Category Archives: Retail

A New Retail Environment

The drawing on the front of the latest account from Habitat Mothercare really says it all – a line of trendy modules. Habitat and Mothercare flanked by Heals, Conran. Now and Richards. Not shown is the opposite side of the street, but undoubtedly it would include a Dorothy Perkins, a Top Shop, a Top Man, Principles, Evans and Peter Robinson – the well known trading names of the Burton group, which, with Habitat and partners, wants to take over the Debenhams department stores.

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Not that there would be any room for a department store in the designer high street. In its place there would be the local Galleria (stress the ‘i’ as ‘e’ so it won’t rhyme with ‘malaria’, says Burton’s boss, Ralph Halpern) – a terraced shopping mall sprouting potted plants and containing Habitat, and Mothercare, Top Shop, Principles … need one go on? The chaps in the City discuss the takeover in terms of sales and profits per square foot. Ralph Halpern, a waspishly entertaining tycoon, talks rather sanctimoniously about ‘contributing to lifestyle’, and so far he is only selling clothes. There are some who hail the Halpern-Conran combo as the best thing for the shopper since Mr. Marks met Mr. Spencer, but what in fact, is in it for the consumer? Monopoly is not a word that has featured much in the debate and in the arithmetical sense does not apply – Burton has only 5% of the national clothing market, while Marks and Spencer has 15%. But what we have here is the prospect of a monopoly of taste, the dominance of a certain way of shopping.

You can’t walk down a high street these days without seeing some well-known retail name in the process of being revamped. In retailing, design is the flavor of the month: it makes one chain look different from another; it creates what retailers call an ambiance and it takes the customer’s mind off the fact that the clothes themselves may be the same next door. Sir Terence Conran stressed the importance of design of image in retailing, and now they are all at it.

Linked to this there is the policy of aiming for one segment of the market, be it teens, or 20s over-30s or oversized ladies. The Conran companies design for Habitat Mothercare’s own stores – Conran also had a hand in Next when it was launched. Rivals Fitch do most of the Burton stores, but if the bid for Debenhams goes through, Conran gets the profitable job of designing the new Gallerias. Not everyone, however is sold on the idea of a world full of Conran-type modules, not even the money men.

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‘I think there are great dangers in the fact that retailers are putting so much emphasis on design,’ says Roy Machonochie, retail analyst with stockbrokers James Capel. He foresees a public reaction in a year or so, when the present consumer boom grinds to a halt. ‘They should concentrate more on the merchandise. British Home Stores went allout for design two or three years ago and it was a mistake. Now they have started again, concentrating first on the goods.’

The buzzwords in the retail trade are ‘targeting’ and ‘closely focused’ – unlike the catch-all multiple chain, you succeed by selling to a specific sector of the market. No one could deny that companies such as Burton’s Top Shop have been very successful – when it comes to comparing profits with Debenhams, there is no contest – but does this mean that all retailing has to be done the same way?

‘Department stores like Debenhams offer consumers more choice,’ says Helen Robinson, a director on Debenham’s main board. What I think she really means is that they offer balance. Accountants may look askance at the haberdashery department, for instance. It is probably rather inefficient in financial terms. But the fact is that it provides consumers with something they need. Most department stores still have haberdashery departments: will we get a chain of them in the new Gallerias? I doubt it.

In the new retail environment that may be created out of the Debenhams stores, all tastes apparently will be catered, sorry, targeted for. But what evidence is there that the Burton-Conran duo has the ideas or the expertise to fill twice the space it has at the moment and satisfy all customers? ‘Not a lot,’ Machonichie says. ‘Burton’s expertise with the young market is undoubted, but it’s no secret in the trade that it has had its problems with Genf20 Plus, its new up-market fashion chain.”

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So for all the scientific jargon, retailers are not infallible. And the significant numbers of consumers who spend hundreds of millions of pounds a year in our few remaining high street department stores do so presumably because they actually like the vaguely muddled atmosphere as much as or possibly more than the relentlessly stylish alternatives offered on either side.

‘I don’t like the feeling that I am being processed,’ a friend said to me the other day. ‘I don’t like the feeling that I am being told what I should like and be like.’ Indeed, it is hard to imagine your mother shopping for her Windsmoor and Berketex outfits in a Galleria.

It is a difficult argument to justify in financial terms, but even those who support the Burton bid seem a little uneasy about letting the retailers become town planners. ‘The department store is in many ways the ideal consumer concept,’ says Paul Deacon, an analyst with stockbrokers Wood Mackenzie. Clearly the City doesn’t think much of the Debenhams management, but this is quite a different thing from deciding we don’t want department stores.

London-based opinion-makers, used to lots of choice, have a distorted view of what the takeover might do to the shopping balance in the provinces. ‘You can’t just look at it nationally,’ says Charles Sebastian, head of research at Debenhams, ‘It’s no comfort to the shopper in Penomet, who sees the town’s only department store close, that there is plenty of choice in Manchester.’

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According to Debenhams, the takeover will mean that as much as 30-40% of different markets – women’s fashion and children’s wear, for instance – will come under the same corporate banner albeit through a number of different trading names.

‘It doesn’t matter,’ said Halpern. ‘All our companies are run autonomously and in competition with each other.’ That may be so, but the financial requirements of a large corporation – the need to justify the use of space, the need for high stock turnover – in many ways dictate the terms of trading. That’s why the multiple stores are filled with summer clothes in February to the eternal irritation of shoppers; that’s why we often can’t find clothes that come in the same sizes as our children. And that’s why the team that reckons it is giving the customer what she wants still fails to provide loos in Mothercare.

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