Erikka Askeland: Online or bust for the struggling high street
BACK in the heady days of the dotcom boom, the rise of internet shopping prompted doom- mongers to predict that the high street faced a wipeout as consumers stayed home in their droves to buy goods online.
We all know what happened to that as silly ventures such as online dog-food retailers believed to be worth millions collapsed, burning the thousands of foolhardy investers that backed them.
But now the predictions of the doom-mongers seem have come back with a vengeance. The good ship internet has been repaired and is now a supertanker, while the austerity-stung high street has never looked more like a rickety junk ship in comparison.
A report by auditors Deloitte noted that the rise of internet shopping caused a massive jump in failing retailers in the first quarter of the year. And while the first three months of the year are cruelest in the absence of festive shopping binges and the arrival of massive quarterly rent bills, the 64 per cent rise on the previous quarter is sobering.
Lee Manning, a restructuring services partner at Deloitte, believes there are still too many stores – as many as 40 per cent too many.
He warned: “A fast-changing retail environment will require certain businesses to reassess their store portfolios, not as a matter of choice, but in order to survive.”
A number of retailers that have failed, such as Game and fashion group Peacocks, were bought out of administration but have seen large chunks of their store estate closed. Game, in particular, which was bought by the firm that snapped up electricals retailer Comet for a snip at £2, came with a heavy warning that it would need a coherent online strategy and fast.
Which is why so many people are looking with interest at Mothercare, a former stalwart of the mothers-to-be, babies and children’s goods market. The group is expected to give a another grim update this week, as the consumer downturn takes its toll on the firm’s 352-strong UK store portfolio. Like so many other retailers, there are too many shops, and the group is expected to cut the number of stores to 266 by next year, and may even shut more subject to a strategic review.
But the Watford-based retailer will also soon be welcoming a new chief executive. Simon Calver was revealed as the replacement for Ben Gordon, who fell on his sword after a series of profit warnings, despite having led the group for nine years and expanded its operations internationally.
However, Calver is not a retailer – not in the traditional sense. He was formerly the chief executive of online rental business LoveFilm before he sold it outright to the internet giant and shareholder, Amazon. Previous to this he was a marketeer at Pepsi.
Some in the City thought the appointment was “leftfield” when it was announced, but Calver is a new breed of chief executive being brought into run old- fashioned business because they have internet nous. For many companies, particularly those that rely on high street footfall, it’s online or bust.
Hotel–style comfort for the serious festival–goer
IF YOU have been to a festival or other out-door occasion lately, you may have been impressed by the increase in quality of the portable loos – if you were lucky enough to attend the right sort of event that rented out a better than standard temporary convenience.
But the game for ad hoc event accommodation has got a lot more serious, thanks to the innovation of a hotel business stalwart who will be well known to many in the Scottish industry.
Robert Breare, who along with Ken McCulloch founded the Malmaison hotel chain back in days of yore, is back with a new concept in hotels, the Snoozebox. His firm makes stackable steel containers that have air-conditioning, TV, free wi-fi and, of course, an en suite bathroom inside.
The president of Breare’s company, Snoozebox Holdings, is understood to be another former business partner of McCulloch, racing driver David Coulthard.
Breare came up with the idea after he was forced to march 20 minutes from his campsite at Le Mans in the wee hours of the morning only to face the indignity of queuing for a “filthy” loo. He thought: “There’s got to be a better way.”
A year or so of development resulted in a successful trial of 40 portable Snooze- boxes at Silverstone for the British Grand Prix. Now Breare is planning to raise £10m in an IPO on Aim in order to take advantage of a growing demand among festival and event goers who would rather maintain their dignity. It could become a familiar sight at sporting events, construction sites and even Edinburgh during festival time.
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