Posts Tagged ‘clone towns’

The High Street as we know it is dead, says Simon Freakley

August 19, 2012

He’s the “retail doctor” that companies turn to in times of trouble. Simon Freakley tells Andrew Cave why big-name stores need a revolution.

The high street as we know it is dead, says Simon Freakley

The High Street as we know it is dead, says Simon Freakley

Simon Freakley is not afraid of being controversial. The chief executive of corporate advisory and restructuring firm Zolfo Cooper Europe thinks high streets outside London are dead and will never recover their former glories.

Freakley, 50, is also sceptical about the future for Marks & Spencer and other mid-market retailers and believes Britain’s commercial property industry has hardly changed since the Magna Carta and needs reform.

These are provocative views and more so because Freakley is far from a disinterested observer. His firm specialises in retail as well as the financial services, leisure and automotive sectors and has run high-profile high street administrations including Clinton Cards, Habitat, Hawkin’s Bazaar and womenswear chains Jane Norman, Fenn Wright Manson and Ellie Louise.

He is clear about the reasons for such collapses – generally bad management, failure to grasp the opportunities presented by the internet and social media, and being squeezed by converging retail sectors. He is the retail doctor and sometime undertaker, and as such his opinions matter.

Take Clinton, which Zolfo Cooper sold in June to American Greetings, its main supplier of greeting cards, after axing 380 of the group’s 780 shops and shedding 3,000 of its 8,000 jobs.

“It had been very profitable,” says Freakley. “But it grew very fast and took on a lot of leaseholds, many of which, frankly, were over-rented. When trading conditions got tough, the property costs were killing the business. The chain’s estate was ludicrously out of step with market requirements.

“In some large shopping mall locations, there were as many as four Clinton Cards stores. You don’t need to be a retail expert to work out that that’s a massive oversupply issue.”

Freakley says retail management teams are “behind the game” unless they’re on the cutting edge of online marketing and distribution strategies with a strong grasp of social networking that’s not just about Facebook and Twitter but also location-based sites such as Foursquare and content sharing service Pinterest.

“That’s what the really smart people are doing in the retail sector,” he says. “It’s absolute hand-to-hand combat between retailers out there in terms of who gets the customer and who doesn’t.

“Increasingly people are making their purchases at places like Westfield and the bigger out-of-town shopping centres, rather than shopping on the high street.”

Freakley’s analysis is that while the value and luxury parts of Britain’s retail sector are holding their own in the recession, the mid-market and upper-mid-market sectors are under pressure.

“If you look at the Austin Reeds, the Jaegers and the Aquascutums… they haven’t been smart enough and quick enough at moving their strategy…

“I think it’s one of the most pressurised places to be in the high street right now. M&S is in that space. I think it’s going to find it increasingly difficult to compete against value plays in its propositions.

“That business has to be fundamentally repositioned over the next few years. It’s lost its bellwether crown to John Lewis. What was once smart, refreshing and invigorating now looks stale.

“Marks & Spencer is a supertanker. It takes some time to turn around and what it needs is strong and visionary leadership.”

Is the current M&S chief executive, Marc Bolland, up to the task? “I don’t know,” says Freakley carefully. “I think the jury’s out actually.”

Freakley is a 28-year veteran of Britain’s insolvency scene, having run the corporate restructuring business of Arthur Andersen in the early 1990s before selling it to corporate investigations group Kroll, which was in turn bought by insurance brokerage Marsh & McLennan.

He stayed throughout and in 2008 led a buyout, renaming it after the European operations of US corporate restructuring business Zolfo Cooper, which he had bought for Kroll in 2003.

Zolfo Cooper famously handled the restructuring of Enron, and its US operation, with 60 people in New York, is now run as a sister business to Freakley’s operation, while another sister partnership is based in the Cayman Islands and British Virgin Islands.

Freakley is at pains to point out that retail is only a part of his firm’s remit, as are insolvencies, with Zolfo also undertaking other corporate and pensions advisory work.

