e sell it - retail blog

Last month eBay took a petition to the European Union with 3/4 million signatures to ask it to amend EU competition law to stop brands from restricting the sale of their products on the internet.

The petition calls for the EU to halt what it describes as the “abuse” of “selective distribution” agreements which block on-line sales of certain products arguing that the practice unfairly impacts online businesses and entrepreneurs and means the consumer ends up paying more.

It wants greater clarity and support for cross-border internet sales in Europe and wants the way off-line and on-line channels are treated for distribution to be the same.

Most brands oppose selling their products on-line, particularly via eBay, because they feel they lose control of how their products are sold and presented.

Alex von Schirmeister the eBay director general  said: “eBay was built on a simple idea - that it could empower individuals by building a global marketplace where practically anyone could buy or sell practically anything.”

“Unfortunately, that idea is under threat from certain brand owners and manufacturers who are trying to block and restrict unfairly the sale of legitimate products on the internet. Through this on-line petition our community of users is calling on policy-makers to amend European competition law to stop these unfair trade practices.”

There are several aspects to this case which are worth discussing.

Firstly let’s address the question of the re-sale of ‘pre-owned’ branded goods on eBay.

I don’t believe that  the Brands are, in principal, against the re-sale of these items on eBay but I know from bitter experience that some brands make it very hard to list their goods. It is often the case that the brands will instruct eBay to remove listings irrespective of whether they have reason to believe they’re not genuine, and due to the high profile court cases eBay have had with Tiffany’s and LVMH they will be removed (and a ’strike’ issued against your account). I’ve had several ‘battles’ in my time with my eBay business and the final straw was where a LV suitcase was removed (and a 7 day supsension of eBay trading given) despite there being a photograph of the original sales receipt from LV in Bond Street on the listing!

eBay’s attitude is that you should contact the brand direct, get them to test it, and once authenticity confirmed they should contact eBay to allow the restriction it to be lifted. Well I tried it once with Evisu and, surprise surprise, could not get anyone to even acknowledge my complaint!

So I believe that it is within everyone’s right to be allowed to resell on eBay or through any other channel, any item bought from anywhere in the world without restriction.

I will address the sale of new brands in part 2

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Following on from my last post I’ve just been reading about a survey  commissioned by PR firm Kreab Gavin Anderson, which found many retailers believe the consumer market will not pick up until 2011.

Just over a third of those questioned – 34% - are not anticipating strong growth until 2011 or even later.

Just 13% expected the consumer market to pick up significantly this year. And nearly all – 94% - said they expected a slow recovery as tax rises squeeze shoppers’ disposable income.

Despite fears, two-thirds said they were more positive than seven months ago as fears of economic Armageddon had not emerged.

Retail bosses also warned that Christmas would be flat this year.

So there you have it - rather depressing but perhaps not as bad as it could have been.

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

…according to Verdict Research. They also reported that value for money will be the prime focus of any retailer which wants to survive the global downturn as clothing volumes fall.

Verdict senior analyst Daniel Lucht said: “As Tesco’s halo has slipped somewhat in the recession, Ireland’s Primark is set to take up the torch of sharpest and most feared retailer from the British Isles.”

Verdict said that clothing retailers have reacted to the recession with understated fashion ranges, cut backs on inventory and a reliance on sales.

They added that plunging consumer confidence and spending levels sparked by unemployment fears and the credit crunch will lead to “a strong and deep value focus” among retailers over the next five years.

Verdict predicted that European value players such as H&M, Primark and Kiabi will be best placed to prosper.

I was conference with some well respected retailers and successful Venture Capital players. The recurrent theme was that this downturn/recession is here for some time and we wont see ‘normal trading’ returning for another 2-3 years, if at all. In fact BDO Stoy Hayward are predicting the demise of 5,000 retailers next year. An increase on this year!

The other point that all were agreeing on was that value retailing is the only way to go and that doesn’t necessarily mean cheapest but best value for money. So along with H & M and Primark being singled out Zara was highly thought of. Their products are not as cheap as Primark but for the quality and styling they represent good value for money.

