up Britain, a project which
encourages small start-up businessmen and women to market and sell their products
for two weeks on a rolling basis in a prominent high street location. These small retailers already run online
businesses, but none has the financial means to take on a shop of their
own. Start-up Britain offers a
co-working, co-funded space for these brand-makers to test-drive the products
in a new way to a new audience. In so
doing, they can get immediate feedback on the goods themselves, their
packaging, marketing and price.
According to Star-up Tracker, the initiative’s statistic
monitor, there have been 22,105 start-ups during October and 391,957 in 2012. The data come from Companies House and have
been interpreted for the tracker by the Made Simple Group.
It’s inspiring and exciting to see this sort of
experimentation going on during the recession, particularly when solid growth
is not anticipated on the horizon in the near term. It’s interesting to note that perhaps given
the socio-economic profile of the area, the start-ups were all products pitched
at the higher end of the gift market.
I noticed two other initiatives on the Start-up Britain
website: Start-up loans and Start-up spaces.
The former is an initiative with BIS making up to £2500 available to any
young person wanting to start a business.
The latter is a scheme which allows start-ups and small businesses to
search enterprise hubs, co-working spaces and other office providers in the
UK.
2 Mary’s
Living & Giving Shop
My next stop was
Mary Portas’s Living & Giving Shop,
located in the southwest corner of Richmond Green, an arguably idyllic
setting. It’s surprising to discover
that this is actually a charity shop as it looks nothing like those you see on
most high streets. This place has the
look and feel of a very trendy high-end boutique, oozing charm and
sophistication, whilst being sympathetic to the local park setting.
The lovely staff are volunteers who were extremely helpful,
enthusiastic and candid. They explained
that 80% of the profits of the shop are donated to the Save the Children
charity and that many donations were directly from designers. They also said that, despite a brisk business
when they opened during the summer, the footfall on a rainy day, being off the
high-street on a drizzly day was a distinct disadvantage.
The Living & Giving shop is Mary Portas’s concept of a
charity vehicle for Save the Children.
She says it’s not just a shop, ‘but a place to inspire, share, create,
meet and discover. She even goes to far
as to say it’s a philosophy and a ‘fantastic way to contribute to the
community, help some of the world’s most vulnerable children and bag a designer
bargain at the same time!” A flyer I was
given was an invitation to a Glitz & Glamour night to include shopping,
free makeovers and hand massage, champagne and ‘sweet treats.’
In addition to the Richmond Green location, her shops are
also in Primrose Hill, Westbourne Grove, Edinburgh and Chelsea. I can’t help but wonder that if it’s Mary
Portas’s goal to revive the high street, then she’s chosen the very poshest
high streets in the country – places that really don’t need nearly as much reviving
as those in less well-healed areas. I
think it’s commendable to open run these shops for charity, only I wonder about
the message she’s sending out about high street revival in places that need it
most.
3 The Petal Pusher
On the 17
th of October I had the chance to speak
to the co-owner of
The Petal Pusher in Sandycombe Road in Kew. Rachel Haynie generously gave me some of her
time to share with me the story of how the shop that she and her husband, Omar
Gharbi, dreamt up and brought into being.
The Petal Pusher is a unique concept to Kew; it combines a
high quality café with sandwiches and cakes with a floristry. The pair are quintessential entrepreneurs –
they have both experience in the sectors and honed their skills in London - Omar in a celebrity chef-run kitchen and
Rachel in a professional project management role as well as running her own
flower stall in the Richmond area.
The atmosphere of the café/shop is warm, calm and intimate
and the flowers at the rear give a lovely fragrance. There’s even a small “den” featuring a small
burning fire and couches. The décor is stylish
but not stark.
Rachel described how it all came about; that they’d had a
dream of creating a retail establishment that would combine high-quality food
and a florist. They chose the spot in
terrace of shops in Sandycombe Road because it was available. They’ve funded the entire project themselves,
without recourse to bank financing or overdrafts. This, she said, has made every decision
considered, from the chairs to the penny-farthing above the door outside the
café.
We talked at some length about customers and the challenge
of selecting the best prices for their offerings. It’s important, Rachel said, to take into
account the prices charged by others in Kew for similar products, as well as
the type of customers that have tended to come by already, the customers which
they hope to attract in future and what margins will be sustainable, both in the short
and medium-term. It sounded that all of
these factors needed to be carefully analysed before coming up
with an optimal pricing strategy.
