August 2011 Archives

 

 

 

Six weeks ago my dad announced to his local press that his book shop, Latimer Books, was going to close. He'd been trading as an independent bookseller in the Borders town of Kelso for just under four years. I'm sure it will come as no surprise to you that sales had never really matched what he had hoped, and in recent months, things had slid from not making enough money, to no money, to losing money. Things were getting silly.

When I spoke to him prior to the public announcement, dad was clearly gutted that he was going to have to close the shop. But within the depressing situation, there were still some things to be proud of: the business had promoted and supported local authors, it had contributed to the local community and most of all, though my dad would be out of a job, no other person would lose their livelihood because of the failure of the shop. Dad was down, but certainly not out.

Following the announcement of the closure of the shop in the press, and the standard closing down half price sale, something strange happened. The shop has now taken more money in the last six weeks than it had in the past six months. Drawn by the garish sale signs and the press attention, locals came and bought books by the bundle. As they came and went, many pleaded for the shop to remain open, insisting that they would be more frequent purchasers from here on. As the days went on shoppers would get increasingly animated with their demands that the bookshop be saved, arguing that it was an asset to the community and one that they didn't want to lose. They'd even pitch in ideas, making suggestions of how to turn the business around.

This activity got my dad thinking. Was there a way that he could provide that sense of a bargain, whilst maintaining the integrity of his brand? After much discussion, he has determined to take the plunge and innovate, providing quality books at a reduced margin. The whole shop will now be stocked with paperbacks to be sold at a 50% discount - all year round. And, the shop will also be stocking other products, also at a more accessible price. As dad now concedes, the market for hardback novels is not what he had once imagined. The presence of these in the shop, therefore, will be much smaller.

Speaking with dad as he has worked his way through the last 6 weeks has been an eye-opener. He'd always dreamt of running a quaint independent bookshop. He's not the only person to have had that dream. And, in recent years, he's certainly not the only person to watch that dream falter. Today when I spoke to him, he mentioned that he will be getting new signage for the shop front to accompany the new emphasis on value stock. I queried why. I always liked the rather old-fashioned shop front. It's time to stop running an 18^th century bookshop, he said, it's time we move into the 21^st century. He's right. With that he got off the phone, there was a customer waiting to buy a book.

As we noted back in 2009 before the, now not so new, government formed, our industry came to the fore as an agent for social and physical regeneration out of the rubble and smoke of the early '80s violence. Its contribution was significant, and with the right tools it can be again. We've started by making recommendations to government in respect of its immediate response but for the sector's contribution to be sustainable there needs to be a firm commitment to policies such as a private sector led TIF and a review of the significant burden of empty property rates.

Shopping centres are at the heart of communities and provide significant employment and training for the people that work in them and investment in the places in which they are located. They provide a place where people of all walks of life interact and engage. They are ultimately a force for good, and our industry is committed to continuing to support their local communities. As its mouthpiece, so are we.

On a slightly lighter note, of all the commentary about this particular crisis (what debt problem...?!) this quote from Peter Cowgill of JD Sports conjured up in my mind the farcical nature of some of this week's event. It you've never met Peter I can tell you he is a very direct and, I imagine, a very strong man. If he had been witnessing youths trying on trainers before nicking them then I certainly would not want to have been the one he caught...

With a vast growing middle class, complemented by a booming Bollywood film industry and an even more thriving wedding industry, the potential for retail growth in India is vast.

However, the drawbacks, including a high level of protectionism which to some extent is being addressed, an economy beset by corruption (if, indeed I am allowed to say that) and crippling inflation, one would think that this is not an opportunistic place to invest. Yet, recent government initiatives to open up the sector for foreign players have enticed many companies to invest in the retail sector, which is worth a staggering $400bn (£245bn). Though there are various kinds of restrictions on foreign investment in the Indian retail sector, organisations can enter the industry through strategic license agreements, franchising and cash and carry wholesale trading.

India's large, young and educated population will become a great consumer in years to come, creating significant opportunities for retail development at a city, district, or regional level. A tide of change is on its way as the need for greater diversity and increasing appetite for sophisticated goods grows, so inevitably will the market.

An exploration of foreign retail interest in India indicates that:

- While global retailers are interested in the hypermarket segment, Asian retailers are keen on electronics, departmental stores and the home sector

- Tata Group's retail arm Trent has put on hold plans to open Arcadia Group outlets in the country to instead focus on Inditex-owned brand Zara

- Marks & Spencer has had presence in the Indian market for almost ten years. It sold 74,000 locally-sourced polo shirts in India last year - perhaps just the beginning for its revitalised business there. M&S operates its twenty stores in a joint-venture with Reliance Retail, the retail arm of Reliance Industries in which M&S has a 51% stake. It is planning to add another nine stores in the country over the next year, focusing mainly in big cities

- Carrefour made its long-awaited debut by opening its first cash-and-carry store in the country last December

- Tesco, Wal-Mart and other multi-brand retailers have taken another step closer towards gaining access to the retail market

- In the food and beverages sector, McDonald's will be penetrating the markets through 100 new outlets across the country. Encouraged by the success of Pizza Hut, McDonald's and Dominos, Starbucks has expressed its interest in opening up outlets by franchising

The property landscape is also shifting. Mumbai, Delhi, Bangalore, Ahmedabad, and other major cities along with some of the smaller tier 2 cities, have started constructing shopping malls and are planning to advance it more in the near future. Retail property will become a major profit segment for long term investors, and financial institutions and banking sectors have also started extending support to potential investors in retail properties.

The locational opportunities are vast. A report prepared by Ernst and Young for India Brand Equaity Foundation (IBEF) reveals that there are significant opportunities for organised retailers in various cities such as Ahmedabad, Pune, Kanpur, Nagput, Surat, Ludhiana, Coimbatore, Chandigarh, Lucknow, Kochi, Jaipur, and many others. This is because these cities have households with tremendous spending power and much lower penetration of organised retail compared to metro cities such as Delhi, Mumbai and Bangalore.

The retail climate is being set for substantial change but at a steady pace. So while India's neighbour, China, breathes consistent fire, the elephant happily strolls along courting foreign interest, with a view that if and when the regulatory environment makes a radical leap, the elephant will then hopefully break into a leisurely strut.