However, the retail administrations are what has given the firm its media profile and Freakley certainly holds outspoken views on the future for Britain’s high streets.

“Outside London, the world is very, very different,” he argues, saying how he was shocked by a recent drive through Croydon.

“Quite a lot of retail space is now being converted into residential. There are only so many charity shops and newsagents that you can put on a secondary high street.

“These units that have stood empty for so long are now finding alternative use and secondary residential is one of the ways that’s happening.

“I think that’s going to be an issue outside London. The high street as we have known it in secondary towns is largely dead, I think it will be redefined.

“I don’t think many of those units will ever be occupied again by commercial retail space. People’s buying patterns have forever shifted.”

Freakley argues that it is not the volume of Britain’s retail sales that’s the problem – total retail sales in the UK have actually risen by about 3pc in the past year – the issue is where they are taking place.

Some 10pc of all retail sales now happen online, and major edge-of-town shopping centres are stealing market share from provincial high streets.

“Those online sales are not coming back to the high street,” he says, going on to disparage the Government’s £5.5m package of support to help revive nearly 400 ailing British high streets under a plan suggested by Mary Portas, the retail expert dubbed the “Queen of Shops”.

“There will never again be the amount of retail activity that there has been on the British high street.

“I think the Portas report reflects a lot of wishful thinking. I don’t think it’s a strategy that’s going to re-establish the high street to its former glory.”

He expects the effect of the Olympics in keeping visitors out of central London for two weeks in mid-summer will soon find its way into retail profit warnings later this year.

So are we going to see another spate of retail failures? Freakley thinks it is possible.

“The difficulty is when you get into a situation where your profits really only allow you to service your interest, rather than pay down your debt or do some of the more expensive restructuring that’s fundamentally required to turn around the fortunes of your business.

“For retail operations, property is their biggest cost along with labour but their ability to buy themselves out of or renegotiate their property costs sometimes is limited because they don’t have the working capital to do it.

“Landlords have pretty much had their own way since the Magna Carta. In 1215, enshrining property rights at the hands of the landowners at the time seemed a very good idea. In 2012 where we’ve still got quarterly rental payments with upward-only rent reviews and rent paid in advance, it’s an absolutely outdated model.

“Other than in the super-prime areas, I think landlords are going to have to fundamentally rethink the way the contract between themselves and their tenants works. You’ll see more turnover-based rentals and monthly rentals or maybe even shorter-term ones.”

It should all mean plenty more work for the likes of Zolfo Cooper but Freakley insists that the firm keeps more businesses alive than it helps to dismember, saying that most of the firm’s work never gets announced.

“Frankly, if you can get into these businesses early enough, you can make a difference,” he says. “You can change the trajectory they are on.”

Is it frustrating then to be seen as an axeman? “Sometimes, yes. Most of the stuff we do is quite complicated surgery but much of that necessarily remains below the waterline. We pride ourselves on the fact that we’re able to solve these problems before they require more public remedies.”

Published in The Telegraph.

I agree with Simon Freakley on M&S. The service is appalling. Often I go in and there will be one member of staff serving, a long queue and the other tills sitting idle. And even when all the tills are manned, still long queues. The reason is the removal of tills, to be replaced by automated tills, and insufficient check-out staff employed. What this shows is complete and utter contempt for customers.

We used to have bookshops, now we have Waterstone’s, minimum wage staff who unless you are very lucky, know nothing about books, as I learnt last year when I asked about Aleph, a new book from Paulo Coelho. Unfair competion, offering best sellers at half-price or less (a discount not made available to independents), is killing off the few remaining bookshops.

Greedy developers and absentee landlords.

On the street leading down to the church in Godalming was a lovely wholefood shop. It closed its doors last year. Driven out by a greedy landlord who wished to jack up the rent.

In Alton was a lovely wholefood shop. The man running the shop was hoping to continue for a couple of years in the hope of finding a buyer, then retire. The greedy absentee landlord wanted a long-term lease signing. The shop closed last summer, one year on it sits empty.

