Time is cheap

Richard Hyman, certainly the wisest of the retail analysts, said in his most recent blog that retail is not making the fundamental changes it will need to survive. https://www.thoughtprovokingconsulting.co.uk/post/restructuring-buying-time-not-a-winning-ticket

Certainly, watching some well known brands scramble for a CVA in order to protect a core of stores is unedifying when the details do not reveal any of these fundamental changes. My worry is that many of these brands have such a weak presence on line, both in terms of ecommerce capability and brand awareness, that just saving stores will not work long term.

Cash is debt

For as long as borrowing money is cheap, these retailers are unlikely to listen and I continue to be amazed after all these years at just how much debt a retail business can carry and still carry on. The tragedy is that debt doesn’t just sink the retailer, it often sinks their suppliers. Look at the brands that have already been wiped out by the collapse of Barneys in the US which finally disappeared in February. And that was before the lockdown.

The hut becomes a mansion

Meanwhile, the Hut Group, the UK’s only unicorn, heads for a stock market listing to make it worth £4.5bn. This ecommerce-only business, which notably owns its warehouses, certainly looks like the sort of retail business that will continue to thrive following the massive shift to on line during lockdown.

Sadly, this leaves many middle market retailers out in the cold. Unless there is some kind of huge shift back to the high street in the next few years, then no amount of borrowed cash will see them through. Meanwhile, it might be time to pile into The Hut shares, which start trading in September. No, I don’t own any Hut shares.

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