Our high streets and the way we use them has fundamentally changed.
The recession has been “an endurance test” for the nation’s retailers, according to Helen Dickinson.
The new director general of the British Retail Consortium (BRC) has only been in the job for a few weeks, and she takes the reins at a difficult time for her members.
“They know they have to work hard to stand still,” she explains when she meets Central Lobby in the BRC’s Westminster offices.
HMV is the latest household name to succumb to the troubled economic situation.
“The mood among retailers is they are not expecting the environment to change anytime soon,” says Ms Dickinson.
“The backdrop that we are experiencing is one that they have seen in the past four or five years now, and they went into Christmas not expecting it to pick up. They have gone into 2013 with exactly the same mindset.
“Because the market is so competitive, they are doing all they can not to pass on cost inflation to customers - they know customers are very cautious and value-orientated.
“Shop price inflation is lower than headline inflation. The things that are driving inflation are utility bills and petrol prices as opposed to food, and particularly non-food. Non-food is either flat or seeing deflation.
“The reason why we are seeing everbody struggle is because of this endurance test, if you like, because we are seeing virtually no growth.
“In order to be able to continue to operate you have to manage your cost base, and because this environment has been going on for so long, the harder it gets.
“In terms of the recent news we have seen about a number of retailers that have not survived, they are in sectors of the industry experiencing the most significant structural changes in recent years.
“They may not have been quick enough to respond and change the way they did business to meet those new needs.”
The BRC is the lead trade association representing the whole range of retailers, from the large multiples and department stores through to independents, selling a wide selection of products through centre of town, out of town, rural and virtual stores.
Ms Dickinson may be new to the BRC, but she is a retail veteran.
“I was at KPMG for over 20 years and the last 15 of those I was working with the retail sector,” she explains.
“I had clients that crossed all different parts of the sector. I bring an understanding of all the different aspects of retail I don’t have a history that is specific to one part of the sector.”
She brings to the BRC “the different skill set of someone who has an analytical background”.
“There are so many things we could be focusing on – what are the most important and what do we want to do that gives maximum benefit to the industry and our members?”
Ms Dickinson admits it has been “a major cultural shift” moving from Head of Retail at a company that employs more than 10,000 people in the UK alone to the heading up an organisation with around 80 staff.
“On the face of it that sounds pretty challenging, but actually part of the joy of it is my clients at KPMG are the same people that are the members of the BRC.
“Many of the interactions are with the same people. Although it feels different at the heart of it, it is much the same.”
Those members saw “very, very modest growth” in December, a key month for retailers.
“Online did better than more traditional channels,” Ms Dickinson says.
“But it is not the case of one or the other any more. We are changing the way that we shop and we as shoppers are looking for consistency and flexibility around how we make our journeys to purchasing something.
“Those that have done well may be new-style retailers but may also be traditional retailers that have got their head round this new way of interacting with the customer.
“We have a mix of membership from those that are more traditional to those in the ‘newer space’, if you want to call it that. It isn’t the case that the BRC membership is made up of old-school retailers.”
Is the Government doing enough to help retailers through these tough times?
Understandably, Ms Dickinson thinks not.
“Government needs to recognise the importance of the industry,” she explains.
“It is taken for granted, but it plays a role in the lives of every single person in this country.
“We are all shoppers; we interact with retail if not every day then every week.
“Retail is the largest private sector employer and it is not just about shops, it is about logistics, supply chain, bringing innovation into the way customers want to shop, all those skill sets sit within the industry.”
The UK is also the leading the world in online, with the largest virtual marketplace in Europe.
Ms Dickinson says Government could start with a freeze on business rates.
“If nothing changes business rates will go up by 2.6% in April,” she says.
“That is on the back of a cumulative rise of 10% over the last couple of years. Rising property costs is not something we can sustain.”
The Treasury should also look at how business rates are actually assessed.
“It is fixed on Retail Prices Index (RPI) the previous September. It should be perhaps a different sort of calculation that takes account of the past 12 months rather than a particular month.
“That would mean retailers could actually plan and project and have more certainly of what is going to happen in the coming year. RPI is the more volatile measure and we want to move it to Consumer Prices Index (CPI).”
In his conference speech last year, David Cameron praised “The doers, the risk takers, the young people who dream of their first pay-cheque, their first car, their first home – and are ready and willing to work hard to get those things”.
There is a good chance many of those young people would have looked to the retail sector to help them fulfil those ambitions.
Retailers are Britain’s largest private sector employer, with almost three million workers, nearly a million of whom are under twenty five.
Of all the 16-19 year olds currently in employment, one in four works for a retailer.
Ms Dickinson, while growing up in Devon, was one of million of Britons whose first experiences of work were in retail.
“I had a Saturday job in a chemist, which was always a challenge because a lot of people come to a pharmacy with some very specific questions and if you only work there on a Saturday it makes it a bit difficult,” she says, smiling at the recollection of her teenage self.
“Then I studied at Kingston Polytechnic and while I was there I worked in an electrical retailer. What I learnt from those jobs is the importance of customer service - it is not just about selling product.”
Retail teaches young workers about more than how to deal with customers.
“It helps you recognise the complexity of what goes on, for example, the logistics of getting the products to the shop for people to buy. It sounds so simple but it’s not.”
And what of the other Queen of Shops, Mary Portas?
Ms Dickinson won’t be drawn on whether she watches her programmes, but she praises the work she undertook for the Government in 2011.
Ms Portas conducted an independent review into the state of the nation’s high streets and town centres and made a series of recommendations.
“What the review did do is raise the profile of the issue of the high street,” says Ms Dickinson.
“Our high streets and the way we use them has fundamentally changed.
“We should not be thinking about how we can get back what we had before – consumers needs have changed and we need to be working out what we do with the 11 – 12% of retail properties that are vacant.
“We definitely need, as highlighted in the Portas review, more local focus on what local community require in the local area.
“That requires all sorts of local people whether it is landlords, retailers, local councils to make those spaces more accessible and affordable, including by looking at parking and public transport.”
The next major piece of Parliamentary business for the BRC’s new director-general will be to attend the launch of a new report.
Retail in Society: Opportunities for All looks at the many and varied ways in which the retail sector supports and promotes social mobility across the UK.
“The report brings together lots of examples of what retailers are doing,” says Ms Dickinson.
“Let’s recognise what the sector is already doing to improve social mobility.”