This week's retail news 'you may have missed'.....
At mdj2, we’re passionate about retail and always looking to share our news, views, and insights. With so much information out there, we wanted to share just a small selection of retail news headlines from last week that we found interesting…
Warning retail job cuts ‘inevitable’ after Budget.
High Street job losses are "inevitable", prices will rise, and shops will close because of tax rises in the Budget and other rising costs, a group of the biggest retailers in the UK is warning.
Tesco, Amazon, Greggs, Next and dozens of other chains are urging the Treasury to reconsider some of the measures.
In a letter to Chancellor Rachel Reeves, they said the "cumulative burden" of the Budget changes and other policies already in the pipeline will add billions in costs to a sector with a 3% to 5% profit margin.
A Treasury spokesperson said it had had to "make difficult choices to fix the foundations of the country", while one union called the letter "pathetic".
Bank of England governor Andrew Bailey told the Treasury Committee on Tuesday he had seen the letter and it was "right" to say jobs could be affected.
He said the employer National Insurance (NI) tax rise from the Budget could mean higher inflation, lower wage growth, or higher unemployment, adding in written evidence to the committee the Bank will be "gradual" on interest rate cuts as a result.
Measures in the Budget, in particular the employer NI increase, have been met with a tide of criticism from business, who argue it will hold back growth.
But concerns have been loudest among retailers and hospitality businesses, where many young people find their first jobs. Firms in those sectors are also facing higher costs from next year's rise in the minimum wage.
Though many individual retailers have already spoken out, this letter marks the first time so many have done so together.
The 81 signatories of the letter range from big British retailers - such as Aldi, Asda, Boots, Currys, John Lewis, Lidl, Marks & Spencer, Primark and Sainsbury's - to charity shop group the British Heart Foundation and trade group Associated Independent Stores.
The government has defended its tax rises as necessary to avoid cuts to public services, and the rise in the minimum wage, with a bigger boost for younger workers and apprentices, has been welcomed by trades unions.
The letter from the businesses belonging to the British Retail Consortium (BRC) said: "The sheer scale of new costs and the speed with which they occur create a cumulative burden that will make job losses inevitable, and higher prices a certainty."
It calculated the changes would add over £7bn a year in costs, adding it would "not be possible to absorb such significant cost increases over such a short timescale".
"The effect will be to increase inflation, slow pay growth, cause shop closures, and reduce jobs, especially at the entry level."
However, Nadine Houghton, GMB Union national officer, said larger businesses "pleading poverty" was "utterly pathetic".
“Most of these companies’ fortunes are already subsidised by the taxpayer. They pay very low wages which then have to be topped up by in-work benefits," she added.
“It’s only right that they should now contribute a bit more to rebuilding our country.”
Taxes and costs
From next April, all large businesses will have to pay higher National Insurance Contributions (NICs) for every member of staff they employ.
Employer NICs will start at a lower threshold than now, at £5,000 instead of £9,100, and the rate will rise from 13.8% to 15%. The BRC calculates this will cost British retailers £2.33bn a year.
The rise in the minimum wage from April is set to cost the sector a further £2.73bn, the BRC letter said.
In addition, from October 2025 a new packaging levy comes into force.
Introduced by the previous government, the extended producer responsibility (EPR) scheme shifts the cost of recycling from local councils onto the companies that use the packaging. Smaller firms are exempt, but the new levy will cost the retail sector overall another £2bn, the BRC estimates.
Retail analyst Catherine Shuttleworth said the Budget changes "will in some cases wipe out profits and in most cases significantly reduce profits, which will in the short-to-medium term risk more jobs if retailers cannot find alternative ways to save costs".
Nick Stowe, the chief executive of High Street fashion stores Monsoon and Accessorize, told the BBC he was going to have to "divert investment" from opening more shops to protecting its current shops.
Mr Stowe, who signed the BRC letter, said the sector was being forced into things which run counter to the government's growth agenda.
Mark Neale, the boss of outdoor retailer Mountain Warehouse, who also signed the letter, told the BBC he would "prefer to pay more tax by growing the business".
The letter from the retailers calls for the government to phase in the introduction of the NI changes and delay the start of the EPR.
It urges the government to reduce business rates, a property-related tax which the BRC says will cost retailers an additional £140m a year after next April, though there is a 40% relief available for 250,000 premises.
The Treasury said that thanks to exemptions for smaller businesses, "more than half of employers will either see a cut or no change in their national insurance bills [and] there will be £22.6bn more for the NHS".
A business update from Begbies Traynor on Monday, gave some weight to the BRC's warnings. The consultancy predicted more firms in financial difficulty would need its insolvency advice due to both the NI change and higher interest rates.
