The camping and outdoor chain Blacks has gone into administration – the latest retailer brought down by the economic downturn. Channel 4 News looks at which shops are facing the most pain.
It’s another blow for the British high street – after what’s been described as “dire” trading over the Christmas period.
Outdoor chain Blacks, which owns 98 Blacks outlets and 208 Milletts shops, with around 3,600 staff, said it had failed to find an outright buyer.
Sports Direct, which has a 22.5 per cent share in Blacks and now stands to lose out substantially, could still be interested in buying the rest of the firm. And several other firms are thought to be bidding for the non-loss making parts of the group, including JD Sports, and the Dragons’ Den star Peter Jones.
The future for Blacks was already looking bleak: it made a £16m loss in the first half of the year, and had reported debts of £36m. Shares have fallen by a massive 97 per cent over the last 12 months. And it is not the only casualty of what analysts are calling the “retail recession”, with cash-strapped consumers reining in their spending, many high street names are struggling to meet their costs.
Last month alone, the shoe chain Barratts collapsed, along with the Scottish clothing brand D2 and the novelty goods chain Hawkin’s Bazaar. The ‘closing down sale’ signs are now adorning branches of the lingerie firm La Senza – while the bargain clothes chain Peacocks is closing 200 stores.
Even the high street giant Next, where queues formed in the early hours for its Boxing Day sale, has reported disappointing Christmas trading, undercut by rivals who have been heavily discounting for weeks.
As Maureen Hinton, from the retail consultancy Verdict, put it – in these challenging times, “retailers have to work much harder to persuade us to spend with them”.
She told Channel 4 News that specialist stores with a lot of branches – and therefore a lot of overheads – are not managing to turn over the revenue they need, at a time of restricted spending by consumers. Paying off debts poses yet another challenge.
Retailers have to work much harder to persuade us to spend with them. Maureen Hinton, retail analyst
“If you are doing something well, and in a sector where there’s a lot of demand, then you are going to survive,” she said.
“But if you’re up against a lot of competion and there’s a drop in spending, you’re much more at risk.”
It is doubly difficult once supermarkets get in on the act: their sheer scale means they can often sell at a discount, and to shoppers who like the idea of being able to pick everything up in one place.
The answer, says Ms Hinton, is to be smaller – cut the number of branches, and rein in your debts: something that is not always possible if firms are committed to leases and contracts over the long-term.
Fashion isn’t a neccessity…You don’t need it. You want it. Marc Jacobs, designer
So what about the success stories? Surely, there must still be some retailers managing to buck the trend.
John Lewis has just reported a healthy £600m in sales over the festive period – perhaps its relatively affluent customers are continuing to spend money, despite the downturn. John Farrand, of the Guild of Fine Food, told Channel 4 News it is not just that people are spending more carefully.
Smaller, independent retailers are often more flexible than chains, and can target their buying decisions towards particular customers, or to suit market conditions.
And firms with a strong brand identity continue to attract people who feel it is worth spashing out on something they really like, or trust.
The luxury end of the market is also looking safe, thanks to tourists, many of them from China, and those die-hard brand loyalists. As the designer Marc Jacobs told Vogue last month: “Fashion isn’t a necessity. It pulls at your heart. It’s a whim. You don’t need it. You want it.”
And unfortunately for Blacks, the rush you might get from the latest Marc Jacobs clutch is not likely to be reproduced by snatching up a £20 pink cagoule from Millets. It is that same old story of the almost-recession: the squeezed middle. Look out for more high street casualties to come.
Felicity Spector is the chief writer at Channel 4 News. Follow her on Twitter @felicityspector