Yorkshire

RetailTheBusinessDesk.com Supplement | Yorkshire | November 2013 Facing up to a changing landscape

Featuring Destination shopping. 4 Using technology to make connections. 9 Last mover advantage for ? 12

in association with Yorkshire Retail 2 Supplement Editor Foreword November 2013 Keeping Contents pace Sponsor forewords: Jim Whittaker of Baker Tilly; Matthew Lewis of Squire Sanders. 3 ➔ ETAIL is a fast paced sector – Destination shopping. Fundamental changes to Rand the implementation of new the retail landscape mean technologies is seeing that pace councils need to look at changing the use of properties quicken every day, to the point that on the high street to increase the leisure consumers can find it hard to keep offering and drive footfall. 4 ➔ up at times. A polarised landscape for retailers and landlords. The retailer/landlord relationship That’s been evidenced by the announcement, as this supplement goes to is evolving but that also creates new publication, that is installing face-scanning technology at its 450 challenges. 6 ➔ petrol stations to target adverts on digital screens to individual customers Using technology to make connections. High street at the till. The technology will use a camera to identify a customer’s gender retailers need to embrace and approximate age, before showing an advertisement tailored to that technology if they want to demographic. stop losing sales and help facilitate a purchase while the customer is in As the saying goes, retail is detail and the same is true of the drivers for store. 9 ➔ changes within the sector – they are varied and far from straight forward. Information nation. Those leveraging big data to provide a more targeted Rather than decrying the death of the UK high street, in this supplement, offering are still just supported by Baker Tilly and Squire Sanders, we aim to look at ways high scratching the surface street retailers can adapt to maintain their bricks and mortar presence and of what is possible. 11 ➔ at how the use of mobile and online sales channels need not be a threat to Case study: Last mover advantage for physical stores but in fact help to boost in store revenues. Morrisons? Bradford-based Morrisons is to finally enter the world of online grocery sales and home deliveries in January, following its I hope you find it useful. deal with Ocado. 12 ➔ People power. Retail is a sector that David Parkin Founder and director, experiences high employee TheBusinessDesk.com churn rates and where the vast majority of staff are on lower pay. 13 ➔ Case study: Multichannel strategy suits TM Lewin. For shirt maker TM Lewin the in- store experience is a hugely important part of its offering, regardless of the sales channels a customer ultimately chooses. 15 ➔ Round Foundry Media Centre, Publication editor: Joanne Birtwistle Foundry Street, LS11 5QP. [email protected] Round table discussion. The UK high street - Tel: 0113 394 4321 Commercial manager: Lee-J Walker a tale of two halves. 17 ➔ [email protected]

« Previous | Back to Contents | Next » Sponsor 3 foreword The pulse of retail

RETAIL has put the brakes on the expansion of We think the pulse of retail continues experienced hypermarket formats, as it began to feel to beat. Recent retail press has been unprecedented the squeeze from online players. Space largely positive and so far this year the change in recent has been freed up for gyms and Giraffe general retail sector has significantly years. Rapid Restaurants. Sainsburys will have more outperformed the market. Leeds has developments in convenience stores than had a retail shot-in-the-arm thanks to technology, the loss by the end of the year. The race for space a sparkling £350m development called Jim Whittaker of imported price has switched to the ‘corner shop’. Trinity. head of retail for deflation (remember Yorkshire, The fact that retail is ever-changing the strong pound?) Retaining customer loyalty in the digital Baker Tilly and unpredictable is both its joy and plus the worst space is a genuine challenge for retailers its challenge. Those retailers that have consumer recession in living memory. who have relied upon a store presence. tackled their operational issues, invested This year we’ve had the coldest weather At least the grocers should have a head in technology, have a distinct offering for 50 years in the first quarter replaced start with commercial exploitation of and understand their customer should by a heat wave in the second. ‘big data’, as they have the most mature loyalty cards. Now more than just a be able to look ahead to 2014 with How things change. Not long ago buzzword, some of the biggest changes justified confidence. supermarkets were aggressively in big data are coming from the apparel expanding their general merchandise side of retail, as they experiment with ranges and causing problems for retail multiple digital channels, tailored offers specialists by creaming off seasonal and targeted campaigns. The reason we profits on gardening, camping and such dislike junk mail is because most of it is like. irrelevant. Big data is changing that.

If you build it, they will come. Not So after several years in and out of anymore. Tesco was the first to casualty, what’s our current diagnosis?

Sponsor Change for the better foreword

WITH the retail law firm to take a 360 degree view of just be “shopping” but for now shoppers landscape constantly multichannel retail and publish our are the drivers of the industry and they evolving, it is vital findings: The Multichannel High Street: are currently empowered by digital that businesses A Nation of Shoppers – But is it a Nation technologies. embrace new of Shopkeepers? This was undertaken in technologies conjunction with Kantar Retail and the But their needs have changed; they are and processes to Retail Trust. increasingly looking for a high-level of Matthew strengthen their personalisation in their interaction with Lewis brand and increase Using the report as a basis, we held a brand. Suppliers also have to be alive partner and customer loyalty. retail debates in Leeds and with to this to ensure their brands are at the head of retail, industry leaders to discuss the future of forefront of change. Squire Sanders Even small changes the retail sector, to help understand how Over the next year, the high street in businesses’ we can better help retailers to succeed. approach to retail can be the difference needs to work out how to successfully between success and failure in the The output from the retail debates integrate physical stores, online and marketplace. This is not always an and our research demonstrated that mobile in order to win back consumers easy balance and is one of the reasons businesses which can provide genuine from online-only businesses and deal a number of retailers find themselves and seamless multichannel offerings with the threat of showrooming. under operational and financial are likely to succeed in this new retail pressures. environment.

Recognising the challenges the sector Indeed, in years to come, we may not faces, Squire Sanders was the first be talking about “multichannel”, it may

« Previous | Back to Contents | Next » ➔ 4

Fundamental changes to the retail landscape Destination mean councils need to look at changing the use shopping of properties on the high street to increase the HE opening of Land Securities hugely successful Trinity Leeds leisure offering Tscheme - more than 12.5 million people have visited since its opening in March - has been a major boost for the overall and drive footfall. attractiveness of , drawing more shoppers to the city in general.

