April

IN THE NEWS
Stefano Pessina and KKR acquired Alliance Boots for £11.1 billion, in the UK’s biggest private equity deal to date. Rival bidder Terra Firma’s interest forced KKR to up its offer to£11.39p – 99p more than planned.

Jessops’ shares plummeted after the camera specialist revealed catastrophic trading and launched a comprehensive business review.

Debenhams confirmed it was going to spend as much as£70 million revamping stores to halt falling sales, as revealed by Retail Week. Later in April its shares took a hammering as it announced its third profit warning since returning to the stock exchange in 2006.

One by one, all of the private equity houses involved in the consortium’s bid for Sainsbury’s pulled out of the deal, after the Sainsbury’s family refused to consider an offer of less than 600p a share.

Primark’s new flagship store was responsible for bedlam on Oxford Street as hundreds of shoppers jostled their way in.

Carphone Warehouse announced that it would spend£12 million rolling out its Best Buy Mobile stores and developing its Geek Squad IT support service.

Tesco revealed record pre-tax profits, up 20.3 per cent to£2.6 billion. Group sales soared to£47.6 billion and the profit equated to roughly£5,000 a minute over the financial year.

DSGi was thought to be in line to take a hit of about£10 million following a major fraud at its online French business Fotovista.

Sainsbury’s attempted to mirror the success of Tesco’s Clubcard programme through a data-sharing deal with Nectar, which would see data of Sainsbury’s customers’ purchases married up with data that Nectar holds on their preferences and activity with Nectar partners.

Entrepreneur Harold Tillman planned to resurrect department store chain Allders, to cash in on the grey pound.

Marks & Spencer underwent a major management shake-up. As well as poaching Steve Esom from Waitrose, Carl Leaver’s appointment as international director hinted at large-scale international expansion.

Irish toy retailer Smyths Toys signed for its first store in England at Rugby Estates’ Grove Farm Retail Park at Chadwell Heath, near Romford.

STORE OF THE MONTH

Primark, Oxford Street
April was the second month in a row during which a store opening garnered headlines. Primark’s Oxford Street flagship took a discount formula and gave it the appearance of a good-looking, mid-market department store.

From the central escalator well with its recessed blue neon lights, to the lingerie department that is separated from the rest of the shop by glass screens with black, baroque swirly transfers, this was a shop that demanded to be taken seriously. Even the cash desks, built to accommodate the masses, looked slick, with black tills set against an off-white background. The store looked fantastic the evening before it opened and has never done so since, thanks to the daily mobs that storm its doors.

ON THE MOVE
Habitat UK country manager Mark Hislop left after three years with the retailer.

Charlie Mayfield assumed the role of John Lewis Partnership chairman, with Andy Street appointed as managing director and Mark Price recruited as managing director of Waitrose.

Graham Frost was appointed chairman of Speciality Retail Group.

John Douglass joined Argos as retail operations director, replacing Ben Idun, who had held the position for four years.

Retailers to pay the price

The retail technology theme that has run throughout 2007 is payment. In April, payment security dominated the national press, after the full extent of the data loss debacle at TK Maxx was revealed.

Any retailer that had ignored the Payment Card Industry Data Security Standard (PCIDSS) suddenly realised what all the fuss was about. The TK Maxx headlines got board members interested in what had been seen as a problem purely for the IT department.

While PCIDSS experts still believe that few retailers will be fully compliant going into 2008, most large retailers have embarked on a process to get and keep them there. Other encouraging signs came with the news that Tesco was among the retailers that had been signed up to the Payment Card Industry Security Standards Council’s advisory board.

April was also the month that Google launched an alternative to PayPal in the UK, with its online payment service Google Checkout, promising “two clicks” checkout and cheap payment processing. By early May, Barclaycard prepared to sign up retailers to accept its contactless payment card.

Visa upped the pressure on retailers to adopt contactless terminals and sponsored independent research that showed it was cheaper for retailers to process card payments than to handle cash.

However, retailers were sceptical. In late October, a British Retail Consortium Cost of Collection survey showed that cash is still the most popular payment method, accounting for£32 of every£100 spent in stores. The BRC claims that, on average, a£20 cash transaction costs a retailer less than 4p. A£20 credit card transaction costs at least 17p.

By December, O2 had pushed the pace of payment technology further, announcing a trial of its O2 Wallet service, which used technology that is in contactless payment cards within mobile phones.

The chicken and egg problem continues for these new payment methods. Retailers say they will adopt them if there is customer demand, but customers won’t be persuaded to change payment cards/phones in large numbers unless they can use them in lots of stores.