Retail Week, today
Archive for November, 2009
Back to the real world after an extraordinary few days in China. You can read more about it in next week’s magazine, but from a personal level the trip was absolutely fascinating, one of the real highlights of my career as a journalist. The welcome from the AS Watson team from Hong Kong, along with our very entertaining guide David, was just incredible, and I also must thank Jenny and Zaria from Superdrug’s agency Z-PR who organised the trip for me and the very nice group of consumer journalists who were there too.
In my absence it was very amusing to see Sports Direct has appointed a policeman as its new chairman. Keith Hellawell apparently has experience of dealing with Serious Fraud Office inquiries, but that’s no basis on which to appoint a chairman for a major quoted retail business. Although it would be entertaining if the former copper started investigating Mike Ashley for crimes against retail…
The other big story of the week is the collapse of Borders into administration. A great shame for its staff, who I’ve always found as enthusiastic knowledgeable as any in retail, but sadly inevitable as to me the company seems to have been mismanaged from the day it arrived in the UK.
Let’s run through some of the highlights: running down the previously excellent Books etc chain; building a central distribution warehouse but putting it in Cornwall; putting out of town stores on retail parks in areas with no tradition of book-buying (see Gallions Reach in East London for a prime example); getting rid of a chief executive, replacing him with someone well-regarded in the book world, then bringing back the old guy…
The list goes on, and sadly when a company is in the sort of perpetual turmoil Borders has been in, then there’s only one thing that’s going to happen.
Will be interesting to see if anyone comes in to take the stores, especially the out of town ones as no-one else really operates that sort of store in the UK, probably with good reason because it’s a very American model.
One thing I’ve learnt during my brief stay in China is that the Chinese never do anything by halves. And so it was with the opening of AS Watson’s 500th Chinese store yesterday. Now I’ve been to a few store openings in my time, but this really was extraordinary.
It started on Monday night with a boat party on the Huangpu river. The Shaghai waterfront is an incredible sight at night, with all the buildings illuminated in a style reminiscent of the city’s model for economic development (and AS Watson’s home territory), Hong Kong. On board the boat, things took on a rather glamorous twist when a group of Chinese supermodels emerged for a photoshoot with AS Watson Group MD Dominic Lai.
Now Dominic, like many of his compatriots, isn’t the tallest of men, at about 5ft 2 I’d guess. So it was an unusual sight seeing him flanked by two models - one of them the winner of the Chinese equivalent of America’s Next Top Model - who were over 6ft in height. It’s unusual to see Chinese people of that height anyway, but that’s not to say they weren’t attractive, far from it.
That was followed by a very grand banquet at the city’s Peninsula Hotel, and then the formal store opening the next day. Now apparently store openings are a much bigger deal here than at home anyway, but this was an incredible affair, featuring live music, a formal ribbon cutting ceremony on the street outside, and a spectacular lion dancing display.
This involved four men in two lion costumes performing the most incredible acrobatics in front of the store, with moves I thought it would be impossible for one person to do, let alone two in a pantomime horse-style costume. Even for a hardened cynic like me it was genuinely impressive - I’ll try to post some pics tomorrow.
There was a serious side to it of course - AS Watson, which owns Superdrug at home, has massive ambitions for the Chinese market. There is clearly an appetite for western style retailing here - the Watsons store was a fairly standard 2,500 sq ft or so beauty and cosmetics-focussed store in a run of the mill mall, but the shoppers were pouring in as soon as the doors opened. And with the extraordinary economic growth here, the opportunity for retailers, not just local ones but from the west, is huge. I’ll be doing more on Watsons strategy and Shanghai generally in the magazine next week.
One of my intended stops on my trip to Shanghai was the Marks & Spencer store which opened last Autumn and appeared to be jinxed from the start according to the reports I read, with everything from problems getting the stock into the country to someone dying after falling down the escalators - here’s a particularly entertaining one from the Mail. I was particularly keen to pay a visit as all the speculation is that international is bound to play a much bigger part in M&S’s strategy when Marc Bolland takes charge.
As luck would have it, the store turned out to be immediately across the road from AS Watson’s 500th Chinese store launch - more on that tomorrow. I asked an American journalist who lives there and works for one of the big international papers how the M&S store was doing - better, she said, but not much better.
I went in at Midday today and customers were few and far between. The store trades over four floors, with a typical M&S general merchandise assortment, with lots of lingerie and new sub brand Indigo being heavily marketed, along with Christmas gift ranges. The store had well documented problems getting stock through customs from the word go, which may explain the exceptionally low density of stock on the fashion floors, with the rails spaced widely apart. Put that together with the standard white floored, yellow-escalatored M&S shopfit and you get a rather spartan experience.
The weirdest part of the store was food, where the assortment was frankly bizarre, although it did appear to have more customers than other areas of the shop. Great if you’re looking for biscuits, crisps or wine, or for frozen ready meals, including, really oddly, Chinese ones. I can only imagine they’ve been there since opening day. There were also dozens of bags of frozen Yorkshire puddings and a few pizzas. It was all spectacularly random.
