Charles Brook, Licensed Insolvency Practitioner and Business Recovery Specialist,
Partner at Poppleton & Appleby – Manchester and Huddersfield
Gives his views on
A cocktail of ingredients makes a good retail offering. The recipe isn’t a secret but, like all good recipes, the quality of the ingredients and the manner and ratio in which you mix them will make all the difference between a successful bake and an unappetising flop. When it comes to retail food and leisure, the actual recipe is even more important because nobody (with a discerning palate) generally wants to pay for poor quality food. Perhaps it’s best to ignore most of the fast-food sector when it comes to a discussion about the potential crisis in the retail food and leisure sector because the golden arches (taking one example) has as much in common with your neighbourhood artisan eatery as alco-pops have with 25-year-old single malt whiskey.
The basic platform of any retail business is to supply something that people want and (preferably) need. To make a success of consumer demand you must attract and keep loyal a sufficiently large share of the market at the right price – enough to make people happy to pay that price on more than one occasion and enough to cover the cost of creating and delivering your product in the first place.
The first challenge of any food retailer after financing the set-up is minimising the level of fixed costs carried by the business; rent, rates, staffing, marketing and loan repayments. The next is having sufficient working capital to cover the variable operating costs until product is sold and cash comes in. Lastly, a balance between supply and demand has to achieve that consistently, for a return of profit from sales.
It doesn’t matter whether you are retailing food or fashion, neither will be a success without footfall but, converting footfall into income involves a level of psychological alchemy. Converting “might have” into “must have” can be a drawn-out process but the moment a customer crosses the threshold it either accelerates towards a sale or it dissipates; getting enough sales is the first fundamentally important achievement towards business success.
In food retailing it’s the recurring trade that assures success. Giving customers an experience that they want to repeat, as often as they can afford, at a price you can profitably provide is the distillation of a good eatery. The experience is everything – the food, the price, the environment, the atmosphere, the service, the consistency, the location and even the brand are all relevant. However, with some exceptions, trends do matter and perhaps a good recent example of a trend that has flared-up and now seems to be dying down is the gourmet burger bar.
Retail landlords are always looking for a good mix of eateries to complement their other retail tenants. The tenants rely on the landlords to provide food and refreshment opportunities to sustain footfall, to draw in casual shoppers and to keep them shopping instead of heading home for lunch. If you can turn up for breakfast, have a latte to go, break for dinner and end the day resting your weary feet whilst watching a film but without leaving the shops then you are having the retail experience that most people seem to want. Even if you are only calling by to collect the goods that you “clicked” the night before, stopping for eats and then (refreshed) nipping into your favourite retailer for a browse, is what makes modern, high street retailing work.
Perhaps there is an over-supply of eateries in many locations but Landlords and other retailers rely on this to draw in their customers. If localised competition is making it difficult for food retailers to survive then perhaps Landlords and other retailers should consider subsidising a rebate on the rent of their refreshment-providing colleagues.
Making a success of high street retailing in food or fashion is now as much dependent on the neighbouring businesses as it is on your own offering. There is so much that you can’t always control and the key is to be responsive to change. Whether it’s a matter of trends, attitudes, economics or tastes; staying fresh and refreshing your offering without destroying the fundamental things that make your product attractive to the majority of your customers is perhaps the final challenge of any food retailer.
The public are fickle. Staying in touch with what people want is a proverbial “moving feast” and perhaps therein also lies the answer!
Partner, Poppleton & Appleby
Licensed Insolvency Practitioner and Business Recovery Specialist
For media information please contact Laura Batchelor at KC Communications on 01484 637980 or email [email protected]