Real-life retail: Tesco/Booker, and US appetite for UK stores

Americans warm to UK retail stocks

Peel Hunt analysts Jonathan Pritchard and John Stevenson are just back from a trip to the States, where they were pleasantly surprised at investor interest in UK retail stocks.

The Peel Hunt team, who are less bearish on British retail than some of their counterparts, jokingly entitled their presentation ‘No one likes us’ – but found that actually people did.

They report: “The general feeling was that the derating of the sector now prices in many macro concerns. Not quite ‘Brexit Schmexit’, but a realisation the consumer isn’t about to completely disintegrate and that this creates investment opportunities.”

“Over the past few years, US investors have increasingly featured on British retailers’ share registers. About 20% of M&S, for instance, held by Americans”

Over the past few years, US investors have increasingly featured on British retailers’ share registers. About 20% of M&S, for instance, is held by Americans - a typical proportion for a FTSE 100 company.

Among retailers to pique the interest of investors that Peel Hunt met was JD Sports. The retailer’s chairman Peter Cowgill “clearly made a big and positive impression” during a roadshow earlier this year, the analysts said.

Tomorrow’s results from JD should provide further evidence that it is doing well.

Tesco/Booker market share

Ahead of the inevitable consideration of Tesco’s proposed tie-up with Booker by the competition authorities, perhaps leading to store disposals, an article in The Telegraph at the weekend considered the pair’s portfolio crossover.

It looked, as an example, at the effect a deal would have in the cathedral city of Peterborough. The conclusion was that, with a combined total of 37 out of 117 food shops there, the enlarged business would control “31% of the local market”.

What struck me was that’s actually the same as Tesco controlled on its own when it was at the height of its prowess.

The latest Kantar data showed a Tesco market share of 27.6%.

Who says there’s no competition in food retail?

Service that really stands out

Retailers are used to moans about customer service, so excellent service is worth celebrating and learning from.

My mobile company, EE, rang me the other day to tell me they’d noticed a slowdown in my wifi speed. I hadn’t and because it wasn’t a convenient time to speak they left a number for me to call on if I noticed a problem.

Over the weekend, I did – my service seemed to have slowed to snail’s pace. When I rang, EE was quickly able to do some diagnostics and address the problem.

It was impressive to have had a problem proactively identified and resolved so quickly.

As retailers increasingly push into services on the back of the changes digital technology is heralding in everyday life, EE provided a brilliant standard to aspire to.