The High Street is dead, but it did not die of natural causes, nor can we finger the internet, poor service weakened it, but what killed it, a clear case of murder, was greedy developers, High Street retailers and corrupt town planners and councillors in their pockets.

Why would anyone wish to visit a High Street when it is the same Clone Town in Any Town, with every High Street looking the same?

When Costa, indicative of all that is rotten and corrupt about our local planning system, muscle their unwanted way into towns like Totnes and Southwold, then tried to claim they are an attraction for the town, that they bring vibrancy and vitality to the High Street, we have to at best treat it as a sick joke.

Costa though may have taken a step too far. I see parallels with London Greenpeace handing out flyers outside McDonald’s. McDonald’s countered with the McLibel trial which spectacularly backfired on McDonald’s.

Costa trying to muscle their way into Totnes and Southwold has spectacularly backfired on Costa. It has brought them national publicity, all of it bad. They are facing boycotts in both towns.

Costa has also highlighted that the local councils in responsible for planning in the two towns to be not fit for purpose with local councillors failing to act for the locality they are elected to serve.

Not that local councillors failing their local communities is unique to these two towns.

Aldershot used to have a wonderful Victorian Arcade. It was demolished, to be replaced by a plastic replica. The plastic replica, home to small retailers, is now itself facing destruction, to be replaced by a large bar and a High Street chain that keeps prices low by employing slave labour.

Bad planning has destroyed Aldershot.

Nearby Farnborough has fared no better. Planning consent was granted to demolish half the town centre to be replaced by a superstore, an estate of social housing was demolished for the car park.

Farnborough is now a ghost town.

Totnes says no to Costa, local council says yes

August 9, 2012
Costa Welcome to Clone Town

Costa Welcome to Clone Town

Totnes says no to Costa

Totnes says no to Costa

Totnes should not let Costa piss in their coffee pot. — Jason E Cooper

I’m an extremely cross mayor and very disappointed and upset. We’re desperately striving here to try and keep the town as unique as we possibly can. — Mayor Pru Boswell

Costa should recognise the damage they do to their own brand as well by imposing where they’re not welcome. — Sarah Wollaston MP

Fine Arabica coffee, however knowledgeably and ethically sourced, has a habit of shedding its winning qualities when made into an amaretto milkshake by casual staff earning little more than the minimum wage. — Joanna Blythman

David Cameron made the right noises when he said local people should make local decisions. He made a fatal mistake when he assumed local councils act in the best interest of local people.

Aldershot and Farnborough are centres of deprivation in an otherwise affluent south-east. Housing benefit claims are double that of surrounding areas. The local council known locally as the Rotten Borough of Rushmoor rather than helping to regenerate, to put money into the pocket of local people, to retain and recycle money in the local economy, has done everything it possibly can to trash the local economy.

Farnborough had half its town centre destroyed to make way for a Sainsbury’s superstore (this in an area saturated with superstores), local independent family run businesses saw their business destroyed (many of who had been in the town for 30 or more years), a small housing estate of social housing was destroyed to make way for a car park for the superstore. The town is now a ghost town.

A lovely little family deli near me was destroyed by the council, worthless jobsworths conducting a vicious vendetta against the shop to force its closure.

Aldershot is a Victorian town. Having learnt nothing from the destruction of Farnborough, an eyesore, a blot on the landscape is being erected on the edge of the town centre. It obstructs the skyline, it is completely out of character with the town centre. This new development will relocate the centre of retail gravity away from the town centre and destroy what little is left. Were it not for the many ethnic shops, Aldershot would be dead.

Aldershot used to have a Victorian Arcade. Possible only one of three in the country. It was destroyed. In its place a plastic replica. The units sat empty, boarded-up shop fronts with pictures of the butcher, the baker, the candlestick maker.

The handful of shops in The Arcade are now being evicted. The Arcade to be redeveloped as a large bar, possibly J D Weatherspoons. Friday and Saturday night Aldershot is full of drunken scum. The last thing it needs is another large bar.

