Not The Best of Times

Of course, as in the US, the spectre of war in Iraq is haunting everyone, and especially retailers. Putting aside for the moment the moral dilemma of whether an attack against Saddam Hussein's vile regime is, or is not, justified, the worry for UK retailers comes not from the outcome of impending battles in the Middle East, but from the expected counter-retaliation of terrorist reprisals here in Britain itself.

The fear of empty streets, when people are too frightened to venture out of their homes, is making the industry extremely nervy. And not without reason too. But, with true British resilience, it's pretty much business as usual, even if the consumer is being much more careful these days to contain their spending - in marked contrast to a year ago when we were all much more abandoned and carefree about running up significant debts on our plastic cards.

So retailing's not having the best of times. After a patchy Xmas and New Year Sales season, most of the big stores and multiples are struggling to deliver figures which the City finds acceptable.

So shares are getting marked down heavily, and, as predicted in this column a year ago, it's becoming open season for predators who sniff a good deal in the offing. A number of well known brands are now openly being stalked by outsiders, with Allders, the department chain, already definitely marked down for a 'change of ownership' and dear old House of Fraser, despite being brilliantly led for the last few years by the extremely talented John Coleman, also looking extremely wobbly.

Baugur, the men from Iceland, who caused Philip Green such embarrassment 12 months ago when he announced his bid for Arcadia, is being particularly active at the moment picking up pockets of shares in all sorts of retailers, and causing lots of consternation in boardrooms. Their latest prey is Mothercare, still struggling to make a comeback despite a change of leadership at the top, and the fact that they have now sorted out the dreadful mess with their distribution which caused customers to desert in droves.

But Mothercare also deserves some sympathy. Established in the 1960s to meet the fashion and clothing needs of the baby boom, it is now operating in a very different market. Not only have the likes of Asda, Tesco, AdamsChildrensWear, and a host of discounters successfully invaded its market territory, but Britain itself is producing significantly fewer babies than ever before. In the recently published results of the 2001 national census, we're told that for the first time ever there are more unmarried partners living together than husbands and wives. Women prefer careers to pram wheeling. Demographic forecasts clearly show massive increases in the numbers of 50+ citizens, and (by 2010) significantly less young people entering the labour market.

The answer for Mothercare is obvious. Change your name to Grandmothercare. Start catering for the swinging 60 year olds, and put the swinging 60s behind you.

Centre stage in UK retailing right now is the hit show "Gobbling Up Safeway", which is delighting the lawyers and bankers (huge fees), and providing the scribblers in the business press with endless column inches as they follow the antics of all the takeover contenders. And the bookies are doing nicely out of this too, with the odds changing on a daily basis about whether it will be (yes, you've guessed it) the ubiquitous Philip Green or Walmart who end up with the prize.

Whoever wins, with the exception of William Morrison, the only company to have made a firm bid, the takeover will be rigorously scrutinised by the Competition Authority to ensure that the ensuing carve-up of the market is fair, and that no one retailer has a monopoly in any of the UK regions.

My personal preference is for Morrison's original bid to be successful. This Northern based retailer is a fresh reminder of what good,old fashioned retailing used to be about. Sir Ken Morrison, the 70-something boss still runs the company like a family business, and perhaps unlike the CEOs of some of our more streamlined grocers who only don a white coat when they are doing store visits, actually enjoys getting his fingers dirty at the coalface. As a Yorkshireman, Sir Ken is particularly fond of his pies, and I'm told that each week he visits his pie-maker for a personal tasting session.

The news which has just broken about Ahold, however, who must surely engage in a fire-sale of massive proportions in Europe, The States and South America just to stave off insolvency, may just persuade the likes of Walmart, Tesco and Sainsbury's to back out of the race for Safeway, and go for greater international expansion instead. We shall see.

But back to the High Street in the UK, and in central London in particular. We talked earlier about the spectre of empty streets in the event of war. In Central London the streets are already empty of the cars that bring in the shoppers. Thanks not to Saddam Hussein, but to Mayor Livingstone's new congestion charge. Whilst retailing in the suburbs has received an unexpected boost, the stores of the great inner London shopping areas are having a very thin time indeed. Mayor Livingstone may have a smile on his face at having de-congested the centre of the capital. The retailing bosses have every reason to call him some very unprintable names indeed!