Media hype about carnage on the high street may be overplayed, but at GA Europe we do believe that the UK retail sector is near the start of an extended period of fundamental rebalancing.  We think that we’ll see the withdrawal of approximately 10% - 12% of non-food capacity over the next three to five years – a mix of healthy retailer store portfolio rationalisation and distressed retail shake-out. So far this year, we estimate some 3.5% of UK non-food retail capacity has been withdrawn from the market although the DIY sector accounts for over 50% of this figure with the demise of Focus DIY.  

Whilst the pace and shape of restructuring will vary considerably by sector, it’s pretty clear that the most exposed segments of the market are:  other housing related sectors, discretionary purchases, particularly the fragmented clothing space (value and middle-market), and what we call ‘structural’ ie those sectors where the internet has permanently changed the rules of engagement, such as entertainment and electricals.  The sustained weak macro-economic climate, coupled with ongoing changes in the way consumers shop, demands  this  ‘once in a generation’ clean-up, followed by an uncompromising focus on turnaround and repositioning.  Although the next few years will be a white-knuckle ride for many retailers, those left standing should be well placed to capitalise on tomorrow’s growth.    

As part of GA Europe’s retail delivery capability, we have a network of field consultants, who we’re able to catapult into stores at short notice following the completion of a transaction.  Lenny Ruback, for instance, has 39 years of retail experience – all in store operations and largely in menswear, including 18 years at Moss Bros.  In other words, he was perfectly suited to oversee a number of stores on one of our deals, Speciality Retail Group.

Questioned about a typical day on the SRG transaction, it’s clear that there’s no such thing for Lenny.  “No two days are the same - I get round all seven stores two or three times per week and I might even be on the road, moving stock between stores”, he explains.  It goes without saying that maximising time on the shopfloor is crucial, in order to ensure that merchandising standards are high and consistent, and that point of sale materials are fresh and interesting.  Ensuring that all the stock in each store is selling at the right price is also no small feat, particularly as price changes and markdowns are a constant feature of managing distressed retail situations. 

However, Lenny’s in absolutely no doubt that the people side of the business takes centre stage. “Being involved in tough retail situations often means dealing with emotionally charged store staff - and that’s where experience is so vital.” And the importance of good communication skills cannot be overstated - whether it’s holding store conference calls across his seven stores every other day, dealing with individual staff issues, acting as the gatekeeper for store instructions from the centre, or implementing staff incentive schemes and creating a healthy rivalry between stores.  As Lenny concludes, “Empathy, the ability to motivate a team and the need to be a first-class communicator are right at the top of my ‘must-have’ list.”