Store groups should – eventually – benefit from the Bank of England’s Special Liquidity Scheme if it succeeds in greasing the wheels of the financial system. Better financing terms, improved debt management prospects and, above all, increased consumer confidence may all flow from the action being taken.
But it all remains distant aspiration, rather than reality. In the meantime, self-help is all that retailers can rely on to drive their businesses and share prices.
And it’s nothing to do with turning off the lights. Cost control and efficiency are certainly part of the retail regimen, but the businesses that emerge strongest from this downturn will have taken advantage of adversity.
In the past week, there have been good examples of retailers positioning themselves to come out of present troubles in a more powerful position. For instance, the mighty Primark, which recorded a 4 per cent like-for-like uplift in the first half, flagged its 10 per cent market share by volume. On that basis, it is the UK’s second-biggest clothing retailer.
Primark’s value model makes volume a key indicator, but all mass-market retailers should be chasing market share – volume, value or both, according to circumstances – in order to exploit their enhanced appeal when conditions improve.
Was it really so wrong for M&S to ensure it delivered volume at Christmas by offering shoppers value? And Debenhams’ market share gains should be welcomed – although its debt will continue to feature front-of-mind for many analysts.
Another lesson of the past week is the need for investment, despite – or even because of – the harsh high street climate. JJB’s concentration on service and staff incentives through the creation of a training academy should, along with efficiencies such as the closure of underperforming stores, help it score against rivals.
Investment, especially when the financial benefits may not come through immediately, might have negligible effect on short-term share prices. But they’re shot to pieces anyway.
The case for continued investment during downturns was made convincingly at the World Retail Congress earlier this month by former Wal-Mart finance boss Jack Shewmaker, the right-hand man of founder Sam Walton when the business roared out of Bentonville and became a big-league player. He should know. And he certainly rewarded shareholders.
George MacDonald is deputy editor of Retail Week – read his Retail Week column at retail-week.com today