Last year small retailers were evicted from Aldershot town centre. This was the idea of the Borough chief executive who offered to pay the legal costs, and cover the ground rent for two years, to bring in a Lidl. The same chief executive who got into bed with the developers who have destroyed Farnborough town centre, the same chief executive who said he would work 24/7 to ensure the development that will finish off Aldershot town centre would go ahead.

At Upton Park in London, the Mayor of Newham got into bed with developers, the same developers responsible for the destruction of Farnborough town centre, to destroy Queen’s Market, a very popular local market, and replace it with an Asda superstore. Local people who opposed these plans were called troublemakers. The good news is that London Mayor Boris stepped in and stopped the development going ahead, in the meantime Asda had pulled out due to the bad publicity.

In Lincoln local people learnt from a Notice hidden in the local paper that the City Council intended behind their backs to sell The Lawn. The Lawn contains the Sir Joseph Bank’s Conservatory, the botanist who sailed with Cook, and who founded Kew Gardens. The Lawn was not the council’s to sell, it was an asset held in trust on behalf of local people. The cost saving, the annual running cost, was that of one useless jobsworth.

In Scotland, bully boys at a local council tried to shut down the food blog NeverSeconds run by Veg, aka nine-year-old Martha Payne.

I was thinking I had never been to Totnes, that I have passed through on the train on my way to Cornwall. But I am thinking of somewhere else where the line runs along a seawall, where there is a town inland of the line. I may have had a fleeting visit to Totnes. I was at Dartmouth and one day went on the river upstream to Totnes, but although I can recall Dartmouth, and the River Dart, I have no recollection of Totnes.

Totnes is small market town in Devon. They are fiercely proud of their heritage and their independent local shops, they even have their own local currency, the Totnes Pound.

It was therefore no surprise when Totnes said No to a Costa Coffee Shop, this in a small town that boasts of 30 independent tea and coffee shops, 5,500 signed a petition, people marched on the local council. The council stuck two fingers up and said yes to an unwanted Costa Coffee Shop.

So much for localism and local democracy as promoted by David Cameron.

What had to be seen as a sick joke, in their application Costa Coffee said:

The character of the street would be enhanced through this proposal as it would bring a vacant unit back into use increasing the vitality and viability for the area.

This is the arguments local planers always use. One wonders who is pulling their strings.

Be it Costa, Starbucks or any other national chain, and increasingly these are global chains, the one thing they do not do is ‘increase the vitality and viability of an area’ far from it, they destroy the vitality and viability of an area.

What is vibrant about all town centres looking the same, with the same High Street retailers? Last year I went to Petersfield to visit One Tree Books, then the official bookseller for the Guildford Book Festival. A church, a market square, but lacking any character as the same High Street chains as found in every other town centre. I have seen the centres of Alton and Godalming destroyed by the same High Street chains.

But is not only the appearance. The chains are draining money out of an area, whereas local shops, each with its own quirky character, are recycling money within the local economy.

Georgia Starr, a 12-year-old visitor from Milton Keynes, who joined the No to Costa March, got it right when she said:

Totnes is quirky and independent and that’s why I like it. Milton Keynes is full of chains already and part of the reason people come to Totnes is because its different. Tourists like individuality and Costa would ruin this town.

Richard Taylor, who runs Beanbug, a ‘coffee trike’ which sources ingredients ethically:

Costa will do nothing for the town, the economy or local people. They won’t support the local supply chain. They don’t care where they get their milk or their coffee from. Where they go, Starbucks and others follow. They may as well just open a McDonald’s.

Costa claimed, and again do not laugh, a high quality coffee shop would attract people to Totnes. Really, I am going to travel all the way to Totnes to drink shit coffee when I can do it in any clone town across the country.

Fuckwit Councillor of the Year Award must go to Basil Cane who claimed the creation of eight full-time and eight part-time jobs would be welcomed (figures no doubt supplied by Costa and not independently verified) and that “In 12 months or two years, the people of Totnes will be saying ‘what a wonderful thing we have a Costa here’.”