9 fashion retailers on store opening sprees.
AllSaints
AllSaints this week revealed plans to open a host of new stores across the UK, US, Europe, and Asia as it steams ahead with its global expansion plans.
Today, the fashion retailer, will open a new store on Brompton Road, London in time for the peak Christmas trading season.
It also recently opened stores in Liverpool One, Outletcity Metzingen, Germany, and its first Chinese outlet store in Shanghai Village.
But AllSaints is not alone. There are other fashion retailers on the expansion trail. Retail Gazette takes a look.
JD Sports
Last year, JD Sports set out plans to become the “leading global sports-fashion powerhouse” under new CEO Régis Schultz’s five-year growth plan.
It revealed it would invest in expansion in underpenetrated markets, opening between 250 to 350 new stores each year.
High-profile branches opening this year include its revamped Westfield Stratford store, a global flagship on Champs-Élysées in Paris, and it will soon open its new Manchester’s Trafford Centre, which will become its biggest global flagship when it opens next year.
Primark
Value fashion giant Primark is rolling out stores in its growth markets in Europe and the US, where boss George Weston says there is “significant white space for new stores”, which would help it drive “sustainable growth over the medium and long term”.
It expects new stores to contribute around 4% to 5% per year to Primark’s total sales growth for the foreseeable future.
The fashion chain also unveiled its first small format store in Montijo on the outskirts of Portugal last month, as revealed by Retail Gazette, which opens the opportunity to expand in more regional locations.
Primark already has a second small format store planned in Bolton, Greater Manchester.
Mango
Back in May, Mango unveiled plans to open more than 20 new stores this year as it looks to bolster its presence in the UK.
The Spanish fashion retailer will grow its footprint in London and Scotland, as well as opening in Northern Ireland, central and southern England for the first time.
During the summer it opened a new store at Gateshead’s Metrocentre this summer, its biggest one in the region, and its first store dedicated to teenagers in the UK, off Carnaby Street in London.
Sosandar
Online Sosandar brand has firmly embraced physical retail, as it plans to open up to 50 stores.
The fashion retailer’s joint chief executive Julie Lavington told The Times that the business was “targeting around 50 [shops] in total” over the next three to five years.
Sosandar opened its first stores in Chelmsford in Essex, Marlow in Buckinghamshire, the Metrocentre in Gateshead and St David’s in Cardiff.
The openings following a successful partnership with Sainsbury’s, that saw the brand’s clothes stocked in the grocer’s supermarkets.
Lounge Underwear
Last July, Lounge Underwear said it would open eight stores across the next 12 months as part of its ambitious expansion plans.
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The brand launched its first shop at Westfield White City, London last September after 7 years of trading solely online.
It has since opened stores in locations including Manchester’s Trafford Centre, Trinity Leeds and Cabot Circus in Bristol, and vowed to open 8 stores within a year.
Charles Tyrwhitt
Earlier this year Charles Tyrwhitt opened a 4,200 sq ft store on Regent Street, London, marking its eighth opening in a year.
The shirtmaker is targeting more retail space across the UK as it plans to open 10 more stores over the next 18 months.
Castore
Since launching in 2016, sportswear brand Castore has grown to more than 30 stores, including 16 in the UK.
Recent stores include Milton Keynes, Derby, Leicester, Dublin and in Dubai Mall.
Castore co-founder Tom Beahon said that “it was clear to us from the beginning that physical retail had an important role to play from both a revenue generation and brand building perspective”.
He told Drapers: “Our mission is for Castore to become the leading British sportswear brand competing on the global stage – the openings of flagship stores in key locations will play a central role in our strategy.”
Mountain Warehouse
In its year to February 25, outdoor clothing specialist Mountain Warehouse opened 28 stores, and 20 more since the year end.
The new stores included 21 in the UK where it more than doubled the size of its Covent Garden branch and took on the ex-Wilko site in Cornwall.
It has opted to open much larger stores, including some in retail parks, such as Bedford Retail Park, Maybird Retail Park in Stratford-upon-Avon, Malvern Shopping Park and Tunbridge Wells Shopping Park.
Mountain Warehouse has also opened overseas, including its first Australian store in Brisbane.
The retailer plans to open up to 50 more branches and relocations globally in its current financial year.
Tesco to open over 150 Express stores in next 3 years.
Tesco is planning to open over 150 Express convenience stores in the UK over the next three years as it ramps up expansion plans.
The changes, which will create more than 2,000 jobs in local communities, come as the grocery retailer celebrates the 30th anniversary of Tesco Express.