It’s been very difficult  predicting anything over the last 18 months but the general thoughts are that Christmas may well be OK, although sales will start (continue?) early putting margins under pressure. Then sales are expected to seriously drop in the New Year as the VAT increase hits. Will retailers pass it on or will they be forced by consumer demand to absorb it?

If you are still trading, congratulations for making it so far. Keep ensuring your stocks are tight, overheads at a minimum (with no detriment to service) and, above all, ensure your products are VALUE FOR MONEY.

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

In April the government pledged to provide up to £5 billion of trade credit insurance to businesses that had suffered reductions in the level of cover provided by credit insurers because of the economic downturn. Firms can buy “top-up” insurance for six months to match the cover still being provided by their insurer.

However only 52 policies, worth a total of £7.1m, have so far been covered  as the scheme’s narrow focus — notably the fact that it excluded firms whose cover was completely withdrawn — has meant that it has been of little use to most firms. Since launching the scheme four months ago the government has changed it twice in an attempt to attract more interest. Two weeks ago it scrapped the lower limit of top-up cover, doubled the upper limit to £2m and reduced the cost of cover from 2% to 1%. The scheme runs to the end of December.

Phil McCabe, a spokesman for the Forum of Private Business, said: “So far the government’s trade credit scheme has clearly been a flop. It has benefited only a handful of struggling firms and extending it in this way will not significantly improve it because the most vulnerable firms, those that have had their credit insurance withdrawn completely, remain exposed. And with late and non-payment on the rise, these firms will continue to suffer.”

I predicted in my article on the credit insurance scheme   that the headlines read well but reality is that few retailers will benefit and, sadly, it’s proved to be correct.

I usually like to end my blog with some positive advice but there’s little that I can add to my previous article so I’ll leave the last words to Stephen Alambritis and Sean Purrington as quoted in The Sunday Times:-

The Federation of Small Businesses is now calling on the credit insurance industry to step in and fill the void to help small firms.

Stephen Alambritis, spokesman for the federation, said: “We think that the credit insurance industry has let itself down and it should do what it is there to do. Small businesses want to deal with the credit insurers themselves rather than through some government scheme.

“This is a crucial time because the recession has bottomed out and if there are any signs of recovery in the economy then businesses will want to be able to say yes to contracts and will need credit insurance in place quickly. Credit insurance is crucial in today’s uncertain world. It has an important role to play for businesses that are trading in risky areas and taking on big contracts. It is a source of reassurance.”

Sean Purrington, regional director of Atradius, one of Britain’s largest credit insurers, said that his firm hoped to start providing more cover towards the end of this year. He said that other credit insurers would be likely to do the same.

“As the economy improves we are starting to extend more trade credit. The taps are being turned on again. We are looking to write more cover as we move into the final quarter of this year.”

However, he also had a warning for small businesses, saying: “I don’t think the industry will be the same as it has been in the past. We will see prices being higher and risk-sharing being greater.”

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Well it sems that my prediction in my blogs last year that the VAT cut was not the best way to boost spending has been proved correct. Here’s what Stephen Coleclough of PricewaterhouseCoopers had to say:-

Last year’s cut in VAT to 15% from 17.5% has had little or no impact on consumer spending, according to a survey by consultants PricewaterhouseCoopers.

The company interviewed 2,000 consumers and found that an overwhelming 88% said that the VAT cut had not prompted them to spend more on goods or services.

The respondents also dismissed the measure as insignificant when compared with other economic factors, citing reduction in income and economic uncertainty as more potent influences on their spending.

Stephen Coleclough, tax partner at PwC, said: “These figures show that, despite it being designed as an economic stimulus, the vast majority of consumers’ spending has been unaffected by the VAT cut.

“The rest of the year will demonstrate whether the cut can still have the desired effect. It will be interesting to see whether consumer spending is affected by retailers potentially bringing forward their new year sales in anticipation of a VAT increase in January.”

