Reviving a retailer in tough economic times and in the public eye is a tall order.

Reviving a retailer in tough economic times and in the public eye is a tall order.

The administration and likely removal of the Comet fascia from the retail landscape, following that of JJB – once upon a time both brand-leaders in their retail sectors – illustrates just how increasingly difficult and risky turnarounds are becoming.

In an environment where even the strong retailers achieve only marginal like-for-like sales increases and are considered to be meeting market expectations, the economics for really troubled retailers seem to be getting more and more difficult.

The logic that, with a bit of refinancing, new management and a reassessment of the proposition, the sick can be cured isn’t bearing fruit.

Even in the good times, retail is a tough business in which to convince the ever-promiscuous consumer to spend his or her precious time and, ultimately, money in store or online, rather than going to the wine bar, gallery, cinema or a sporting event. Changing the direction of the company takes time and money – ingredients that are currently in short supply.

Unlike a manufacturing company, when a retailer gets into trouble, it is obvious for all to see. The store environment starts to look shoddy, the shelves are light on product and the staff can appear disaffected.

Retail businesses therefore have a real disadvantage, in that the consumer sees everything with their own eyes. All of us instinctively know those retailers that are struggling, just from walking into their stores.

The coverage in the media doesn’t help, either. The national TV and newspapers understandably love to write about retail, because it is something that their audience can easily identify with. 

Negative comment that once might have been reserved for the business pages finds its way into the general news, which inevitably serves to further undermine consumer confidence.

For quoted retail companies, the situation is even worse. Under the listing rules, they have to make a public announcement whenever there is a material change in circumstance, such as a renegotiation of a bank facility.

The drip, drip, drip of announcements and negative comments convinces everyone that a business has gone bust, even when it hasn’t. To resuscitate such a damaged business, with all the negative perceptions around it, takes a huge effort. Implementing change in one location can be tough enough; achieving it in 100 or more makes it considerably more difficult.

So once a business has got into that degree of trouble, can it ever survive? 

Trade sales, rather than refinancing, offer a more likely route to ultimate success. Although it includes a reduction in stores, JD is showing progress with the purchase of Blacks.

The revamped Blacks store at St Paul’s in London now has a much clearer definition of brands, product and proposition. The pockets of the owner are deeper and, when combined with its retail and management expertise, there is a greater chance of success for the turnaround.

For others, it will be a long hard slog.

  • Peter Williams, is a non-executive director of Asos and a former chief executive of Selfridges