Whilst rents in Leeds have fallen 11% in big centres, such as Leeds and Sheffield, the last five years, it is the only centre in and smaller convenience locations. the Yorkshire region to witness growth in the last 12 months, with average Matthew Lewis, head of retail at Squire is a good chance their rents increasing 1.9% to £275 per sq ft, Sanders, says that although there have situation will worsen according to property agent Colliers been more high street failures over the as good locations International’s retail report, published last 12 months, with those stores being suck footfall from the in July. replaced with a proliferation of charity bad. shops, cheque cashing outlets and But retail rents across Yorkshire and the betting shops, there is talk of a return of Jim Whittaker, Jim Whittaker Humber as a whole remain 5% below consumer optimism. partner at business partner, average, having declined 20% over the advisory firm Baker “Portas and Grimsey have both tried Baker Tilly last five years to £125. Encouragingly, Tilly’s Leeds office, to get to grips with the problems of the however, the decline from 2012 to 2013 says the answer lies high street and they both agree that was just 2.1%. with politicians, adding there is a lack of this is a wider and more endemic issue Colliers’ report also revealed that the than poor retailers and the impact of skills and money to deal with the issue number of empty shops on high streets online,” he says, adding this view was within local authorities. across Yorkshire continues to rise with expressed by participants at a recent “It will take significant investment to a vacancy rate of around 17.5%, higher retail debate, hosted by Squire Sanders create that skill with a mandate to make than the national average of 14.5%. at the Everyman Cinema in Trinity change. Planners have to follow national Leeds. It forecasts that the long delayed and local guidelines and they need to recovery in the retail market will start Unless local authorities in second and change. But they need to be given a in 2014 but that it will be focused on the third tier locations take action, there reason to change.” ➔

« Previous | Back to Contents | Next » He continues: “Portas, whatever her deciding factor for a consumer that landscape mean high personal motivations, did a good job wants to visit an already thriving high streets just do not and elevated the conversation, interest street or shopping centre – Trinity has need as many shops. and discussion about the high street. not been impacted by the fact it does not There are numerous other reports have onsite parking – for those second This is where Cathy that don’t get air time. The debate will and third tier towns and cities that are Barnes, professor of continue until something is decided by retail innovation at already on the wane, it does have an Greg Styles government.” impact. Leeds Metropolitan University, sees head of retail development, Some of the suggestions from veteran However, implementing some of the more fundamental Colliers retailer Bill Grimsey, previously of recommendations from the respective differences between International , in his report published in reports are easier said than done, the Portas and September this year are not dissimilar according to Lumley. Grimsey reports. to those made by celebrity fashion retailer Mary Portas back in 2011. “It is all well and good to say that “Portas was saying we need to see the we need free parking but the local high street revived whereas Grimsey Prew Lumley, property partner at authorities can’t afford that as it is a is trying to say that we need to redefine Squire Sanders in Leeds, says: “Portas significant income when they have had the high street and that might not be was dead until Grimsey came along to other income slashed,” she says. about retail. Portas was about driving reinvigorate the debate. Grimsey came footfall whereas Grimsey wants to see out on the morning Portas was due “There are cash flow issues – councils a change of use and different types of in front of the committee deliberately will get more rates if there are more retail,” she says. for publicity.The press reports were shops because more people come in to “Retail will follow if there is a hub all about the battle between the two a centre with free parking. They would where people will congregate but the but, in reality, both have to take an immediate hit for longer point of a centre is not always retail. We were looking at town term gain.” centre organisation, just do not need as much retail space as parking and business Baker Tilly’s Whittaker calls the parking we have.” rates. Although issue a “red herring”. they had different Greg Styles, head of retail development viewpoints, they “It’s Catch 22 – poor parking doesn’t at Colliers International and based in were both coming encourage people to go but nor does a Leeds, adds: “The day of new retailers Prew Lumley from the same angle.” poor shopping experience and what entering into the UK and rolling out 300 partner, Squire comes first?” he says. new outlets is over. The new model is to Sanders Whilst free parking open 20 to 50 units in the major retail will not be the But fundamental changes to the retail centres and to have a strong internet ➔

Trinity Kitchen keeps the buzz going TRINITY Kitchen, which opened at trade during opening month include provide intimate Trinity Leeds in October, will select local Leeds-based company The seating areas five of the best street food vans from Marvellous Tea Dance, joining the likes alongside spaces across the UK to set up stall for a of London’s most renowned hot dog for regular live Gerald entertainment and month, offering consumers the chance trader, Big Apple Hotdogs. Jennings events. to try something new each time they portfolio visit. Land Securities has also brought in seven permanent high street food and Jennings says: director, Land It provides consumers with a mix of drink brands, all of which are new to “With leisure such Securities street food vendors, pop-up market Leeds. a key component stalls and emerging high street food of our offer, Trinity Kitchen has added and drink brands in a 20,000 sq ft Gerald Jennings, portfolio director at an innovative and exciting new indoor food hall. developer Land Securities, says Trinity ingredient to the Trinity Leeds mix that Kitchen forms part of its response will help to drive footfall throughout The street food vendors, chosen with to the evolution of the retail market, the day, while also boosting the city’s the help of food journalist and curator which has seen food and beverage night-time economy. of the British Street Food Awards facilities at Trinity Leeds increase from Richard Johnson, will be launched 13% to 24% in response to demand “This unique proposition is the next each month from the street by from consumers. chapter in the Trinity Leeds story. We hydraulic lift up and into an opening have worked hard to ensure that it in the wall of the first floor of Trinity A combination of warehouse and really is a destination that everyone Kitchen, in an event named ‘Swap out street alley styling, it features will want to come back to time and Sunday’. vibrant, individual zones inspired by time again. Trinity Leeds promises to urban environments and has been be ever-evolving to constantly offer The first five street food vendors to configured to allow the flexibility to visitors something new.”