The American journalist I spoke to said the food range appears to change from week to week depending on what happens to be on that week’s boat. Now to be fair I can’t imagine it’s easy to set up shop here, and obviously you can’t do fresh or chilled food given the fact there’s only one store. But that hasn’t held M&S up in Hong Kong, where it is well-established, and I’m sure it will get Shanghai right in the end. At the moment though it seems caught in the middle - not luxury enough for the city’s super-rich, but way too expensive for the city’s teeming masses - and there probably aren’t enough UK expats to sustain a store this size.
Apologies for using the name of an appalling 80s film starring Madonna in a blog post, but I am in said Chinese city and just got the surprise of my life in a car heading back to the hotel. We were crossing a four-lane bridge over the river - only problem was it was a one way street, and we were going the wrong way. Cue terrifying hurtling between buses and trucks in the style of Indiana Jones. “It’s because there’s a lot of construction going on and the older drivers don’t know which are the one way streets,” said our unruffled guide.
You could forgive him as Shanghai does indeed appear to be the world’s biggest building site, which makes even the simple task of walking down the street fraught with danger. I’m here as a guest of global health and beauty retailer AS Watson, which is holding a ceremony marking the opening of its 500th Chinese store tomorrow. AS Watson is best known in the UK for owning Superdrug, but its a global business with stores across Europe as well as in its Asian homeland, and the Hong Kong-based company has big plans for mainland China.
The potential is certainly here. It’s chaotic but there’s a buzz about the place which is utterly infectious, and the retail scene here is growing exponentially. The luxury brands are particularly conspicuous, but so is Zara and also all the big fast food operations. The explosion in western consumerism is so obvious that you forget you’re in a Communist country, that is until you try to do something like log on to Twitter and you find it’s blocked.
Wow, what a day yesterday was - we had to tear up a lot of our plans for both Retail Week and Drapers, which both go to press on a Wednesday, and start over again. I love press days like that - the last one in a similar vein was when Woolies went into administration a year ago - it gives me an excuse to shout cliches like “hold the front page”, swear a lot and run around the office excitedly.
Marc Bolland’s appointment as M&S chief exec seems to have gone down very well with the City, with M&S’s share price soaring by about as much as Morrisons fell. The announcement appears to have taken everyone in Bradford by surprise - apparently it wasn’t due until 430 but was forced out earlier after my university contemporary Mark Kleinman of Sky picked it up. He’s on fire at the moment. Apparently on the Morrisons update call just now the chairman Ian Gibson demanded there were no questions about Bolland, unsuccessfully of course. Steve Hawkes of the Sun asked Bolland if he was wearing an M&S suit - priceless.
A lot of other stuff going on yesterday - as luck would have it I interviewed Stuart Rose at the Drapers Summit, where he said the big thing for Bolland is going to be stepping up the pace of change so that initiatives like branded food don’t take five years to implement. He also urged the audience to vote for the “ccccccomprehensive” party. Can’t imagine which one he was referring to. Amusingly while I was interviewing Rose the ever-persistent Kleinman had apparently arrived at M&S head office and was camped out there waiting for Stuart to emerge.
Then swung by the Arcadia Spring/Summer launch. Glamorous as ever with a rather jowly looking Boy George as special guest. Philip Green and Ian Grabiner were on garrulous form as ever, and Philip was off to a charity dinner with Stuart later in the evening. Someone had apparently paid £10k to have dinner with the two of them, and what a night to do it on - would have loved to be a fly on the wall.
Then finally off to the Drapers awards at the Grosvenor, lots of big names there and a lifetime achievement award for New Look founder Tom Singh. He has a reputation for being rather uncommunicative but even smiled on stage and was very warm and engaging. It was a great moment and a hugely deserved accolade, as the generous applause and ovation he received showed.
Well Marc Bolland was definitely a name that was growing in currency for the M&S job over the past few weeks, although he was playing the talk down in a big way when I saw him last a couple of weeks ago.
We should have listened to mystic Creevy: see this piece from July
Interestingly the fashion people who the team are calling from the office seem to have never heard of him, and I expect there will be some criticism from the City (especially Tony Shiret no doubt), but the share price was up 7% last time I looked so on the whole the response should be pretty positive.
I think he’s a good choice for the job. He does lack fashion experience but he lacked food experience when he came to Morrisons and did fine. He knows about managing a big, much-loved brand and that’s what being the M&S chief executive is all about. Interestingly though he’s no fan of multichannel either, which is a big thing for M&S, although to be fair that was more driven by not wanting Morrisons to try to run before it could walk.
Will be interesting to see who Morrisons get in, he has been absolutely the driver of Morrisons turnaround and will be a massive act to follow. I see Rich has already put Kate Swann forward - please no!
We were thinking in the office earlier about words that only retailers use. Assortment, garment, apparel are three. Assortment is my favourite, used particularly extensively by John Lewis people.
Can anyone think of any others?
In Yorkshire over the weekend at a wedding and visiting sister at uni, and inevitably I managed to engineer an hour to spend walking the shops of central Leeds before catching the train home. Within a very small area Leeds manages to show off both the best and worst in UK retail.
