HIGH STREET INSIGHT UPDATE APRIL 2013

Improvement on high streets boosts shopper numbers

Footfall in February was 0.8% higher than a year ago, an improvement on the 4.6% decline in January. These figures support the recent uplift in retail sales reported by the BRC-KPMG Retail Sales Monitor, where total sales growth reached a three year high. Footfall improved on high streets with a 2.7% increase compared with a year earlier, the strongest growth since December 2011. Footfall in shopping centres (-1.6%) and out-of-town (-1.5%) locations fell; however, this is a significant improvement on January's figures. Helen Dickinson, British Retail Consortium Director General, said: "This is a respectable result, which tallies with the signs of gradual improvement shown in our February sales figures. Compared against the widespread regional variations seen in January, it's really encouraging to see improvements in footfall across the board. However, the link between the number of shops and shoppers is plain to see; the lowest footfall was in the North and Yorkshire, which has England's highest vacancy rate.

Jessops reopens six stores under new owner Peter Jones of Dragons' Den
Jones, who will take on the roles of chairman and chief executive, has launched six stores, including the Oxford Street flagship. Up to 30 more stores are set to open throughout April, following a 4m investment. Jones rescued Jessops out of administration last month after it collapsed in January, closing 187 stores. The retailer had struggled to trade due to the growing popularity of camera phones and a tough economy. He believes the high street is fighting back, following the buyout of Blockbuster and British Retail Consortium figures which showed a 2.7% year-on-year increase in shoppers on the high street in February 2013.

Argos like-for-likes rise 5.2% as tablets drive sales

Argos like-for-like sales jumped 5.2% in the eight weeks to March 2, driven by an increased demand in white goods and core electricals, offsetting weaker trading in homewares. Total sales at Argos increased 4.3% to 501m. Two stores closed in the period, reducing the store portfolio to 737. Total internet sales were up and now account for 43% of Argos total sales, up from 40% a year ago. Mobile sales soared 117%. At Argos stablemate Homebase, like-for-likes fell 1.5% while total sales declined 2.8% to 191m. One store closed in the period taking the DIY retailers store count to 336.

Discount retailer, B&M Bargains, has released double-digit growth in both sales and profits for 2012
B&M Bargains posted an increase of 31.5% to 937.2m in the full year to 31 December 2012, while Pre-tax profits grew by 43% to 90.6m. It also extended its portfolio from 271 to a reported 324 in the same period. B&M has consistently outperformed the market with sales growth of 17.4% reported in 2011 and 43% reported in 2010.

John Lewis sales return to growth with 13.5% rise

Department store John Lewis saw sales growth return in March thanks to a strong performance across bricks & mortar stores and online as total sales rose 13.5 per cent, it has been announced. Although heavy snow impacted sales patterns in the week to March 23rd 2013, with fashion struggling as demand for winter warmers continued, the electricals directorate drove growth with sales rising 22 per cent on the same period last year.

Boots launches evening ready meals

Boots is launching its first range of healthy, ready meals under its lunchtime Shapers brand in 100 Boots stores throughout London and across major commuter sites. The Shapers evening meal selection offers 27 new options with prices from 1.25 including main meals, warm salads, vegetable accompaniments and desserts. The range follows the lunchtime format whereby customers can pick up a main meal and side or dessert for 500 calories or less. The extension to the Shapers lunchtime brand follows a trial released in August last year in partnership with Musgrave to deliver a convenience food offer within a number of its stores.

HIGH STREET INSIGHT UPDATE APRIL 2013

HMV rescued by Hilco in deal that protects 2,500 jobs
HMV has been rescued by restructuring specialist Hilco in a 50m deal that saves 2,500 jobs and 141 shops. HMV collapsed into administration in January following a slump in sales as the 92-year-old entertainment retailer struggled to compete with online rivals and supermarkets. Record labels and film studios were desperate for HMV to survive in order to maintain a presence on the high street and Hilco has long been seen as a potential saviour. Hilco has bought 141 stores, 25 of which had been earmarked for closure by the administrators. The deal includes nine Fopp stores also owned by HMV and Hilco is also exploring plans to reestablishing HMV in Ireland. Accounts for the six months to October 27 show that HMV made a pre-tax loss of 37.3m on sales of 286.6m.

WH Smith brings back DVDs after HMV failure

Some of the companys stores have started selling chart CDs and DVDs again, such as the latest James Bond film Skyfall, after withdrawing from the market in the last few years. Kate Swann had dramatically reduced WH Smiths exposure to the entertainment sector in one of the most high-profile strategic moves of her decade-long tenure as chief executive. However, the retailer is understood to have restored CDs and DVDs to some WH Smith stores after the closure of 107 HMV sites since Christmas left many high streets and travel destinations in the UK without any entertainment retailers. Ms Swann pulled WH Smith out of the entertainment market because it is low margin and highly competitive due to the rise of online rivals. Her decisions at WH Smith have helped the retailer to emerge as one of the most resilient businesses on the high street, despite sales falling sharply. In the 20 weeks to January 20, WH Smith reported a 5pc drop in like-for-like high street sales and a 4pc decline in its travel stores at airports, railway stations and service stations.

High Street 'loses one shop every hour'

Britain's high streets lost almost one shop every hour last year, according to research, and the flood of closures is predicted to worsen. Analysis by PricewaterhouseCoopers and the Local Data Company found that major retailers in Britain closed an average of 20 stores a day through 2012. The number of shop closures by high street chains was ten times the number on the previous year, with the survey finding that 1,779 stores were closed last year compared with 174 in 2011. Matthew Hopkinson, director of The Local Data Company, said: "We can expect to see this trend continue and indeed accelerate in 2013 as more leases come up for renewal along with the ever increasing demands from consumers for space that delivers an experience good enough to pull them away from their technology devices." "The end of 2012 and the beginning of 2013 has seen the most dramatic period on record as companies controlling more than 1,400 shops went into administration," he added.

SO WHAT SHOULD WE DO? 1. The first quarter of 2013 has seen mixed fortunes for the UK high street. A number of high profile chains have been forced into administration and the number of vacant premises is at an all-time high. There have been a handful of winners however (particularly those selling electrical and discount goods) and footfall is beginning to trend upwards. The recent resuscitation of both HMV and Jessops is evidence of a renewed confidence in the high streets future, though most analysts would concede that it will need to change substantially to survive long-term. Showrooming is becoming more commonplace, with consumers keen to try before they buy, though choosing to convert the sale itself through an online channel for a reduced price. As a result, we need to help our clients leverage the benefits of physical shopping (immediate availability of goods etc.) in order to complete with the etailers. There is an opportunity to support both very high and very low value goods, with some consumers still unwilling to make large purchases over the internet and with small ticket items thought too low value to warrant the effort of searching for cheaper price points online when they can just be picked up in store.