« Previous | Back to Contents | Next » presence that runs symbiotically, the high street out of retail and into Whittaker concludes: providing the consumer with both other uses,” says Lumley. “There is a great traditional and online shopping options.” future for great LMU’s Barnes argues that Trinity Leeds quality shopping That means councils have to look at is an example of how an evolved high centres but the name change of use, both to fill the physical street could look. is old fashioned, they space and to encourage greater footfall have become leisure for those retailers that remain by Cathy Barnes “Land Securities has just put a roof on destinations and now increasing the leisure offering. it; the entrance being open to the street professor the high street must of retail reflects that. It has created a destination “David Lloyd and other gym operators do the same, with innovation have had huge battles on planning shopping experience with mixed-use planning authorities at Leeds permission for small city gyms on the space and it does have a real buzz. It is becoming more Metropolitan high street because planners say that’s showing what the future could look like flexible and open to University not what they want the high street to and it takes business to do that rather a mix of different look like. That counters the need to get than the council,” she says. uses.”

high street is potentially vulnerable to failure.

“The ‘Comet effect’, which is an example of a botched turnaround, not the real thing, is having a serious knock on effect, the most worrying of which is to spook suppliers. Blockbuster is another example of this,” she says.

Cathy Barnes, professor of retail innovation at Leeds Metropolitan University, agrees that there is hope for those companies that went into administration.

“Ultimately they are great brands and people bought into the brand. The issue is the business model that goes behind that. Some are about price – different products are more sensitive – but it is usually about the full deal, the experience of the purchase and after A polerised landscape for sales and how much people pay for the knowhow,” she says. retailers and landlords Phoenix insolvencies – people putting their own company into administration and immediately buying it back as negotiating with the landlords of its VD and games rental chain a means to renegotiate terms and retail outlets.” DBlockbuster is the latest drop failing stores big brand high street name It has also attempted to launch a digital – are a result of to enter administration - and platform to take on the likes of Netflix the realisation by and Lovefilm but ran into licensing retailers that they for the second time this year difficulties when the US parent do not need to cover despite closing more than 250 company scuppered the plan. every town and city branches and cutting staff in the country. Stores will continue trading while a Christine levels. buyer is sought. Rules currently Elliott state that if a chief executive, It collapsed for the first time in January Christine Elliott, chief executive of the business is placed Institute for and was sold to private equity firm Institute for Turnaround, says while into administration Turnaround Gordon Brothers Europe in March. there is overcapacity in the market, immediately following rent quarter day, there are still segments of the business then it can continue to use the property Gordon Brothers Europe said it had: that could have a future, as is the case for up to three months without paying “striven to turn around the historically with Jessops and HMV. any rent. loss-making company by restructuring the business, investing significantly “It’s a sad fact that over the next five or Last month, The British Property in strategic marketing activities and so years as much as 30% of the current Federation took the unprecedented ➔

« Previous | Back to Contents | Next » step of advising landlords to take retailer limp on to the busiest time of partnership to make sure both the store extra security from tenants, including year when margins are highest – but and the centre are a success,” she says. guarantees from parent companies and it is immediately after Christmas that The challenge for landlords is that they extra deposits of up to three month’s we will get an idea of how retailers are really fairing. cannot guarantee the income, which rent, to protect themselves against the affects investment returns. widespread use of the tactical timing Prew Lumley, property partner in the of insolvencies and the losses that this Leeds office of law firm Squire Sanders, “In a big centre that idea can work creates. says there is increased polarity and because the risk can be blended across while good businesses are seeing an all tenants and the landlord controls the The BPF said that upturn and are starting to thrive, poor surrounding environment, but if they it took the step businesses will continue to suffer. only own one property on the high “reluctantly” given street – that’s a huge challenge. Funding the extra cost it “Most will push through to Christmas is so often a block because landlords are would place on now and the banks will allow them to too highly geared with borrowing so occupiers, and urged find a way to keep trading. If Christmas they can’t afford to be flexible or take a long-term view on rents recovery,” adds the government to doesn’t work for them, then it’ll be the Lumley. Ian Fletcher act quickly to restore December quarter date’s rent demands director of that could trigger a series of new creditors’ faith in policy, British insolvencies in January,” she says. Nigel Duxbury, property director at the rules governing Property A S Watson (Health & Beauty UK Ltd), Federation insolvency. She adds that zombie businesses are is responsible for the retail property “still happening” and there remains a lot portfolio at Superdrug, Savers Health Ian Fletcher, director of hidden debt that the banks do not yet & Beauty, The Perfume Shop and 3 and of policy at the British Property want to crystallise. the company manages 1,800 stores Federation, says: “There have been across the UK. He spoke at a recent retail some horrendous examples of small Jim Whitaker, partner at Baker Tilly, debate, hosted by Squire Sanders at the landlords and pensioners losing their doesn’t expect this January to be as Everyman Cinema in Trinity Leeds. savings via dubious pre-packs, while bloody as last year. “I will have 20/25 leases with the largest the owners of the companies that use “A lot of names have gone and that does single landlord. The larger landlords them to strategically restructure their free up the existing ones who benefit have the capital and the vision to deliver businesses lose nothing, and gain from capacity in the marketplace. The flexible terms and an environment that a competitive advantage over their market has been allowed to adjust,” he shoppers want to visit,” he says. competitors. says. “Landlords are so diverse in the UK – you can have one woman who has inherited one shop versus a ‘What about stores that are basing their rent on multinational company.

