Quarter Day Rent Due More Carnage on the High Street

Discussion in 'Current Affairs, News and Analysis' started by geezer466, Jun 26, 2013.

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  1. If businesses are short-sighted enough to not plan ahead for expenses that they know are coming then they deserve to fold. I have sympathy for businesses that go under due to low sales or unexpected supply problems, for example, but not planning ahead for a scheduled rent payment? Stupidity.
     
  2. Such is the leveraged world of commerce we live in today.........

    Firms like this borrow to the hilt expecting to pay it down when the sales come through.....
    Most firms do it and sometimes it works well as the likes of Marks and Sparks, Tesco and Sainsbury's can testify form their early days.

    There is a huge flaw in this approach though as I am sure you have noticed.
     
  3. Wordsmith

    Wordsmith LE Book Reviewer

    Or failure to adapt to changing times. Business are increasingly going multichannel and the ones that are late doing so are really suffering. The overall volume of retail has not gone up much, but there has been a switch from 'brick and mortar' to internet sales. The most extreme example is in office supplies with people like Staples doing 45% of their business via their website these days.

    Modelzone for example (toy trains, etc), are in a sector exposed to ruthless competition. A quick glance at their website shows them selling bog standard products at not particularly attractive prices and with little to differentiate then from the competition. With 47 stores (and associated costs) they are always going to suffer at the hands of 'pure play' internet competitors.

    I would suggest the problem is not planning ahead for rent payments, but failure to plan ahead for the changing retail landscape.

    Wordsmith
     
    • Like Like x 1
  4. That's definitely the cause of the so-called death of the High Street. When Jessops went bust and re-opened I was quite surprised to see that they hadn't changed their pricing or business model. They'll be down the pan soon. I also suspect Argos and HMV are on dodgy ground - I was in HMV the other day and I can see that they're trying to diversify slightly but their pricing hasn't changed.
     
  5. Argos have a viable business model and will survive.

    A good website where you can find what you want quickly and where it is in stock near you. Reserve online collect within the hour.

    But it is the website which is making it work for them.

    HMV is dead firm walking.
     
  6. Wordsmith

    Wordsmith LE Book Reviewer

    Its a Catch 22 - if you're in trouble, it costs money to get out of trouble. But you don't have the money to spend.

    I can across an interesting statistic recently. If you're selling over the internet you need good product descriptions because that's what the customer reads in order to decide to buy the product. To enter a single product description takes about 40 minutes - meaning that one person can enter about 4,000 a year. It's not a numpty job, so assume you'll pay £30K a year per head. If you've got 200,000 products on your website, you've got one off wages bill of £1.5M to bring it up to standard, then recurring costs of (say) £120,000 a year.

    And that's only one thing that needs to be corrected in a failing business.

    If you're in already in trouble, the money is not there. In order for a retailer gone into administration to survive, you need a venture capitalist willing to plough quite a million into the business in order to get a return a few years later. They're in short supply.

    Which may be the problem here. Its no good buying companies in administration unless you've got a clear vision on how to change the business and deep enough pockets to do it.

    Wordsmith
     
  7. TBH. The price in high street shops is always going to be higher as those shops have much more overheads on top of the cost of items that have fixed sale prices set by the supplier....
     
  8. Wordsmith

    Wordsmith LE Book Reviewer

    But it can be dealt with. Look at the John Lewis website:

    With the caveat.

    So, if you shop at John Lewis, you can have their service - always a good selling point. If you buy from an on-line retailer, the service you get (or don't get) is your problem.

    Wordsmith
     
  9. And the banks????
     
  10. mercurydancer

    mercurydancer LE Book Reviewer

    A component in killing the High Street is councils charging for parking. Its almost as if the councils are doing everything then can to prevent people from actually going to the town centre. Like many others, I need to visit Boots for my prescription. I visit Boots in an out of town shopping centre. Whilst I am there I may visit Currys and other shops. I cannot think of a reason why I should pay to park and go and get my prescription in a town centre when I can get easily into an out of town shopping complex.
     
  11. They haven't gone under due to a planning failure. They've gone under because they've run out of cash and can't borrow, and that could be down to any number of reasons.

    The rent payment was simply the straw that broke the camel's back.