The Petal Pusher has plans to provide additional services
and events, such as flower and table arranging classes, wreath making, a German
Christmas market as well as Christmas events for children. I thought that this is what entrepreneurship
is all about; thinking of new ways to provide goods and services that customers
can enjoy, experience and learn from.
4 Art House
Hairdressing
The owner of the new
Art House Hair Studio, Rosemarie,
allowed me to view the new spaces included in her salon and chat a bit about
her business early on a Tuesday morning.
Rosemarie opens her shop at 8.30am, or whenever it’s convenient for her
clients – that’s what I call customer service.
It’s a lovely place in an excellent spot; a corner shop on Sandycombe
Road, decorated in contemporary style but sympathetic to the Victorian
architecture and surrounding residential area.
Rosemarie is from Australia but has set up salons and worked
on cruise ships all over the world, so she’s brought a wealth of experience
with her to the venture. She’d initially
considered a Richmond address, but told me that rents and rates were excessive
there and that she’s glad she settled in Kew instead, particularly due to the
large traffic of pedestrians and buggies down the road. She has two chairs on the ground floor of the
salon at present, explaining that any more would have made it difficult for
prams to park. Again, her consideration
for the details for of a client’s needs is admirable.
Rosemarie took me downstairs to a renovated space, part of
which she plans to rent to a beauty therapist (for waxing and nails) and a
larger area which will become part art gallery (hence the name) and lounge for
clients waiting for haircolour to develop.
This is her innovative edge – I’ve never yet seen this combination of
salon and culture combined in an elegant and funky space; quite unique to this
area I think. With her business
colleague, Brooke, Rosemarie hosted a champagne open house on the 28th
of October, offering free hair consultations as well as the opportunity to view
the work of the artist Robin Sinclair. The attendance was over 200 and was a great success. Brilliant.
I asked Rosemarie whether there had been any impediments to
starting up her business and if she’d received any help in doing so. As a matter of pride, she said, she hadn’t
sought or had any help in setting up her business and wasn’t aware of what
assistance might be available.
Hairdressing, she said, was pretty recession-proof; though people might
not go for a Nicky Clarke appointment, they still needed to have their hair cut
and what she was offering was a stylish experience at an affordable
price.
The impediments she faced in pulling her concept together
were contractors and utilities, some of whom had failed to provide her with
services they’d promised on time. She opened the ground floor salon in July, prior to the entire shop
being completed in the hopes that it would begin to generate interest,
excitement and income whilst she worked on the lounge/gallery/beauty room. In all my walks passed, I've never seen the shop without a client.
Brazilian-born Zita Elze is a Chelsea Flower Show award-winning floral designer who has expanded her Kew-based floristry business to include wedding services, floral decor for venues & events, prop hire and an international flower school. She is considered to be a
breath of fresh air in the traditional British floristry industry, coming from a background in interior design and artistic book-binding. She had little actual floristry training, but considers this to have been an advantage as her approach is unique. Zita emphasises her objective of incorporating artistry and beauty in all her work.
One of Zita’s most innovative ideas has been to create a range of wedding gowns and accessories made entirely from fresh flowers, leaves and grasses. The bodice of the wedding gowns appears like a 'living embroidery', composed of tiny rosebuds, seed heads and other delicate plant material, while the skirt of the dress is made from dried skeleton leaves or grasses. The gowns (called Zita Elze Living Embroidery Bridal Collection) were originally designed for shows and exhibits, but their success has prompted the first order by a real bride and a dress will be made bespoke a few days before the wedding next summer. The same technique is used on parasols and tall glass vases. This and other techniques - with strong emphasis on inspiration and creativity - are used in her Design Academy which offers a range of classes from an intensive four week course for professionals to single day or evening classes for amateurs. A range of informal Christmas classes will run through December for local enthusiasts wishing to try their hand at festive floral decorations.
It was noticeable that during the recession, as more and
more 'for let' signs have gone up on Sandycombe Road where Zita Elze is located,
she has three shop fronts, including a prop hire shop for events and the Design School as well as her stunning flower shop. Zita Elze's shops sit close to the heart of Kew; stylish, botanical and understated, just as the village of which she's now become an integral part.
This small shop, located along the same parade of shops as
Zita Elze, specialises in quilting fabrics, patterns and kits, tapestry and embroidery. What caught my
attention is that, though this is a traditional haberdashery, it also offers classes
in quilting and patchwork, for both beginners and more advanced students. I see this as a wonderful combination of a throwback to a traditional British craft with an innovative teaching service.
