Fash­ion chains’ owner cuts hun­dreds of high street jobs

On­line shop­ping, rising busi­ness rates and chang­ing con­sumer habits have rav­aged re­tail­ers across the land. Ben Woods re­ports from Swansea on how traders are learn­ing to adapt

The Sunday Telegraph - Money & Business - - Business - By Jack Tor­rance

THE owner of high street fash­ion chains Mon­soon and Ac­ces­sorize scrapped hun­dreds of jobs last year as it shut­tered stores in a des­per­ate bid to get back into the black.

Drill­great Lim­ited’s head­count plunged 12pc to 2,737 in the year to Aug 26, 2017 as it closed 18 UK stores and geared up to shut more this year, Com­pa­nies House records show.

The re­tailer, still ma­jor­ity owned by Peter Si­mon, its founder, said it had seen an ac­cel­er­a­tion in the num­ber of shop­pers buy­ing on­line in­stead of go­ing at shops. The high street en­vi­ron­ment was “prob­a­bly the most dif­fi­cult in Mon­soon’s 45-year his­tory”, it said.

The axe fell hard­est on the two chains’ stores, where more than 250

‘In com­mon with all of our high street com­peti­tors we are wit­ness­ing a steady de­cline in foot­fall’

jobs were scrapped, but it also cut 100 ad­min­is­tra­tion roles.

The cut­backs helped the chain im­prove its prof­itabil­ity but it still chalked up a pre-tax loss of £10.5m, down from £18m the year be­fore. Rev­enues were broadly flat at £424m.

“In com­mon with all of our high street com­peti­tors we are wit­ness­ing a steady de­cline in foot­fall and like-for­like sales [in the UK],” the re­tailer said, adding that an uptick in on­line sales was fail­ing to off­set de­clines in stores.

The re­tailer an­nounced two years ago that it would close 141 stores over five years as part of the plan by Paul Allen, the chief ex­ec­u­tive, to phase out dual-branded shops in­tro­duced by John Browett, his pre­de­ces­sor.

Drill­great said it ex­pected that the re­tail cli­mate would “con­tinue to prove chal­leng­ing” as the shift to on­line, weak con­sumer de­mand and eco­nomic un­cer­tainty con­tinue to weigh on sales.

When Juliet Lu­porini was a lit­tle girl she would watch cus­tomers queue out­side her par­ents’ restau­rant un­til clos­ing time. It was the Sev­en­ties, and Swansea’s high street was awash with shop­pers. To­day, The Kar­domah restau­rant – her prized fam­ily busi­ness – has a loyal fol­low­ing, but trad­ing is not what it was.

“I re­mem­ber the days when Swansea was packed,” Lu­porini says. “But we are hav­ing to ad­just what we do now be­cause we can’t open for as long in the day any more. It just isn’t worth our while.”

The high street of Wales’s se­cond city is suf­fer­ing. The rate of empty stores is 17pc, a good 6pc above the na­tional av­er­age, and the si­t­u­a­tion is likely to get worse be­fore it gets bet­ter.

On­line shop­ping and chang­ing con­sumer habits have rav­aged the busi­ness models of some bricks-and­mor­tar re­tail­ers. Cost pres­sures from steep rents, rising busi­ness rates, and hikes to the na­tional liv­ing wage have eroded mar­gins. A bout of low con­sumer con­fi­dence has only sought to darken the skies above the na­tion’s be­lea­guered high streets.

Such has been the pres­sure that a num­ber of high street stal­warts have been wheeled into the ca­su­alty ward.

Maplin and Toys R Us have col­lapsed. New Look, Car­petright and Mother­care have been pulled back from the brink, but not with­out con­sid­er­able pain for the towns and cities that they oc­cupy. These re­tail­ers have se­cured a life­line known as a com­pany vol­un­tary ar­range­ment (CVA). The in­sol­vency process helps busi­nesses es­cape a pre­car­i­ous fi­nan­cial po­si­tion by shut­ting un­der­per­form­ing sites and se­cur­ing deep rent cuts.

High streets in Swansea, Don­caster and Ip­swich are ex­pected to be hit the hard­est by this spate of re­tail dis­tress, ac­cord­ing to the Lo­cal Data Com­pany. The Welsh city alone has eight stores that have ei­ther been closed or face an un­cer­tain fu­ture fol­low­ing the lat­est re­struc­tur­ing wave. But while the si­t­u­a­tion in Swansea may be tough, it is not unique. Nearly one in 10 town cen­tre shops across the coun­try are empty, while March and April fig­ures recorded the big­gest na­tional drop in foot­fall since 2009, ac­cord­ing to the Brc-spring­board’s monthly tracker.

If Napoleon were alive to­day, would he still brand the United King­dom a “na­tion of shop­keep­ers”? Of those that are fight­ing on, many have an axe to grind.

Paul Davies, who runs the urban fash­ion store NV-US near the Swansea train sta­tion, is clear where he thinks the blame lies. The 48-year-old says the trou­bles on the high street are be­ing ex­ac­er­bated by gov­ern­ment and land­lords. “If I em­ployed some­one, I wouldn’t be able to pay them a wage to­day,” Davies says. “In fact, I can’t af­ford to pay my­self some­times.