turnover but using the store as a showroom – “My shareholders are Hong Kong-based how do the landlords capture those online sales?’ and they are horrified that we talk about five year leases. In Asia it’s one year leases and turnover rates, they are very flexible,” he says. “Unfortunately, government policy on The retailer/landlord relationship has to this issue is one of dither and delay. evolve in response to the drastic changes But, he adds, change has to be industry First, they were going to tighten across the high street and in shopping led. regulation, then they weren’t, then centres – turnover rents,where a “This industry is all about people. People they asked the insolvency profession to retailer’s rent is based partly or purely want flexibility so we need to model implement the most minor of changes on the store’s turnover, have been the industry as much as possible to the to self-regulation, and now they are around for a while but once again, online flexibility that people want,” he says. having a review.” shopping has an impact on this model. Duxbury predicts that shopping centre Teresa Graham will report her “What about stores that are basing their service charges will be “the next preliminary findings to ministers by rent on turnover but using the store as big bombshell” for retailers. Not for the end of 2013. a showroom – how do the landlords those in tier one centres that are well capture those online sales?” asks maintained but tier two and three Fletcher continues: “While we very Lumley. schemes where there has been no much welcome Teresa Graham’s investment. Review we can’t stand by and watch She suggests the next step is variations smaller landlords and pensioners being in rent based on the success of the “They are tired and at locations people robbed of their savings.” surrounding area. don’t want to shop. The costs of investing in those schemes will in some way fall Many retail administrations are “So if a shopping centre loses the anchor back on retailers who remain in those triggered by a quarter rent date. The tenant, the other retailers will get a schemes. Today we talk about the high Michaelmas quarterly retail rent date reduction and if the footfall reduces, they street, tomorrow it will be those tier passed without event , which is not get a reduction. This should mean that two and three shopping centres,” he unusual as many banks will let a the Landlord and Tenant are working in concludes.

« Previous | Back to Contents | Next » Supporting retail: local commitment, global reach

If your business is involved in the retail sector, we can help you handle the challenges of the global retail industry: from right here in Yorkshire.

As part of an international law firm based in the heart of Leeds, the Squire Sanders retail team has helped a variety of clients – high street retailers, online marketplaces, supermarkets, property developers and landlords – succeed in an increasingly global environment.

We know that all businesses involved in the retail sector have different legal needs, focus and culture. With our local market expertise, our international coverage and knowledge of industry trends, we can help your retail project flourish in a vibrant and fast paced industry. Whether you want that to be in Leeds, the UK or across the globe, we have the team for you.

Contact us today for a solution to your legal needs.

Matthew Lewis Global Head of Retail, Leeds T +44 113 284 7525 E [email protected]

squiresanders.com ➔ 9

Using technology to High street make connections retailers need to embrace technology if HE future of retail lies in But there is another way to look at they want to stop connected stores, where this – 44% of women would still make T a purchase with the retailer if they losing sales and shoppers have access to had items unavailable in-store ordered free wi-fi, ordering kiosks, on their behalf and delivered to an help facilitate a sales assisted devices and address of choice. So the leveraging purchase while smartphone scanning. of technology in-store can mean that stocking a full range in each shop the customer is in All of these services put the power of becomes less crucial – especially if good the sale in the hands of the consumer, logistics mean retailers can guarantee store. who can still buy the products they next day delivery. want from the retailer of their choice, Matthew Hopkinson, director of The even when items are not immediately Local Data Company, formed part available. of the team that wrote The Grimsey A surprising high 38% of consumers left a shop empty handed within the last month of being polled due to items either not being in stock, or ‘The leveraging of technology in-store can mean unavailable in the right size, colour or that stocking a full range in each shop becomes style, according to The Missing £Billion Basket Report 2013 report, which less crucial - especially with good logistics.’ commissioned YouGov to poll more than 2,000 people and was published in September by digital Review: An Alternative Future for the He adds: “I’m at the peak of excitement commerce provider High Street. He says the supply chain is when I pay for something online with Venda. critical and often the issue with multi or Paypal. If the product doesn’t come omni-channel is the final mile. quickly that wanes. It’s about prompt Customer loyalty and efficient delivery – too many fail on is increasingly “It’s the logistics and the cost of logistics that.” Matthew important for Hopkinson retailers, however, it that will make or break. Fashion The Missing £Billion Basket report director, The is put at risk if they retailer returns are between 25% to finds that 38% of shoppers would Local Data fail to provide desired 60%. At what point does that become automatically look for the products Company stock in store. unprofitable?” they wanted on a retailer’s website ➔

« Previous | Back to Contents | Next » if they were not available in the shop – sell something. Retailers must now use of marrying the two without distracting highlighting the importance of an omni- social media and communities to enable from the core strategy of the business. channel approach. customers to help build the brand Multichannel is absolutely crucial, through their own discussions and but as part of the overall strategy not Alex Craven, chief executive of Leeds- recommendations. Social is definitely a separate strategy... There should be based digital agency Bloom, underlines part of an omni-channel retail shopping a seamless interaction between the that retailers must adopt an omni- experience as experiments in stores website and store,” he says. channel approach if they are to optimise prove.” sales and says the best customer Encouraging in-store collection has experience is created by bringing Cathy Barnes, professor of retail another advantage: impulse point of together influence, experience and value. innovation at Leeds Metropolitan sale purchases – of those products placed in reach of the queue or at the “Today’s consumers expect to be able to University, says very few retailers have a till itself – are hard to replicate online. research products and make purchases truly converged omni-channel strategy. It’s something that certain retailers are online, via mobile and tablet devices, “Most have a key channel and then use turning to their advantage. and through social recommendations... the technology to support that. They are Across the top 50 e-commerce sites, online with a physical presence or vice- Matthew Lewis, head of retail at law there is an average 2% conversion versa - the back room operations show firm Squire Sanders, says: “For most rate, leaving 98% of an active audience they are not truly omni-channel but retailers, it’s usually free to have untouched,” he says. have physical and virtual offerings that something delivered to a store but He adds that marketing is moving from meet,” she says. they will charge to deliver at home – ‘shouting’ to developing one-on-one that’s because up to 40% of people who communication. Keith Nesbitt, chief operating officer of collect from a store will also make shirt maker TM Lewin – which sees an additional purchase in store and “Personal recommendation has always 25% of its online orders delivered in retailers want to encourage the extra been one of the most effective ways to store - agrees: “For us it’s the complexity footfall.”

Founded in 2008, the business has continued to flourish at a time when many retail businesses have struggled.

Executive chairman Andrew Malcher says: “We have been profitable every year for the past five years and this year we should smash through turnover of about £35m and expect to get to £60m- £70m within the next two years.

“We also have a very large export business we are growing and I expect international business sales to grow to £50m in the next three years. We expect to see 70% growth next year.”