Moreover, 5% of those polled by PwC were unaware that there had even been a cut in VAT, which is set to be reversed on 1 January next year. Only 8% of people said they had boosted their spending as a result.

The report stoked renewed criticism of the government’s £12bn VAT cut, made in last November’s pre-budget report by the chancellor, Alistair Darling, which both the Conservatives and the Liberal Democrats ridiculed at the time as ineffective.

“This is yet more evidence that Gordon Brown’s VAT cut was a costly and expensive failure,” said Philip Hammond, Conservative shadow chief secretary to the Treasury.

Jeremy Browne, his Liberal Democrat counterpart, said: “The government’s defence of its wasteful VAT cut continues to unravel. Its benefits have been overstated and most of the money is not helping the poorer households that are struggling in the recession.

“This ineffectual VAT cut is costing £1bn a month. Ministers should scrap it immediately and spend the money on transport and environmental projects which would boost the economy, create new jobs and leave a lasting green legacy for Britain.”

The Treasury, though, has regularly defended the tax cut as putting the equivalent of almost 1% of gross domestic product back into the economy.

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
07905 848 111
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

The Carbon Trust is offering interest free loans to Small and Medium sized businesses/enterprises (SMEs) to make their buildings more energy efficient. You can borrow between £3,000 and £400,000 interest free for up to 4 years with no arrangement fees.

Typical projects that are considered are Air Conditioning, Boilers, Hot Water Tank and controls, Building and/or pipe insulation and lighting.

They claim that a typical small business can save £8,000 in their energy bills a year so you can see that the savings may well cover the loan repayments so that the efficiency upgrades can cost you nothing and you can look forward to savings going straight to your ‘bottom line’ from year 5!

Check out the Carbon Trust Website for more details.

 What have you got to lose????

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Here’s a release from the Press Association:-

Shops that hire attractive staff can put off female shoppers, according to an academic study.

Researchers found that women were less likely to buy a product if they thought the shop assistant was better looking than them.

Bianca Price, of the University of South Australia, said that many women viewed attractive assistants as “a direct social threat”.

She said: “Women are biologically competitive - if they consider that a female is a direct social threat, it may affect their behaviour in that context.

“Retailers often think that beautiful is better. In the same way they use a celebrity to endorse a product, they hire a beautiful girl thinking that it reflects the brand and that other women will want to be like her. It doesn’t always work like that - women may not consider celebrities a direct social threat, but they might consider the girl at their local shopping centre to be one.”

Ms Price studied the behaviour of a group of women aged 18 to 26 when confronted with an attractive or unattractive staff member.

She found they were less likely to buy a product if they felt the staff member was better looking than them.

Ms Price said: “Retailers need to understand that beauty can affect their bottom line. The solution lies in hiring women of all shapes and sizes, someone for each of your potential customers to relate to.”

The research was released in the week it was revealed that a student with a prosthetic arm won her case for wrongful dismissal by Abercrombie & Fitch.

Riam Dean, who was born with her left forearm missing, claimed she was forced to work in the stockroom of the US firm’s London store because she did not fit its strict “look” policy.

End of press release

OK, so there’s always some study or reseach being released which contradicts previous research/studies but I guess that if you think about it logically there may be some truth in it. Maybe you think that attractive staff boost your shop/product image? Maybe attactive females will sell better to men? Perhaps the opposite is true???

I can’t advise you which is correct but I would recommend that the best course of action is to just hire the most competant personal irrespective of their physical attributes.  After all, that’s what employment law tells us to do.

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
07905 848 111
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

A £5m Retail Crime Action Plan is launched today for small retailers. Grants of up to £3,000 are being offered to upgrade their security includes cash for alarm systems, metal grills and similar anti-theft devices and banknote-testing kits.

Also as part of the Retail Crime Action Plan, published today by the Home Office, shopkeepers will be able fill in an online risk assessment form to help them improve security.

