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The news from the High Street is mixed, and a survey out this week brings worrisome news. But before you give up on the High Street altogether I have news of a more encouraging prediction on the future of retail from someone who should know what he is talking about.


What do critics know? The day the John Lewis advert was launched to an expectant public, the TV critics began reviewing Christmas ads. One critic slated the John Lewis ad and what he called the whiny tone of Lily Allen. Of course these things are subjective, but it seems to me that the views of critics rarely correspond with the views of the majority of people. On this occasion at least, the critic was proven spectacularly wrong. Not only was the tune one of the big chart successes of the Christmas season; not only, or so it appeared to me, did it get more air play than Slade and the Pogues put together, but it was invariably introduced by radio presenters as the John Lewis song. In fact I only saw the ad three times, I think, but I was reminded of it several times a day, however, every time I heard the dulcet tones of Lily Allen. It was one of those rare occasions when a paid for ad creates PR worth far more than the paid for air time.

From an investor’s point of view, it’s all a bit maddening. I decided John Lewis was a good company to invest in about 15 years ago, and ever since I have cursed its policy of being wholly owned by employees. Good for John Lewis, good for its staff, and a good lesson on how to run a business, but not so good for those wanting to invest.

I think we can learn two lessons from John Lewis. Firstly, when employees have shares in the company it works; indeed such a policy can pay off big time. I like companies that do that. Secondly, it goes to show that you don’t need to be a highly paid analyst, with access to all kinds of information the public can’t easily acquire, you can get a feel for how good a company is by viewing its public image. As for investing in retail, I reckon there is no substitute for visiting a store and looking around. I would much rather trust the views of my wife about which shops are doing well, than those of any analyst.

Not that the Baxter family did all its shopping at John Lewis – if only we could afford to – but we did manage to pull off the rare coup of buying a present in the store for a rarely satisfied relative, which elicited a big grin as she pulled off the wrapping paper.

I am sure you did the same. I ordered several products online and collected them in store. Stores that are learning to marry online and retail shopping are clearly stores to watch, and oh drat, John Lewis seems to ahead of the field in this respect too.

I note that Next had another good one, as did Ryman Robert Dyas.

I thought Debenhams seemed all right this Christmas. Certainly its goods seemed to be keenly priced in its seemingly never ending sale. But then again, it appears that the price Debenhams paid for competitive pricing was not having enough margin.

I suspect it was another good one for Dixons. Any shop that is big on tablets and now, wearable technology, will do well.

M&S did not do as well, and I am not surprised. I did some post-Christmas shopping there because I had no choice. I got an M&S voucher as a pressie, and I have to say I was not impressed. Food was as good as ever, but the clothes! Here is some advice for M&S’s buyers: take a look at Next. I note that Citi, one of M&S’s two brokers, has cut its sales forecast for the store. Well, my experience in trying to get rid of my voucher confirms what Citi is saying.

One of the first reports on Christmas sales has come courtesy of accountancy and advisory firm BDO. Its High Street Sales Tracker show overall like-for-like sales among mid-market retailers in December were down 2.2 per cent year on year. There was some good news in the BDO report, which had Homeware sales increasing 8 per cent year on year. Alas BDO had fashion sales down 4.6 per cent. It said “poor weather and savvy bargain hunters…[hit] the sector particularly hard.”

BDP concluded by saying: “The big rise in the last week of December when we started to see discounting shows that consumers are prepared to hold out until the last minute to pick up a bargain. This suggests that the January sales will encourage shoppers to part with their hard earned cash but there is little room for complacency. January is a cruel month for the high street as retailers are usually sitting on high cash holdings and low stock levels so they are particularly exposed at this time of year.”

But here is my cheer. IBM’s vice president of innovation, Bernie Meyerson, reckons local shopping will make a return. He reckons local retailers will combine with the internet, so that your local store will know in advance what products you want. He said: “In five years’ time local stores will merge digital with the instant gratification of physical retail to offer a more immersive and personalised shopping experience and make same-day delivery a snap.” See: Our complete interview with IBM’s Bernie Meyerson on the top five predictions for the next five years 

See it this way. In the world of business, network tools such as linkedIn, Google Hangout, or even good old email have not removed the need for face to face meetings. What they have done is made is easier to find people, get to know them, and then meet them. If IBM is right, it will be like that with retail too.

 

These views and comments are those of the author alone and do not necessarily reflect the view of The Share Centre, its officers and employees


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