Its As Seen On High Street TV dedicated retail areas are based in a plethora of major retailers including , Next, Boots, John Lewis, Debenhams and Argos. The business has more than High Street TV 5,000 locations across retailers and Case study deals with 35 different retail groups. eyes rapid growth The firm also owns the rights to major products including Zumba and has recently completed a deal with Disney to sell its Stompeez slippers. ARROGATE-based High Street TV is the largest infomercial Hproducer in the UK, with up to 100 hours a day of infomercials “More and more retailers are giving us shown on three different channels. Despite being a hugely popular more and more locations,” says Malcher. “Our ability to grow to 12,000 retailers is industry in the US, it’s a concept that is still relatively new to the definitely on the horizon.” UK market. The company employs 82 people at its The retail company offers a combination partnerships with retailers, which stock Yorkshire base, but this will increase of selling goods through its TV channel, its products so customers can buy them to over 100 by the middle of 2014, the High Street TV website and through in store. according to Malcher.

« Previous | Back to Contents | Next » looked at on the website but not bought. It is the personalisation of shopping – rather than bombarding consumers 11 with messages.” ➔ Information – from the location, to the browsing habits and profile of a visitor to a retail website can be used to build targeted strategies for growth.

Baker Tilly’s Jim Whittaker gives the example of Harrogate-headquartered Up & Running, which has more than 30 stores across the country.

“It tracks everything so it knows where to set up the next store based on where it is are selling most online. It is using that data to understand where there is interest in the UK,” he says.

The same principle should be applied when looking to potential new overseas markets, he adds. Information nation But retailers also recognise that there is sometimes a need for a softer approach as a question mark remains over how comfortable people are with the use of HE leveraging of big data habits and to make specific offerings to detailed and personal information. and use of a customer’s people. T “Already the use of information is quite information to provide a more Alex Craven, chief executive of Leeds- explicit - like online ads that relate to the relevant, targeted offering both based digital agency Bloom, says: last product you viewed. Many people online and in-store is an area “At the heart of the opportunity is the feel slightly uneasy with that,” says ability to anticipate and personalise the where even the most advanced Matthew Lewis, head of retail at law shopping experience. Digital channels firm Squire Sanders. “Will people push and sophisticated retailers – provide a wealth of data about what a back if they don’t think the use of their such as Tesco with its Clubcard customer is looking for and the price data gives them value for money?” and the recently launched Hudl they expect to pay. This can be tailored to a personalised shopping offer and However, that attitude is largely – are still just scratching the delivered to a mobile at the point of generational and for younger surface of what’s possible. purchase.” consumers communicating and sharing on social media networks “Successful retailers are the ones who In store there is the opportunity such as Facebook and Twitter is have made the most progress with for technology to support a more commonplace and not viewed as an big data but there is still a real gap personalised service from a shop erosion of privacy. between what they could do with all assistant, who can access information this information through a tablet device, while location- Older consumers need not get too and what is being based social media like Foursquare panicked by what the future holds achieved at present,” and Facebook Places allows retailers to just yet - Cathy Barnes, professor of says Rupert Eastell, use social channels to market to local retail innovation at Leeds Metropolitan head of retail at Baker customers and reward engagement University, thinks that ultimately, the Tilly. and loyalty. leveraging of big data is an area that still has a long way to go. Tesco was one of the Craven says: “Retailers looking to Alex Craven first retailers – and exploit this channel can offer discounts, “We’ve not really touched on the chief executive, certainly the first sale information or carefully targeted potential for this yet. The reason we Bloom – to marketing messages that are delivered haven’t is because there is no algorithm kick-start the use of when the consumer is receptive to that can replicate human behaviour. information gathered through a loyalty them.” You can take all the information in the card with the launch of its Clubcard world but if you can’t use that to predict nearly 20 years ago [1995] – it was a Eastell adds: “Your smart phone will the behaviour… that’s the missing link – tool that quickly saw the supermarket alert the store to your arrival, which being able to predict human behaviour. kick Sainsbury’s off the top spot in might trigger targeted offers to that terms of market share. phone. When you go to a till they can “Yes, we will be cracking certain things identify you by name and they will with predictive software but the Today, online shopping gives an even bring up details of other things you real power will be when we get that greater ability to collect data on buying have bought, along with stuff you have algorithm.”

« Previous | Back to Contents | Next » Digital order pad IT is hard to believe but the UK’s fourth largest supermarket chain has only very recently moved from paper-based shop floor stock management to a digital system. Richard Manners, retail improvement director for Morrisons, says: “The operating model was broadly designed 30 years ago in a world of pen and paper.” It has been working with software consultancy ThoughtWorks to bring each store into the digital age with the introduction of the electronic Order Pad to replace its manual Last mover inventory process. Case study Manners says: “People were working off three to 10-day-old data and it is very dependent on the skill advantage for of the person writing an order. That is unusual in our industry but there Morrisons? are elements of that process that we wanted to keep. RADFORD-based Morrisons Towards the end of 2012, launched wine “You can’t take from a central system local influences such as is to finally enter the world website www.Morrisonscellar.com. B One key feature of Morrisons Cellar is the impact the fact it is raining will of online grocery sales and its ‘Taste Test’, which has since won an have, or a football match down the home deliveries in January, industry award for innovation. road and you can’t get individual following its deal with Ocado. responsibility: ‘the machine does it’. It asks customers three non-wine We wanted to retain some of that According to Morrisons, the agreement related questions and then assigns ownership and autonomy.” will enable it to enter the online grocery them a flavour profile based on their The Order Pad allows Morrisons’ market quickly, with a profitable preferences for sweetness or bitterness. employees to input and track data business model and chief executive The customer is then given a number electronically on a tablet, making Dalton Philips calls its online offer “the between 0 and 12, which they can stock management a more accurate final pillar of our strategy”. match against available wines. and streamlined process. It could be argued that Morrisons has Whittaker says: “It has been slow to the It is similar in look and feel to the timed its entry to online just right, as it table but already proven with one small old paper process but it eliminates has “last mover advantage,” says Baker part that it can do something different.” administration and gives access to Tilly’s Jim Whittaker. real time information. The big question is how will Morrisons’ Manners says a key aspect of the “Setting this up online grocery offering be different? transition from paper to pad was and getting it right The supermarket has suggested the that it was user-friendly, which is a real technical differentiator will be the same as in resulted in rapid adoption rates and challenge, hence store – vertical integration and a focus a limited need for training. the deal with Ocado, on fresh produce. although a 25-year The tablets are wirelessly linked to agreement is a long Richard Manners, retail improvement the store’s network and transmit Richard time in technology director for Morrisons, says it is the orders to the mainframe, saving Manners terms,” he says. something the supermarket’s hours of data entry, increasing director, retail customers will increasingly value. accuracy and giving greater improvement, However, the flexibility. Morrisons supermarket chain “We are very committed to vertical is not entirely integration. We own our own butchers, “It will enable many other store inexperienced in the world of online bakers etc. That’s an expensive way of processes to become streamlined retail. Its first foray came in 2011, when doing business compared to getting and mobile, ultimately helping us it bought online children’s clothing things processed in a factory but as to provide a better customer facing and accessories retailer Kiddicare in a we discovered earlier this year [with service in the stores,” says Manners. £70m deal, with the intent of leveraging the horse meat scandal] that approach The Order Pads will be used in all both the technical and physical was really useful. We were the only Morrisons stores by the end of the infrastructure for entry to other online retailer with no trouble at all apart from year. market segments. branded lines of Findus,” he says.