“There are so many empty units and most of them are owned by prop­erty land­lords who are out of town, or in London. They don’t know what it is like. Peo­ple can’t spend as much here be­cause the wages are much lower.” In­de­pen­dent re­tail­ers in Swansea say some lo­cal land­lords have a bet­ter grasp of the chal­lenges the city is fac­ing, and have set rents ac­cord­ingly.

London-based land­lords, and prop­er­ties owned by in­ter­na­tional trusts, have been crit­i­cised heav­ily. Some re­tail­ers claim they treat Swansea “like any other high street”, and are not sen­si­tive to the city’s eco­nomic si­t­u­a­tion.

Lo­cal au­thor­i­ties can also suf­fer a dis­con­nect to the high streets’ detri­ment. Coun­cils hop­ing to at­tract new re­tail­ers may be des­per­ate for land­lords to over­haul their tired look­ing stores, but con­vinc­ing them to

‘There is also a cul­tural change. There’s no shame in hav­ing a Pri­mark bag rather than an M&S one’

do so is not al­ways easy. In de­pressed ar­eas where rents are low, it may not make fi­nan­cial sense for a land­lord to plough funds into a full-blown re­vamp if they are un­likely to see a de­cent re­turn on their in­vest­ment.

In­stead the shops sit di­lap­i­dated and empty. Given the pres­sure rents can place on re­tail­ers’ mar­gins, it is un­sur­pris­ing land­lords are tar­geted by busi­nesses try­ing to sur­vive.

Busi­ness rates have also been in sharp fo­cus. The Gov­ern­ment has drawn fire for last year’s busi­ness rate reval­u­a­tion, which has landed some re­tail­ers with crip­pling hikes to their bills. The tax on prop­erty value is a par­tic­u­lar sore point be­cause it lumps high street re­tail­ers with a sig­nif­i­cantly higher tax bill than on­line-fo­cused busi­nesses with lit­tle or no stores.

For Davies, a re­prieve from busi­ness rate charges would go a long way to re­viv­ing Swansea’s si­t­u­a­tion. His pre­vi­ous busi­ness in the city, a skate­board shop called Screwloose, was tipped over the edge in 2007 when he could no longer af­ford to pay a £45,000 an­nual bill for busi­ness rates and rents.

While the Gov­ern­ment of­fers mea­sures that pro­vide firms with busi­ness rates re­lief, there is lit­tle hope of a hefty cut across the board. Busi­ness rates counted for around £30bn of the £752bn raked into the Gov­ern­ment’s cof­fers, ac­cord­ing to the lat­est fig­ures from the Of­fice for Bud­get Re­spon­si­bil­ity.

How­ever, to as­sume that cost pres­sures are the root of all the high street’s woes would be naive.

Shop­ping habits are chang­ing at such a rate that the high street is strug­gling to keep step.

Ama­zon may have be­come a by­word for sec­tor dis­rup­tion for many in­dus­tries, but there is no deny­ing how its ser­vices have re­shaped what shop­pers want from re­tail. Its huge breadth of prod­ucts and su­per-fast de­liv­ery ser­vice have shifted shop­pers’ ex­pec­ta­tions to such an ex­tent that in­con­ve­nience is no longer tol­er­ated. Ama­zon’s phe­nom­e­nal rise is cer­tainly not lost on Swansea. The US tech gi­ant has emerged as one of the city’s big­gest em­ploy­ers. Its 800,000 sq ft ful­fil­ment cen­tre – the size of 11 foot­ball pitches – is home to around 1,500 staff. David Tyler, the chair­man of su­per­mar­ket Sains­bury’s and the land­lord Ham­mer­son, ac­cepts that the in­ter­net may be the driv­ing force be­hind the chang­ing face of re­tail, but be­lieves the rev­o­lu­tion is two-fold. Shop­pers’ in­sa­tiable ap­petite for bar­gains has also played a part in squeez­ing some re­tail chains on the high street. “Firstly, con­sumers are be­ing of­fered a num­ber of new dig­i­tally driven choices, which can give them a range of prod­ucts and ser­vices with a short de­liv­ery time – none of which were avail­able five years ago,” Tyler says. “Sec­ondly, life­styles are chang­ing with to­day’s dual in­come, busy fam­i­lies opt­ing for con­ve­nience and ser­vice as well as value for money. We have there­fore moved into an ‘adapt or die’ era.” One of the rising stars of the bar­gain boom is dis­count re­tailer B&M. The busi­ness is not afraid of the chal­lenges on the high street and has been launch­ing bricks-and­stores at a rapid rate. Chief ex­ec­u­tive Si­mon Arora says the re­tailer’s push into Swansea has been met with en­thu­si­asm from shop­pers. “The Bri­tish con­sumer is see­ing some pres­sure and wants to save money,” he says. “But there is also a cul­tural change. There is now no shame in hav­ing a Pri­mark bag in your hand rather than an M&S one.” B&M’S se­cond store at Parc Tawe re­tail park was prof­itable from day one and hauls in 8,000 shop­pers a week with­out ad­ver­tis­ing.

The com­pany’s suc­cess sug­gests that, with the right of­fer, re­tail­ers can still bring cus­tomers through.

But what does this mean for Swansea? Will it only be the dis­coun­ters and smat­ter­ing of other

Juliet Lu­porini, in Swansea’s strug­gling Ox­ford Street

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