When are thick councillors and planning officials going to wake up to the fact that chains destroy jobs not create jobs? When are they going to wake up to the fact they are there to serve their local communities, not act as facilitators for Big Business to muscle in and destroy the character of a local area, the local economy.

One of the pleasures of a day trip to Brighton is North Laines, three streets with individual quirky shops.

In Bassano del Grappa, a small town north of Venice in the foothills of the Alps, four independent bookshops happily coexisting. One was in an old palace.

Devon has green fields, dairy herds. Farmers are suffering as the big chains and milk processors are not paying enough for their milk. A local coffee or tea shop would be buying its milk locally, Costa import their milk from Belgium!

The empty unit into which Costa wish to move, was occupied until 2009 by Greenlife, a local independent whole food shop, who have now moved to larger premises. There are other independents who would be happy to relocate into the empty premises, but the absentee landlord refuses to let. Oxfam showed an interest but were outbid by Costa.

Independent shops provide variety and diversity, they offer a wider range of goods and choice, they usually employ staff who are knowledgeable and take an interest in what they are selling, and they usually pay higher wages. Many High Street stores are now competing unfairly by employing slave labour, unemployed are forced to work for nothing or lose their benefits.

Early in the week a friend and I visited Costa. It was not out of choice. It was late in the afternoon and Costa appeared to be the only place nearby open, plus I wished to learn why Art @ Costa no longer took place. Art @ Costa used to take place on the first Tuesday of the month, the same day as the farmers market in Guildford. The coffee was disgusting (possibly marginally better than Starbucks). And it was expensive. £6-40 for two coffees and a cup cake. To put this in context, excellent lunch at a Thai restaurant cost only 65 pence more. I learnt from the staff that employment conditions are abysmal, they are paid a pittance, Costa a bad company to work for.

Translate this to Totnes. I know from Art @ Costa if you have a coffee and a cake you are lucky to see change from a fiver. Therefore assume a fiver per customer. That is a lot of money being drained out of the local economy in Totnes. The only money recycled back into the local economy will be the pittance paid to the staff, and that assumes it is all paid back into Totnes, and not all will, even if we only assume money is spent on energy costs (heating, lighting, cooking, transport).

First it was Tesco (and be warned Tesco is opening a chain of ‘artisan’ coffee shops) that was seen as a threat to our town centres, now as Joanna Blythman explains, it is coffee shop chains:

Coffee chains in general are rapidly becoming a downtown planning menace to match the creeping supermarket threat. First it was Starbucks popping up like the proverbial bad penny on every corner. Then it was an army of Costas. The coffee chain assault on our town centres is now so pronounced that both Bristol and Totnes have seen high-profile campaigns – ultimately unsuccessful – to stop Costa opening.

What makes truly great coffee shops? Joanna Blythman again:

Truly great coffee shops – think Tazza D’Oro in Rome or Caffè Pirona in Trieste, are one-off indie operations, often family-run. They reflect all the quirks and preferences of the diverse group of people who run them. This authenticity is what gives the best independent coffee shops such timeless appeal, and makes them genuine assets to their area. Never confuse this venerable business model with faux chain coffee shops, stamped out with a corporate template.

But the good folk of Totnes should not be too disheartened. They should follow the advice given by Sarah Wollaston MP on Costa Coffee and vote with their feet:

I realise the people of Totnes are disappointed and feel their views were not fully taken into account. I now advise people to vote with their feet! There are so many wonderful independent coffee shops in Totnes, all contributing to its vibrant atmosphere and I wholeheartedly encourage people to continue to give them their custom. Taking part in Transition Town Totnes’s Independent Coffee Week earlier in the year enabled me to appreciate just some of those on offer.

This is only the first skirmish. They have had a lot of support for their No to Costa campaign. Turn this into direct action. Make this a very expensive exercise for Costa. Boycott the shop. Ensure not a penny is spent in Costa. Educate visitors why you are boycotting Costa. If the visitors take the message back home, an even more expensive exercise for Costa. Already nationwide bad publicity has been generated for Costa.