« Previous | Back to Contents | Next » ➔ 13

Retail is a sector People power that experiences high employee churn rates and HE industry employs point for Lewis - ensuring staff actually where the vast nearly 2.8 million people know what the company’s long-term T aims are and what they as a team majority of staff and makes up around 11% of should be working towards. the total UK workforce - but are on lower pay. of those 1.6 million earn less “Irrespective of pay, they need to know where they fit in with the than £8 an hour, according business and why they are valued,” he to research company says. “Messaging is important. Most Datamonitor. retail store managers will have a

So how can retailers ensure staff are not just well trained but motivated, given pricing pressures mean it is an ‘If there are to be sales incentives these should be industry where wages for the vast majority have to remain low? based on shop turnover, not individual sales, so people feel engaged to work as part of a cohesive unit.’ Matthew Lewis, partner and head of retail for Squire Sanders, says that conversation with staff at the start of “Commission for a sale can lead to poor having low paid staff each day or shift to tell a key message. service and a less cohesive unit because doesn’t mean they But part of that is also making them feel all are fighting for the customer’s can’t be engaged they are doing a good job - hone in on attention rather than focusing on who is with the company, its the positives not the negatives.” best for that shopper,” he says. Matthew brand and goals. Lewis Lewis suggests that if there are to be David Bannister is a former HR director partner and Having disengaged sales incentives these should be based for fashion retailer New Look. He is now head of retail staff is likely to equate on shop turnover, not individual sales, the managing director of business and for Squire to poor customer so people feel engaged to work as part of HR consultancy Empowering People Sanders service. It’s a key a cohesive unit. and is one of ten top executives ➔

« Previous | Back to Contents | Next » behind a soon- He says: “If staff truly are engaged with distribution or overseas opportunities. to-be-launched the business as a whole then they will There is a wide and varied career to be consultancy that will do the harder stuff because they believe had in retail and those who take the help businesses of all in the brand and the bigger picture. opportunity do benefit from having had sizes manage change, the shop floor experience and customer called the Leading “What business are we in? The business contact.” Heads Partnership. of being chosen. Why should someone David buy from you when they can get it There are very few retail specific Bannister He says that it is elsewhere? The ultimate difference is degrees on offer in the UK at present, let managing crucial for staff staff and commitment.” director, buy-in to attribute alone masters or PhD programmes – Empowering an online sale to The industry as a whole needs to Barnes says this is partly because it’s a People the nearest store find ways to reduce churn – thereby subject area yet to be accepted as a key but beyond that adds that financial reducing the costs of recruitment academic discipline. incentives for staff - primarily and training – and for more people commission structures - don’t work. to consider the sector as an option To that end, Leeds Metropolitan for a viable, long-term career with University is going some way to bridge “You have to take money off the table. progression opportunities. the gap with the introduction of an Let’s get rid of incentives, then how do omnichannel retail masters degree, Cathy Barnes, professor of retail you motivate people to do all the things which it is running you want them too? innovation at Leeds Metropolitan University, and Eastell both make the in collaboration with He makes a distinction between staff point that retail is an industry that consultancy firm recognition and incentives. needs many foot soldiers at the base BlueFin Solutions and of the pyramid and not everyone will commence in “Recognition schemes are totally can climb the ladder to become chief September 2014. different and do work. Recognition that executive. costs nothing is getting people to say “The issue is that a lot Cathy Barnes thank you,” he says. Yet the industry has a long way to go of retail companies professor improve its reputation and a lot still a consultancy like Rupert Eastell, head of retail for Baker of retail needs to be done so people see it as an innovation Tilly, adds that factors other than pay BlueFin work with aspirational career choice. at Leeds are important for retention, citing fair just don’t have the Metropolitan working conditions, being treated as skills to do the work Lewis says: “People see retail as University part of a team, encouragement and essentially just working in a shop that’s needed within development. and maybe they could progress to the business. We shop manager. What they don’t see are working together to up-skill the “I like the idea of treating your staff are the buyer, marketing, branding, industry,” says Barnes. as you do your customers. Creating success in both areas starts at the top. It is the quality of management that makes the difference,” he says.

Eastell says the way a retailer looks at its business – by channel or as a customer – is at the heart of the retail skills and training debate.

“If you put the customer at the heart of how the business operates then the staff and management will follow this in their behaviour,” he says.

If retailers’ high street stores are becoming more experiential and showroom-like, staff that have good customer service skills with strong product knowledge are critical to converting a shopper’s ‘try’ into a ‘buy’.

Bannister underlines that retail is all about experience, adding that comes from committed, passionate staff that Rupert Eastell engage with the head of retail brand and do more for Baker Tilly than simple tasks.

