Enough already! No more shops

Opening more branches is no shortcut to enhanced profits. Improve what’s there. 

Zara UK has posted a substantial rise in profits on the back of a very small increase in sales and a whopping cutback on capital expenditure. Put another way, it opened no new stores last year and with the exception of a store in Stratford, new openings are looking thin on the ground this year.

This, apparently, leaves it with 65 shops in this country currently – far fewer than many other chains, in spite of the brand’s seeming ubiquity. The secret may just be that the retailer is now in almost all the places that you need to be in in order to be viewed as having national coverage. And, we are informed, when the Stratford store does open it will house a new look Zara, although how radically different this will be remains to be seen – this is a company that takes few risks and where store design details are finely honed…in a good way.

It also brings sharply into focus the obvious question. What’s the point in opening more shops? To judge by the ever-increasing availability of sites, it would seem that adding more options to what’s already there is little short of folly.

Perhaps Ikea has it right in London and suburbs. It has outlets in Wembley (around £2m a week), Edmonton (£1.6m a week), Croydon (unknown, although probably the same as Brent Cross) and Lakeside (no idea, but big). Tot this up and you have a business that is worth something close to £400m from four huge shops – and everybody travels to visit them.

Unless you are very, very good, endless duplication can only result in cannibalizing sales and if you are that perfect, then shoppers will beat a path to your door no matter how few branches you may have. The answer (in the current climate) therefore would seem to be to modernize, update, revamp and improve what you already have, rather than scrambling to add to the sum of what’s already there.

This is what Topshop has done with its Oxford Circus flagship, Ikea has done in Croydon and Zara seems to be engaged in doing at the moment. And surely there are sufficient supermarkets to ensure that we can all keep the hunger pangs at bay (and the non-food cravings, come to that).

This may not be what many landlords want to hear, but in large manner, they are the architects of their own misfortune. At a moment when we are all being urged to tighten our belts, raising rents has to be a gravity-defying strategy.