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Comment: Adding clicks to bricks is crucial for retailers

Terry Murden. Picture: TSPL

Terry Murden. Picture: TSPL

  • by TERRY MURDEN
 

THE High Street enters the final month of the year hoping shoppers will show some Christmas spirit and help lift flagging sales.

2012 will certainly be remembered as a year when bricks and mortar retailers were forced to confront the reality of the downturn and the challenge posed by online traders.

Yet there have been winners as well as losers. 
The empty shops bear witness to the changing patterns of shopping, but those that have embraced change and remodelled their proposition are getting their rewards.

Shopping is becoming a click-and-collect operation, ordering products online and collecting them at the stores which increasingly take on the role of pick-up points and showrooms.

Andy Street, managing director of John Lewis, is pursuing what he calls a “bricks and clicks” strategy, effectively the same thing, but emphasising that the shops and the internet can work in harmony and that the shift online does not mean the end of the walk-in store.

The department store chain has had a phenomenal year 
of online trading and it is no accident that other retailers which have developed this route to sales are among the survivors. Mackays Stores Group, trading as M&Co, is moving upmarket, opening outlets in the glamorous malls of the Gulf States and in Russia which now accounts for 9 per cent of its online sales.

Retailers have resized to achieve a better balance between bricks and clicks. Sector analysts reckon that 
a chain which once required 250 stores to give them saturation UK coverage would now need 50 to 60 
and a good website.

It gives them a better chance of survival, but it also contributes to the growing number of gap sites in our town centres. It is the price we’re paying for our fondness for armchair shopping.

Unexpected suitors take a look at RBS

THERE is a surprisingly healthy interest, particularly from private equity groups, in the second attempt by Royal Bank of Scotland to sell 316 branches under orders from the EU.

When Santander withdrew from a £1.65 billion deal, RBS was forced to put them back on the market and analysts expressed concern that next year’s deadline was so tight it would require an extension to ensure a proper auction.

Yet interest has emerged from AnaCap Financial, Blackstone, JC Flowers and Corsair Capital, whose vice-chairman is former trade minister Lord Davies.

Nationwide building society is regarded as the frontrunner after Sir Richard Branson all but ruled out his Virgin Money operation.

But the interest from private equity is intriguing, given that it normally seeks a quick turnaround before selling a business on for a profit.

The branches being sold by RBS throw off cash which would make them attractive, but patchy interest from trade buyers suggests the only exit route for a private equity firm would be a flotation, unless those deep-pocketed Middle Easterners were tempted to step in to the British banking sector.

The government may not be so keen on private equity getting involved because of the uncertainty that comes with fitting two distinct industries together and what the final outcome might be. But it has made this a potentially more interesting bid process than first time around.

Twitter: @TerryMurden1

 

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