High street casualties that all made the same mistake

All three made the same mistake: operating a model that was successful a decade ago but no longer has any relevance.

Dan Butters, restructuring services partner at Deloitte in Yorkshire, said: “The failure of these businesses is due to a systemic change in the marketplace. They have not kept up with consumer trends. They have ceased to be relevant to the consumer.

“If you are a consumer who would have spent money at one of these stores ten to 15 years ago, the chances are you wouldn’t anymore.

“You have to be as price competitive as online and provide better customer service.”

Retail sales fell by 0.1 per cent in December and not one retailer has said they expect to see things getting any better in 2013.

Economist Alan Clarke at Scotiabank said: “The situation is unlikely to improve much over the coming year. Employment growth is already cooling off and the trajectory for inflation is upwards. Both mean that households will have less spare cash and this should hold back demand.”

The latest ONS figures show that food sales fell by 0.3 per cent in December, increasing pressure on the already fiercely competitive supermarket sector.

Of the big four grocers, Morrisons was the biggest loser. The Bradford-based retailer said that like-for-like sales fell by 2.5 per cent in the six weeks to December 30.

Sainsbury’s and Tesco outperformed the market with like-for-like festive sales growth of 0.9 per cent and 1.8 per cent respectively.

Sainsbury’s Brand Match price promise to be as cheap as Tesco and Asda is striking a chord with upmarket customers while Tesco’s success is partly due to Christmas 2011’s dismal performance.

Leeds-based Asda is expected to announce flat like-for-like sales when it updates the market next month.

The ONS data shows that non-food, most noticeably household goods, was the main driver behind the three per cent monthly fall in sales, the biggest fall in three years.

Yet this doesn’t explain why household goods specialist upmarket John Lewis has continued to perform so well or why value retailer Argos is enjoying a renaissance.

Argos sales rose 2.7 per cent on a like-for-like basis in the 18 weeks to January 5.

It said that internet sales accounted for 42 per cent of sales as more shoppers took advantage of the chain’s new tablet and smartphone apps, as well as click and collect services from stores.

Andy Street, managing director of John Lewis, said online sales now account for a quarter of the retailer’s business John Lewis and Argos share one thing in common that HMV, Jessops and Blockbuster failed to grasp – that a strong and successful online presence is essential.

Morrisons confessed that its lack of a food website was a major reason behind its disappointing festive sales. It is expected to announce plans for an online food launch at annual results in March.

“There are moving trends towards online as the norm,” said Mr Butters. “It’s now seen as the primary way of buying. Traditional retailers will see a continuing encroachment from online. I can only see that as ongoing.”

The ONS said online and other types of non-store retail grew almost 12 per cent on the year in December. According to the latest IMRG data, online shopping will rise 12 per cent to £87bn in 2013.

Indeed web sales increased 17.5 per cent year on year to £9.4bn in December as festive shoppers shunned the high street crowds.

Neil Saunders, managing director at retail consultancy Conlumino, said: “We’ve had an online and multi-channel Christmas, where those retailers who have offered great multi-channel solutions have done very well and those who haven’t have lost out.”

Footfall on the decline

UK shopper numbers dropped by 1.2 per cent compared with December 2011 as consumers continued to rein in their spending, according to the latest British Retail Consortium/Springboard footfall moni- tor.

Town centre shops saw a 0.5 per cent fall in shopper numbers, while out-of-town locations saw a one per cent drop and a shopping centres were down 2.8 per cent.

Like-for-like sales edged up 0.3 per cent in December, boosted also by an 18 per cent jump in internet trade.

Yorkshire saw shopper numbers decline by 4.8 per cent.

Shopper numbers rose in the west Midlands, Scotland, London and Northern Ireland.