Blackfriar: Troubles heap more misery on beleaguered retailers

Retailer Greggs became an iconic image of the riots, as one of its shops was engulfed in flames and smoke from a burning neighbouring store.

Looters targeted electronics stores including Currys and Comet, retailers already hammered by an austere climate of weak consumer confidence and shrinking spending.

While these chains will probably recover, able to claim on insurance, many independents will struggle to rebuild after stock was destroyed or stolen.

As well as keeping shoppers away, Blackfriar fears the looting may also put investors off committing to suburban projects. Regional high streets are already under pressure and shoppers flock to primary locations such as big shopping centres.

“The riots were more bad news for a (retail) sector already struggling,” said Harm Meijer, a property analyst at JPMorgan. “It is not a huge disaster at this stage but you could expect a small impact on estimated rental values.”

Shopping centres of the likes of Sheffield’s Meadowhall, jointly owned by British Land and London and Stamford Property, has been one of retail’s rare winners in recent months, acting as a magnet for shoppers while smaller regional centres and high streets suffer.

Its footfall has increased 2.7 per cent and sales have grown 1.4 per cent year-on-year since January.

But on the whole, it has been a tough year for the high street, with dismal vacancy rates, rents and capital values, and a fresh round of retailers shutting up shop.

The riots will only exacerbate this, warn property experts. International investors “will probably be more wary of looking at some of the (London) suburbs”, said Richard Lewis, property director of Leeds-based developer Town Centre Securities. The British Retail Consortium has urged tough action to catch offenders, calls Blackfriar echoes. Retail employs one million people under 25: this generation owe it a great deal.

“The response of the Government and police forces across the country to the recent wave of mindless destruction has been encouraging,” said BRC director general, Stephen Robertson.

“For too long, shop crime has been wrongly regarded as a low priority.

“There is a myth that stealing from stores is victimless and that police resources are better used elsewhere.

“The sad events of the past week should have brought home to everyone the huge economic and human costs which are caused by crime against the retail sector.

“Destroying shops and high streets is counter-productive in every sense.”

This wanton destruction and erosion of an already fragile sector must be brought to an abrupt end. Rioters may not realise it yet, but they are biting the hand that feeds.

n In a challenging market, high street baker Greggs has delivered a resilient performance.

The group, which has ambitious expansion plans including the opening of 60 new shops in Yorkshire, reported a seven per cent fall in first half pre-tax profits this week after trading conditions turned out to be tougher than expected.

The group also took a £2m hit from the additional Bank Holiday for the royal wedding in April and the delayed New Year’s Day holiday on January 3. But Greggs’ move into lunchtime and breakfast meal deals, coffee that is 25-30 per cent cheaper than high street rivals and the capacity to switch to sausage rolls when customers can no longer afford sandwiches has stood it in good stead.

The group sold 2.6 million breakfast deals in the six months to July 2 and sales of multi-pack sausage rolls rose by seven per cent as the group cashed in on the take-home market.

There has been some suggestion that Greggs is losing customers as more people decide to save money by making sandwiches at home, but Greggs’ chief executive Ken McMeikan denied that was the case this week.

Hull-based pork producer Cranswick said that it sold 25 million more packs of cooked sliced meats over the past six months compared to last year as more people bring a packed lunch to work.

But Mr McMeikan said Greggs has seen no sign of people switching to packed lunches.

Instead they are trading down to sausage rolls, £1 free-range egg mayonnaise sandwiches or switching to meal deals.

Perhaps the real losers will be sandwich makers such as former Leeds-based Northern Foods, Greencore and, of course, Cranswick itself which counts sandwiches as one of its six main divisions.

n If you want to contact Blackfriar, write to us at the Yorkshire Post’s City Desk email address which is [email protected]