The best is the Victoria Quarter, the network of arcades which is home to Harvey Nichols and a collection of other upmarket brands. Walk in there on a wintry afternoon as it’s getting dark, and it feels not only incredibly festive but also as though the recession never hapenned. It was packed yesterday and I couldn’t see any empty shops; proof perhaps that if you create the right retail environment shoppers will still come.
The Harvey Nics in Leeds is to me the best of the stores the luxury London department stores have opened in the regions. It suffers a bit from low ceilings and lack of room to circulate, but that doesn’t seem to matter as it has a buzz and an energy about it which is really refereshing. You can’t say that about some of the other stores HN, and indeed Selfridges, have opened.
The city centre’s mass market retail offer is in a bad way though. It boasts a collection of very sub-optimal shopping centres like the Leeds Shopping Plaza, the Merrion Centre and the St John’s Centre, packed with low-grade value stores, all of them really badly configured. Weirdest of all is the old Headrow Centre, now renamed as The Core, where the redevelopment appears to be complete but only about three stores - Sports Direct, HMV and New Look, oddly on its own on the first floor - appear to be open. Anyone know what’s going on there?
We don’t really need more shopping centres in the UK, but Leeds is the exception, so that retailers can get their hands on decent sized stores with the right floorplates. Both Land Securities and Hammerson have schemes on the block, with the LandSec scheme having marginally the better site - but for the good of the city, work needs to start sooner rather than later.
Until yesterday all I knew about Hanger Lane was that it had a gyratory system, thanks to the fact it always gets mentioned on traffic reports. It is, however, also the home of River Island, and I went for a visit yesterday to see chief executive Richard Bradbury and their newly modernised head office.
Hanger Lane station is in the middle of said gyratory system and has about seven exits. Having found the right one and gone through about six subways, past the builders merchants and through the car park, you eventually make it to Chelsea House (River Island was of course Chelsea Girl in a previous incarnation.)
And while the surroundings are unpromising and building looks nothing special from the outside, on the inside it’s been modernised superbly, with the old warehouse area converted to offices giving a wonderful feeling of height and space, and lots of brickwork put in making it feel not unlike one of River’s stores. There’s product hanging everywhere, not in an untidy way but in a busy way which just helped contribute to the buzz of the place. It just looks like a really nice place to work.
As I was at rather more formal meetings earlier in the day yesterday, I was stupidly attired like a merchant banker in pink shirt and tie. I think if I’d been a martian walking through the River Island office - which incidentally has a male to female ratio of about 1 to 100, and like all fashion retailers they are all very beautiful - I’d have got fewer funny looks.
We had the shortlisting morning for the Oracle Retail Week Awards today, which is always a lot of fun. We get a lot of entries in and so the shortlisting experts play a vital role in narrowing the list down to the best entries for the retailer judging panel in February. The entries look very strong this year and nearly all the main retailers were represented - we’ll be announcing the shortlist in next Friday’s magazine.
Finally you’ll have noticed the subscription barrier has now kicked in on the news site - any problems do please email the customer service team at firstname.lastname@example.org (including your last name and postcode) or call 0207 728 4651.
Apologies for not blogging yesterday, crazy day as we gear up to the subs barrier launching tomorrow, which is also the shortlisting day for the RW Awards. Today’s pretty hectic too - I’m out this afternoon with River Island CEO Richard Bradbury, seeing his new HQ in the rather unglamorous Hanger Lane, and this morning I was at the Ivy for the third in the series of retailer breakfasts in aid of the Textile Industry Children’s Trust.
I’ve always liked TICT chairman David Carter-Johnson, best known until recently for being CEO of Adams, and I like him even more since he introduced me as the “ever-suave” editor of Retail Week this morning. I have a stinking cold today and actually feel anything but suave but the thought was nice. We were talking about private equity with Debenhams chairman and serial dealmaker John Lovering, and Peacocks very likeable boss Richard Kirk, and had a really good discussion.
As always it was all off-record but there was a healthy debate about the merits of private equity, and about the potential for exits next year. Lots of PE-backed retailers, led by New Look and Pets at Home, are gearing up to float next year, but while they should succeed as long as consumer spending holds up, it may be that the valuations managements attach to some retailers turn out to be ambitious when they come to exit.
I was going to post yesterday on this article from the Guardian about Waterstones from Tuesday. I have to be a bit careful seeing as we’re half-owned by the Guardian but I’m no fan of the liberal hypocrisy on which it is built - it always amused me that its leading leftie columnist sent her daughter to the same private school in south London as me. Do as I say, not as I do. The Waterstones assualt is the worst example I’ve seen to date of the book world not realising that book retailers operate in the real world.
The fact is that Waterstones is the last show in town. The Guardian may well sneer - as it did in a picture used to illustrate the print version of the feature - at the sight of loads of shoppers at Lakeside queueing up to get a signed copy of Katie Price’s book, but that’s what Lakeside book shoppers want to buy. That Waterstones retains any presence as a serious high street bookseller is an achievement in iteself - look what’s happening to Borders - and if the book world had any sense they’d get behind it. Otherwise WH Smith, Amazon and Tesco will get the mass market on a plate, and speciality bookselling on the high street will die.