I attended a “retail burial club event” last night relating to the effectiveness of CVAs in retail. My summary of the retail headwinds are as follows – HMRC debt recovery – preferential creditor status – falling demand – buying what don’t need – over-fuelled by digital – property over valuation – inflexible lease agreements – personal liability for HMRC debts – the unrealistic focus on endless growth – the unpaid price of buying cheap clothes on the environment – fast growth e commerce companies like ASOS deflating gross margins – since 2002 public sector debt and personal debt fuelled growth – online sales are only 17% so other goods are c30% Sales per sq’ remains the main metric in high street retail The most difficult turnarounds are those with falling demand, ultimately stalling demand and the environmental / unsustainability impact of excessive buying of cheap products will screw the environment. This is before China’s aggressive profitless growth models like JD and Didi get started in Europe, some aspects that investors of the ASOS fast growth /marginal profit model. There is a future for retail in the UK, it is the largest employer, many have a good future and online is not utopia! The inability to pay rent might precipitate a property price crash. Lets see..http://www.retailresearch.org/whosegonebust.php
