It’s not been any easy ride, yet for all but the weakest 2009 has been better than feared. From the final closure of high street stalwart Woolies to the demise of Borders and First Quench, Retail Week looks back at a year in which the future retail landscape has begun to take shape

The year began with some of the most depressing pictures Retail Week has ever printed, documenting the final closure of one Woolworths store.

The last goodbye to one of the most identifiable names on the UK high street was just the beginning of a year characterised by a feeling that the Government and other organisations could be doing more to clear the path for retailers as they aimed to successfully navigate the recession.

This was why Retail Week launched its successful Backing UK Retail campaign, supported by Prime Minister Gordon Brown and Tesco supremo Sir Terry Leahy among many others.

The bad guys of the year were the credit insurers, the Government, and particularly the Chancellor of the Exchequer Alistair Darling for standing firm on issues such as returning VAT to 17.5% on January 1, 2010, the 5% business rates increase and the 2010 rate revaluation.

Surprisingly, retailers’ views on landlords seem to have softened over the year, especially since they have recognised economic reality and begun moving to monthly rents. The collaboration between retailers and landlords in April to come up with a scheme to cut service charges by as much as 20% was also noted.

CVA controversy

The emergence of company voluntary arrangements was also a standout theme of the year. Landlords’ willingness to support such measures allowed several retailers to continue trading.

Other methods for dealing with adversity were more controversial.

Pre-pack administration is now a concept that has become familiar but, while it has enabled several major names to remain on the high street, both retailers and landlords (as well as other creditors) expressed dismay that some were allowed to walk away from their responsibilities to creditors.

The freeze on Iceland’s finances was felt in the UK by Baugur’s businesses, with the exception of Iceland, the retailer which carried on seemingly oblivious to the economic conditions faced by its competitors.

The rush to value

2009 was also the year when spats over who offered the best value to consumers really went into overdrive, particularly as the supermarkets ramped up their non-food offers, and food retail became even more competitive. There was lots of talk about the changing consumer, about whether consumers were less loyal, and whether they were trading down within, or between, retailers in the recession.

Sainsbury’s chief executive Justin King was forthright with his opinion. “I’ve always said we don’t need to win a single new customer,” he told Retail Week. “What we have to make sure is that those who shop with us a little, shop with us more and those that shop a lot, shop always.”

While the year’s initial exchanges were filled with anxiety, for all but the weakest retailers 2009 has been better than feared. Lower mortgage payments have meant consumers - those in work anyway - have felt better off, and the Government’s stimulus measures - even the much derided VAT cut - appear to have made an impact. Confidence has returned to the public markets too, and a string of potential stock market flotations are now lined up for next year should sentiment continue to improve.

All change

In the run-up to 2010’s eagerly awaited general election retailers have begun to hone their lobbying skills. New Look chairman Phil Wrigley summed up what needed to be done, urging
retailers to work together to support industry bodies and maintain the health of the sector.

“In the past people have been complacent and paid their subscription and said: ‘Leave it to the BRC.’ Any body is only as strong as the support of its members, not just with subscription money but with support,” he said.

The message that the industry still needs much support did not appear to be hitting home in all quarters, as the last few months of the year saw further business failure with the administrations of both Borders and Threshers owner First Quench Retailing.

At the same time, more successful retailers such as Marks & Spencer and Arcadia Group led the way in openly questioning the size and shape of their store portfolios, partly as a result of the continuing growth of online and move towards multichannel retail.

2010 will be a challenging year, but the best retailers will continue to prosper. 2009 may just be looked back on as the year that the future size and shape of the high street began to emerge.

Review of the year 2009