Ulster Grocer

Donald McFetridge argues that while some retailers are certain to go to the wall in 2010, there is also some dim light at the end of a long tunnel. Curtailing the rampant growth of out-of-town retail, however, will be key to the sector’s survival, he adds.

As predicted by many of our foremost leading economists and forecasters, 2009 proved to be an extremely testing year for those operating in the retail sector – both here in Northern Ireland and further afield. However, one of the most interesting things about the year just gone is the fact that it wasn’t just the independent retail sector which was under threat, but also the multiples and national chains. The past year has proved to be a most challenging one for retailers operating at all levels and in multifarious retail formats.

It’s clear that everyone understands and accepts that the economic downturn was a global problem and not one peculiar just to Northern Irish retailers. However, few had predicted that it would be quite as difficult, lengthy or protracted as turned out to be the case. From a general perspective, few would have predicted the demise of many of our well-known retail names, for example Woolworths and Zavvi in the wider retail arena. Unfortunately, this is far from the end. Others, sadly, are set to follow and as 2010 unfolds, we will see other casualties ‘go to the wall’.

Independent retailers often receive very unfair press and are often, mistakenly, perceived to be constantly whining and moaning about their circumstances. This, I believe, is extremely unfortunate and indeed, extremely unfair. Those who have managed to weather the storm in the independent sector have managed to do so through clever, dedicated management, excellent resource utilisation, clever procurement policies and sheer hard work – and they are to be congratulated on their successes in 2009, especially given the current economic climate.
It would, however, be totally inaccurate to suggest that they didn’t find the economic situation draining in the extreme. Those far-sighted enough to realise that times were going to be tough followed the lead of the multiples and, for example, introduced more non-food product lines to their retail offering. This is one of many trends which I predict will help them to continue to grow, expand and strengthen their retail operations in 2010 and beyond. In many respects, the far-sighted independent retailer has greater flexibility than the multiples and can rapidly effect changes which would take months to implement at national/multiple chain level.

But the multiples too had to face up to the fact that the recession-conscious consumer was changing from being time-poor, cash-rich to almost totally price-focused and price-oriented, which formerly had not been the case. Price has often been regarded by retailers as being a very blunt instrument - not so, when trading or shopping in recessionary times. Therefore, the multiples had to sharpen up their retail operations and retail offerings. Many of them did this through trimming the number of product lines they made available to customers and through pruning jobs – both in-store and at head office. Further cuts cannot be ruled out during 2010.

The consumer has changed irrevocably and, even after the recession is well and truly over, shopping patterns, trends and behaviour will be slow to change. Consumers have realised that there are quality retail offers available at bargain prices and are actively seeking out these quality products at premium prices. They have learned also that they can ‘make do’ with less and many are considering this as a valid lifestyle choice or option. Profligacy is out; frugality is in – and it’s in to stay – at least for the foreseeable future.

TRENDS
Retailing has always been a tough game and 2009 has been particularly difficult. During recessionary times, three main (or principal) trends generally emerge.

These are:
1) Weak retailers flounder and fail and have then to face up to the fact that they are no longer viable trading entities;
2) The clever and more strategic retailers ‘trim’ their retail operations and staffing levels and squeeze their suppliers tighter for better margins with the result that they often (though not always) emerge from the recession as better (or, at any rate, leaner) retailers in the long term; and
Just as recession can inspire great poetry, art or music, it can also – eventually – inspire new retail formats and offerings which help to fill the gaps left by those in category (1). We still await their arrival to help fill the ‘black holes’ in many of our town centres left by those who have had to exit the market.
The recession may have bottomed out but there’s absolutely no reason to be popping the champagne corks – at least not quite yet. However, the three-stage model outlined above has already started to pan out and will continue to unravel and unfold as we move through 2010 and beyond.
Planning is still a nasty word to the ears of some people – and no wonder. I believe that the Planning Service in Northern Ireland needs to take cognisance of the fact that we have (several years ago) reached superstore saturation point. Our population is not growing commensurate with the number of proposed supermarkets for this geographic region.

I firmly believe that it’s time to sit up and recognise that we don’t need any more supermarkets – particularly in the areas for which they are being proposed. Perhaps there is room for some (albeit limited) development in the west of the province but certainly, most of our principal market towns and centres of retail excellence are more than well-served. It is interesting, however, to note that the multiples are not particularly keen to develop store operations out to the west – the chimney pots simply don’t add up – not enough profit to send back to London!

It smacks of little more than sheer avarice and greed on behalf of the multiples that they plan to foist more supermarket shopping opportunities upon communities which are already more than well-served. It is of paramount importance that this is fully recognised and understood and that we do not see any more planning permission granted for these massive out-of-town shopping developments in areas which are already saturated and beginning to look like clone towns.

CHANGE
I hate to trot out the old chestnut that the only constant in retailing is change but – unfortunately – that is the case and it will continue to be the case well into 2010 and beyond. We are living at the beginning of the 21st century, as 21st century consumers operating in a contemporary 21st century world and we continue to demand the best retailing there is available. There is, I purport, no good reason why consumers here in Northern Ireland should be treated any differently from the consumer cognoscenti in other parts of the world.
It is, of course, important to welcome and embrace change – but (a word of warning here) only change which is going to enhance the already vibrant retail culture which is presently in existence. We must be careful not to distort or upset the balance between town centre and out-of-town retail development opportunities and we must not allow the multiples to cannibalise their own markets or to further infiltrate and decimate our struggling (albeit courageously) independent sector.

Northern Ireland’s retailers face another challenging year in 2010 and they must face it with hope and courage. In order to do so, they must be assured that those in power and those who exercise control over our built and commercial environments do not permit further developments which will operate to the detriment of what is already working for us here in this geographic region.

The wise, or prudent, retailer – whether an independent or a multiple operator – will be preparing cautiously for 2010. We are far from over the worst. There are still retailers who face the daily and almost constant threat of closure; there are those who will have to lay off staff (both part-time and full-time) and, there are more casualties to come.

While it’s not all doom and gloom and while we must do our best to remain optimistic about the future, it would be foolhardy to claim (as some ‘experts’ suggest) that we’re almost out of the woods. Yes, there’s some light at the end of the tunnel but it’s only a glimmer from a dim torch; it’s most certainly far from being a star in the East!

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