« Previous | Back to Contents | Next » ➔ 15

Case study Multichannel strategy suits TM Lewin

OR shirt maker TM Lewin something similar they are happy term. It is not on our the in-store experience is to then go ahead and buy for home agenda to reduce F delivery or collection at a shop.” a hugely important part of its bricks and mortar as we build online. The Staff training focused on introducing offering, regardless of the sales ease and convenience technology to an existing customer channel a customer ultimately includes free delivery experience rather than on the tool itself. chooses. to the store which Richard Small “The technical training [on devices] proves popular and head of HR, All staff wear a tape measure to was 10% of the time. The other 90% of gives the opportunity TM Lewin demonstrate they are trained to fit and the training was about the customer to link sell and up sell. measure, for example. experience. Trust is important - people If we reduce the estate we take away don’t need to check against the John “The confidence that engenders for the that ease and convenience,” he says. Lewis price promise because they online business is remarkable,” says its already trust it,” says Nesbitt. Wider changes TM Lewin has made, in chief operating officer Keith Nesbitt. terms of brand positioning, have also Richard Small, head of HR for TM The interaction with staff in store helps positively impacted on staff morale. Lewin, adds that the training focused to build confidence in the brand across on creating excitement and enthusiasm “It’s a much more sophisticated product all channels and staff also use tablets for the tablets as a new sales channel on the shop floor to in look and feel and there is more among staff, and that part of that process pride in the business and being part of allow shoppers to was ensuring sales made through the access its full range. something that’s going somewhere,” tablets were attributed to each store. says Small. “Around 70% of our He denies the possibility that by selling “That’s why people bought into in-store iPad sales more through an online channel, staff multichannel for which there is no are for suits - people are potentially making themselves bonus. We simply say ‘this is a key Keith Nesbitt don’t see what they redundant. chief operating are buying in the focus’ and formally recognising those officer, flesh first but having “We are trying to get colleagues to think people who do well – by mentioning TM Lewin been measured in how they can play a part in the long them in the weekly focus email.”

« Previous | Back to Contents | Next » Baker Tilly ticks everything on the shopping list In today’s fiercely competitive retail market, Baker Tilly is the ‘one stop shop’ achieving a strategic advantage is a complex for all of your accountancy and business advisory needs. challenge. Retailers have faced rising costs, property and branding issues and increased complexity in For more information please consumer buying habits for over 5 years. What is contact Jim Whittaker, Head of Retail for Yorkshire on now different is the talk of recovery and growth +44 (0)7798 823629 or at which creates opportunity - but are retailers ready to [email protected] take advantage of this in 2014?

Baker Tilly’s Retail Team can provide practical and relevant solutions to help your business succeed. We have been assisting our retail clients for many years. Whether you are multi-channel or pure e-tail we can provide practical solutions to help you save cash, manage your cost base, drive down tax bills, attract and retain the best people and develop and optimise your estate.

www.bakertilly.co.uk

Baker Tilly UK Audit LLP, Baker Tilly Tax and Advisory Services LLP, Baker Tilly Corporate Finance LLP, Baker Tilly Restructuring and Recovery LLP and Baker Tilly Tax and Accounting Limited are not authorised under the Financial Services and Markets Act 2000 but we are able in certain circumstances to offer a limited range of investment services because we are members of the Institute of Chartered Accountants in and . We can provide these investment services if they are an incidental part of the professional services we have been engaged to provide. Baker Tilly & Co Limited is authorised and regulated by the Financial Conduct Authority to conduct a range of investment business activities. © 2013 Baker Tilly UK Group LLP, all rights reserved. 0084 1. Simon Oxby corporate sales 5. Edward Ziff chairman and chief 9. Michael Bates managing manager, Berry’s Jewellers executive, Town Centre Securities director, Joe Browns 2. Prew Lumley property partner, 6. Rupert Eastell head of retail, 10. Jim Whittaker partner, Squire Sanders Baker Tilly Baker Tilly 17 3. Edward Chary retail director, 7. Phil Anderson e-commerce & 11. David Parkin founder, High Street TV (Group) Limited marketing director, Damart TheBusinessDesk.com Round 4. Gerald Jennings portfolio 8. Richard J Donner chairman, The (discussion chairman) table director, Land Securities Shirt Company Ltd 12. Matthew Lewis partner and head of retail, Squire Sanders

8 7

9 1 2 3 4 5 6

10 11 12

The UK high street – a tale of two halves

HE changing face of the UK’s Land Securities, which owns the Trinity along with the arena which has also high streets is very much a Leeds scheme that opened in March opened, lets us sell on an international T and is the only major retail and leisure platform.” tale of two halves – on the one development in the UK to have done so hand large cities like Leeds are this year. Jim Whittaker, partner at Baker Tilly, doing well, particularly those emphasised the north/south divide, He said he was positive about the future saying that one in five North West units that have embraced the concept outlook for retail but only for selected are empty compared with less than one of building a destination, where locations because of structural changes in 10 in London. consumers indulge in shopping in the retail sector as a whole, adding that “retail has changed forever”. as part of a wider leisure offer. It is something Edward Ziff, chairman and chief executive of Town Centre He admitted that in the depths of the Securities, whose portfolio includes the But on the other side of the coin, smaller recession, Land Securities’ capital values Merrion Centre in Leeds, has seen. towns and cities continue to struggle. fell by 44%. “Not many businesses can That gap is widening, with no obvious manage such a seismic change in the “We do see that divide. We don’t own solution for those in distress. world,” he added. much in the south - values inside the The state of Yorkshire’s retail offer While larger city destinations like M25 are as though there has been no and how changing shopping habits and will do recession but in other areas it is hard are impacting on retailers was up well, that is not the case for second and work,” he said. for discussion at TheBusinessDesk. third tier towns across the country. com’s retail round table, held at Squire Jennings pronounced there was Sanders’ offices in Leeds. He said: “We collectively in Leeds can be “simply too much” retail space in the UK, confident. Trinity provides a platform whereas Ziff specified that it was the Gerald Jennings is portfolio director at for Leeds and the wider city region – it, wrong type of retail space. ➔