The new risk assessment tool has been developed by crime prevention experts, which businesses can complete online to identify simple measures they can take to reduce the risk of crime. The online tool is available on the Home Office website and takes 10-15 minutes to complete. Retailers are then given advice on simple things they can do to improve the security of their store and who they can contact for help.

Home Office minister Alan Campbell said: “Small businesses play a vital role in our communities and I am determined to ensure that small businesses are not taken advantage of during these hard economic times, by providing real support where it is most needed.”

“From today we are providing real help to businesses with a £5 million fund to pay for improved security in the places it is most needed.”

“The Government is committed to working with industry and police to tackle the crimes that affect them such as shoplifting, anti-social behaviour and robbery, particularly during this economic downturn, where certain crimes will face upward pressure.”

Retailers will be able to bid for grants through their local crime disorder reduction partnerships (CDRPs). Groups of businesses in a certain area, such as a parade of shops, can also team up to bid for bigger grants of up to £50,000. These can be used to improve a neighbourhood with landscaping or additional lighting.

I am not sure at this stage  which geographical areas this scheme covers yet or how easy it will be claim but as, The Federation of Small Businesses claims that crimes  cost small businesses on average £13,500 per year, the assistance is most welcome.

You can check out more details and take the on-line assessment at the Home Office website here

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

Over the last few years everyone has been talking about marketing via Websites, Blogs, Twitter, Facebook, iamthenextbigthing etc that it’s easy to forget or dismiss good old-fashioned advertising.

If your outlet(s) are localised there is little to be gained by telling the whole on-line world that your Autumn/Winter collection is in-store soon. However, targetted local advertising may well be better use of time and money.

I’m sure we’ve all used the local papers but have you tried posters and billboards? It may be cheaper than you think.

Check out www.signposter.com

Try the search in your area and it will give you the places where you can put a poster, the price for 2 weeks and the weekly ‘audience’. For example, in my area I could get a ‘48 sheet’ poster with a weekly audience of 154,660 for £689 or they can do a package for £1,500 which gives you 1 poster site,  1 phone box and 2 bus shelters for £1,500 for 2 weeks.  If they are viewed by 250,000 people and 0.1% visit your shop that’s 250 customers. If 25% of them spend £50 you’ve taken an extra £3,000+ and hopefully, treat them right,  they’ll come back again with some turning into regular clients.

I’m not advocating signposter.com in particular as there are other companies doing similar - www.postersitesuk.co.uk www.positivemediamarketing.co.uk  for example (Google for loads more) but the sign poster site is easy to use and gives a good overview.

There’s also something psycololgical about seeing posters in that it can often give the impression that you’re are ‘bigger’ and ‘more established’ company.

Don’t forget if you are thinking about doing it - EVERYTHING IS NEGOTIABLE!

Good Luck

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
www.gilcrest.com
www.linkedin.com/in/tonyheywood2

UK retailers are likely to continue discounting right through to the first half of 2010, according to a report by PricewaterhouseCoopers [PwC].

The PwC survey of 100 high street retailers revealed that 90% were currently on sale and that discount levels were above 60% - similar to those in the run up to Christmas last year and January Sales.

The survey said there was also an element of “de-stocking”, with retailers trying to shift some out-of-season stock in order to get cash into the tills and people in their stores.

Discounting was spread across all sectors of retail with luxury brands, mid-market and value players all promoting Sales, both in their shop windows and on their websites.

A spokesman for PwC said: “Following the peak level of discounting in the January Sales many stores have continued to promote discounts throughout 2009, to the extent that some corners of the UK high street seem to be on constant Sale.”

“Discounting will be an ongoing trend for UK retailers for the rest of 2009 and through the first half of 2010. This is good news for consumers, but less positive for retailers, whose margins have been and will continue to be under constant pressure.”

This seems to contradict my last post which just goes to show that we’re in ‘uncharted’ territory and nobody has any idea how deep or long this downturn will be.

Tony Heywood - Gilcrest Services Ltd
Retail Troubleshooter
Business Turnaround and Recovery
07905 848 111
www.gilcrest.com
www.linkedin.com/in/tonyheywood2