The supermarket opened the doors of the first Express store in Barnes and Norbury, London in 1994 and now operates a total of 2,704 of the convenience sites.
To mark the anniversary, Tesco has opened the doors to its Burnt Oak Express store in North London, which is it’s 2,882nd UK store and is just feet from where founder Jack Cohen opened his first ever shop in 1929.
Tesco managing director UK stores Kevin Tindall said: “I’m delighted that we have come full circle and returned to the street where it all began, with Jack Cohen’s first store in Burnt Oak.
“Burnt Oak has a special place in Tesco history, and we’re proud to be serving its local community once again – alongside thousands more across the country.”
Just last week, the retailer ramped up its value offering in its convenience stores by cutting the price of more than 200 own-brand and branded products, including milk, bread, pasta and coffee.
Dunelm snaps up Irish soft furnishings retailer Home Focus.
Dunelm has snapped up Irish soft furnishings retailer Home Focus at Hickeys.
Home Focus, which trades from 13 stores across the Republic of Ireland and trades online, will allow Dunelm to enter the country, which it said had a homewares market of more than £1bn.
Home Focus trades from smaller stores than Dunelm, with branches typically measuring less than 10,000 sq ft.
Dunelm, which revealed last month that sales had nudge up during its first quarter, said it saw potential to offer customers a broader range of products in Home Focus stores, in line with its existing smaller format stores in the UK.
The homewares retailer also plans to introduce a more comprehensive online proposition to Home Focus and will assess new store opportunities across Ireland over time.
Dunelm CEO Nick Wilkinson said: “In Home Focus we have found a high-quality and complementary business, with a shared heritage in home textiles and strong values which stem from family ownership.
“We’ve really enjoyed getting to know the team and look forward to welcoming them to the Dunelm family as we work together to further develop and invest in their specialist home proposition.”
He continued: “We see a clear opportunity to introduce more choice and value into the offer which Home Focus has built for its customers.
“With an established national store footprint and expertise in mutual growth areas like made to measure, we’re confident that Home Focus will help us to continue unlocking our full potential.”
High Street Rental Auctions to start.
High Street Rental Auctions powers will come into force on 2 December to transform long-term empty shops, the government has announced.
Councils will be handed new powers next month to breathe new life back into high streets and transform long-term empty shops, the government has announced.
High Street Rental Auctions (HSRAs) will allow local leaders to tackle persistently vacant properties in city, town and village centres by putting the leases up for auction. This will boost the high street through a ‘right to rent’ commercial lots for businesses and community groups, after the powers come into force on 2 December through legislation laid on Monday.
The move will stop disengaged landlords from sitting on empty properties for more than 365 days in a 24-month period, before councils can step in and auction a one-to-five-year lease. Before putting a property to a rental auction, a local authority must first seek to resolve the vacancy by engaging with the landlord.
American Golf to open concession in Go Outdoors’ Coventry store.
American Golf is continuing its partnership with Go Outdoors with the launch of a new 2,300 square foot concession in Go Outdoors’ Coventry store on 25 November.
The news follows the successful launch of a Gloucester concession with Go Outdoors earlier this year.
The new space will offer an extended range of American Golf’s top brands, including TaylorMade, Callaway, PING, Cobra, Benross, Garmin, Adidas, Stromberg and Under Armour.
Employees from American Golf’s recently closed Coventry store have been re-deployed at the concession and will provide services such as free custom fitting, which includes the latest Foresight FSX Pro shot-tracing technology.
Elaine Wrigley, retail, operations and director at American Golf, said: “The latest opening in partnership with Go Outdoors reflects our continued dedication to making golf accessible and enjoyable for everyone.”
Sealskinz opens first permanent store.
Sealskinz has opened its first-ever permanent store on Hinde Street in London’s Marylebone Village.
The move follows the outdoor and premium apparel brand’s launch of a successful Christmas pop-up last year.
Spanning two floors, the 1,000 square foot space will house Sealskinz’s Vitae line of performance-driven everyday wear and full range of waterproof accessories, as well as its inaugural running collection that was released earlier this year.
The store will also host a range of events, such as run clubs and adventure workshops. The brand said the interior aims to capture its spirit of adventure by blending quirky artwork with signature Sealskinz prints.
Ray Kelvin, founder of Ted Baker and creative director at Sealskinz said: “After the success of the pop-up last year, it is great to have a permanent presence in the area.
“I don’t want this to be just another store but a hub for the entire Sealskinz community. I have lived and breathed retail my entire life and I intend to create something truly special. It’s good to be back.”