“At this rate, you’ll only be writing about Amazon.”
That was the bleak summary of one retail observer I spoke to in the wake of a stormy start to the January slew of Christmas trading updates.
Hyperbolic and tongue-in-cheek the notion of a Jeff Bezos-controlled retail monopoly might have been, but the overall downbeat sentiment stands.
There is simply no getting away from the brutal dogfight that many retailers currently find themselves embroiled in, partly driven by the seemingly unstoppable onslaught of the etail Goliath.
Last week, Debenhams sharply downgraded its full-year profit forecast following “disappointing” festive sales, in what it described as a “volatile and highly competitive” market.
The department store group’s share price took a battering as a result, tumbling 15.2% to 30.1p on the day it posted a 2.6% slide in UK like-for-likes.
But Debenhams is far from alone.
House of Fraser has its own troubles – it has written to landlords in an effort to slash rents at as many as 30 of its stores, we understand.
And on Monday morning, Mothercare filed another eye-watering set of festive figures and, like Debs, also warned on profits after a 7.2% slump in like-for-like Christmas sales.
The three retailers have painted a far from optimistic picture of what the next 12 months might bring, off the back of a turbulent year.
Hard times
According to Deloitte, the number of retail administrations increased for the first time in five years during 2017, as 118 retailers of varying sizes bit the dust.
Jones Bootmaker, its former stablemate Brantano, Jaeger and the remnants of the old 99p Stores business were among those that collapsed within the first half of last year.
And as the clock ticked towards Christmas, furniture duo Multiyork and Feather & Black both drafted in administrators, although the bulk of the latter’s business was subsequently rescued by beds giant Hilding Anders and DFS bought the Multiyork brand and some shops.
“For real strugglers, a CVA, emergency refinancing or indeed administration are dark clouds looming ever larger on the horizon”
Amazon’s relentless rise and the growth of online more generally, coupled with increases in the national living wage, the apprenticeship levy and business rates, have left some retailers over-shopped and struggling to pay bills associated with sizeable store portfolios.
House of Fraser’s attempts to lower those costs are therefore far from unique.
The likes of Marks & Spencer and Next are actively pruning their estates to ensure their bricks-and-mortar operations remain profitable in a multichannel world.
But for real strugglers – as with Toys R Us – a CVA, emergency refinancing or indeed administration are dark clouds looming ever larger on the horizon.
Indeed, a number of property sources have suggested that 2018 will be “the year of the CVA” as a number of retailers fight to survive after worse-than-expected Christmas trading.
As far as the future of the high street is concerned, let’s hope that doesn’t stand for ‘Celebrate Victory, Amazon’.
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