7 Kew Village
Community Market
The
Kew Village Market happens the first Sunday of every
month for four hours in the centre of the village where the parade is closed to
traffic. It is a local market that is “run
by the community for the benefit of the community.” It is
composed of a mixture of between 30 and 35 food and craft stalls and a couple
of charity ones. Run by a group of local
volunteers, the stalls are charged per market day and also a license fee to the
council. The market has both a Facebook
and Twitter presence which is contemporary and completely in keeping with the traditional feel of Kew itself.
During 2011, the market donated of £5,500 from profits to a variety of local charities. It also allows local musicians to provide entertainment, usually young secondary-school aged performing artists.
Categories of goods on sale at the Kew Village Community Market include specialty food (baking, chocolates, nuts, cheeses, savouries, butchers, beer, sweets and sorbet), skin care, jewellery, ceramics, art & cards, photography, toys & gifts and home accessories.
Some traders have shops located elsewhere, using the Kew Market as an additional sales venue and marketing opportunity. Others are just starting out, giving their products and brands a test drive. Still others are traders whose businesses aren't large enough or profitable enough yet to warrant a shop premise. And some are niche entrepreneurs who want to stay that way. But what unites the entrepreneurs of the Kew Village Market is that they all sell goods that are of very high quality. Sometimes bespoke, often handmade, these are the types of products which make great gifts: they're contemporary and elegant and show that the people who make them care deeply about the goods they make and serving the people who buy them.
* * * * * *
The health of UK retail has been worsening over the course over the past two years, as demonstrated by the KPMG/Ipsos Retail Think Tank's
Retail Health Index (RHI):
The calculation of the RHI involves, firstly, a quantitative assessment of the impact on retail health of demand, margins and costs every quarter for that just completed and a forecast for the one ahead. A score is arrived at using both objective and subjective judgements based upon hard datasets and softer qualitative material. These scores are submitted by RTT members
[12], collated and aggregated for the Retail Think Tank's quarterly meeting. The framework follows the example of the Bank of England Agents' scoring system on economic intelligence provided to the Monetary Policy Committee. The aggregate scores are combined to form the RHI which is reviewed at the quarterly meeting and are occasionally revised after debate if members feel it is appropriate. The index base of 100 was set on 1 April 2006. The definitions of factors used to assess the index are the following:
- Demand: From a retro-perspective, retail sales, volumes and prices are the primary indicators. For future prospects, economic factors such as interest rates, employment levels and house prices as well as consumer confidence, footfall and preferences are used.
- Margin (gross): Sales less cost of sales; the buying margin less markdowns and shrinkage. Cost of sales include product purchase costs, associated costs of indirect taxes, duty and discounts.
- Costs: All other costs associated with the retail operations, including freight and logistics, marketing, property and people.[13]
In my talks with all these entrepreneurs I was reminded of one of the main findings of Scott Shane in his book The Illusions of
Entrepreneurship of 2008: in his research, Shane found that most
entrepreneurs begin their own businesses in low-tech sectors such as retail; they haven't plans to grow and their businesses generate less than $100,000 per year in revenue. Furthermore, he found that entrepreneurs tend
to start businesses in sectors in which they’ve worked before and understand,
and that these tend to be in highly competitive industries. In the US, Shane found that entrepreneurs
typically do not come up with an innovative idea or possess an extraordinary
dream; they don’t desire to make a lot of many, become famous or better their
communities or improve the world. Rather,
they simply don’t want to work for someone else. They also start-up with their own savings or
have personal borrowings, tending not to use venture capital.
I have to say that the start-up business owners that I spoke with in Kew and Richmond, do not appear to resonate so much with this US trend, in that they certainly
have tried to offer an innovative mix of products and services. I also think that Shane’s findings with
regard to entrepreneurial productivity might be a bit dated as many of the
businesses I spoke to have an online presence for sales or a Facebook and/or
twitter presence for marketing and communication.
In the UK, independent retailers account for 67% of all high street spaces. Matthew Hopkinson of LDC said, "it is these businesses that sit at the heart of the economic, social and community issues that the country faces."[14] Even in the leafy Richmond borough, it's difficult to start up a business which will endure difficult trading conditions. I applaud the innovative entrepreneurs of my neighbourhood whose vision, drive and commitment are helping to keep alive the health and prosperity of our community.