« Previous | Back to Contents | Next » Rupert Eastell, head of retail for Baker There has been a recognition by those Tilly, said recent business failures in retail sheds like B&Q and some meant that a lot of capacity had gone out supermarkets that they can achieve the of the market, making life somewhat same sales with 20% less space in store. easier for those that remain. Michael Bates, managing director of He too agreed that London was a clothing retailer Joe Browns and former different market, emphasising it was buying and marketing director at London alone and that other locations Morrisons, said some stores are now in the south were suffering the same getting other retailers in that space issues as northern towns. within their store – so a B&Q might introduce a food retailer, for example. He pointed to the Croydon Village Outlet, which opened in late September on the Matthew Lewis, partner and head of site of the iconic Allders department retail for Squire Sanders, said that was part of a strategy to make the stores store, and was forced to close hours more of a destination to keep people can afford that rent, you don’t get that after opening because it couldn’t cope there for longer. mix of shops.” with the volume of shoppers. “Supermarkets have also taken the view Ziff explained that the issue around The 550,000 sq ft store stocks well- that the high street is the place to be, rentals has come about because of the known and designer brands at reduced not making people drive out of town. way property is financed – that often prices. Retailers had previously seen 250 shops landlords are not allowed by their banks to offer lower rents because of Richard J Donner, chairman of The needed for a national presence but repayments that are owed on property Wakefield Shirt Company, said: “We with online they don’t need that much space. This leads to more pressure on that was over leveraged before the are in there. They have really cleaned landlords,” he added. recession. the shop up and now it works with a 20/30% discount on the theoretical Donner said empty shops were not It is often the second and third tier RRP. All the investment costs have been just down to overcapacity but to rental towns that will see more single transferred to the supplier, including prices too. property landlords on a high street, that staff, so they are a [multiple] landlord can’t afford to lower rents because they within one shop. “If rental prices are wrong then people have leveraged the property for use as won’t take it up. New entrants will come a pension, for example – resulting in a “Lots of people want brands they grew into the marketplace if the price is right,” Catch 22 situation. up with and can’t find. This has brought he said. “Landlords have really got to them all together under one roof. I think get that mix so there is everything for “Our portfolio is 98% let because we that’s a formula that will work.” everyone. If you only have people who have been realistic about rents. Those that need to go to the banks are in a real mess. You can ask for £20 a sq ft and never get it – if the right price you will. ‘Recent business failures meant that a lot of But not everybody has the ability to recognise that,” he said. capacity had gone out of the market, making life “We need a sustainable model from somewhat easier for those that remain.’ a property perspective but also for retailers because we are inextricably linked. That’s a worry for me when looking at new business. We are all tied together.”

He added that made it harder to strike a deal with the likes of good retailers such as Philip Green, because they “know the value of the business” they bring.

Prew Lumley, property partner for Squire Sanders, agreed that strong tenant occupiers are in a good position to drive difficult deals.

“Now is the time if you are a retailer to negotiate good terms that work for you but they also have to work for the landlord,” she said.

Jennings said that although retail landlord/tenant relationships are changing they still remain quite adversarial, adding that increasingly ➔

« Previous | Back to Contents | Next » a partnership approach is what’s needed Jennings echoed the fact that people in response to changes in consumer now shop less frequently but that when The silver shopper shopping habits. they do it is seen as a ‘day out’.

Edward Chary, retail director for High “Footfall is down across the UK but the Most seniors don’t rate the high Street TV, said changes to the high street amount of time they spend when out is street or shopping centres – and are mostly being driven by the way up,” he said. why would they when they are clearly not the target demographic. Many have migrated to another retail destination that does cater for ‘There will be a late surge because people know their tastes and requirements, with they can get things delivered the week before.’ shopping, leisure and food all offered under one roof: the garden centre.

Phil Anderson is e-commerce and consumers are changing their shopping Lumley added that the “arena effect” is marketing director for Bingley- habits, with more and more people having a positive impact on bricks and headquartered catalogue and online want to shop at their convenience. mortar retail in Leeds city centre. clothing retailer Damart, which caters for the senior market. “That’s either at their TV with a mobile “That is building on the extended hours – – which is what we do – or they do filling that gap between finishing work He said: “What fashion stores are that and decide they want to touch and at 5.30pm and the cinema at 8pm,” she targeting that age group? You feel. There is an element that requires a said. struggle to find that proposition. change in usage to make people stay on There is a constant focus on the the high street for longer,” he said. Jennings said: “Because we have younger generation, even though extended trading hours in the city we Whittaker and Lumley both said that we have an ageing population will see more people coming in the was about the consumer experience profile. evening. The food and beverage and and introducing more leisure and “My dad is 80 – he’s not got a garden hospitality. leisure offer will escalate with more people coming in for a meal and the so why does he visit a garden cinema and some shopping at the same centre? It’s not a garden centre but a time. It should be a good Christmas for great destination.” Leeds city centre.” Richard J Donner, chairman of As thoughts turned to Christmas – The Wakefield Shirt Company, the most critical time of year for any another traditional brand with a retailer – there was recognition that long history, agreed, adding that his consumers are doing their Christmas company sees the best returns in shopping later and later every year. garden centres. That’s partly because of improved logistics and express delivery for online Prew Lumley, property partner, orders and partly in the hope that the Squire Sanders, said: “What they early pre-Christmas sales of recent are running is a retail destination years will materialise once again. with a few plants on the side.”

Anderson said: “If you have got the web A lack of choice on the high for 24/7 shopping and express delivery street and the ease of using new then surely that will impact and people technology like tablets means the will get later and later every year.” ‘grey’ market increasingly doing its shopping online too. Simon Oxby, corporate sales manager for Berry’s Jewellers added: “There will Damart makes 10% of its sales online be a late surge because people know - but it’s a percentage that is rapidly they can get things delivered the week growing, according to Anderson. before Christmas. We now hold more in stock so we have it there for the He said: “That’s down to the age customer. It’s a stock cost for us but a profile of our customers but also we necessity.” think tablets will have a time bomb effect - I imagine it will be one of the Some thought the potential for industrial biggest retirement presents.” action around the privatisation of Royal Mail could impact on consumer Donner agreed, adding: “A product confidence in online orders being for old people is not really on the delivered in time – resulting in a high street at all. The web is better possible boost for bricks and mortar for them in terms of choice.” retailing.

« Previous | Back to Contents | Next »