Confusing signs in the high street

The superstore groups flourish but the rest of the retail sector faces an uncertain future. Nigel Cope reports

It has been a week of confused signals on Britain's high streets. Since last Friday the sector has delivered a profits warning at WH Smith (the first for 15 years), record profits at Marks & Spencer and a slump into receivership at Reject Shop. Yesterday Safeway added to the confusion when it announced a restructuring that included 4,800 redundancies on one hand and 7,500 job creations on the other. It is a strange market.

The Safeway restructuring is as much about new technology as store closures. While 1,800 jobs are going due to the disposal of 104 Presto stores and 20 branches of Safeway, 3,000 are white collar positions. It is the kind of action Sainsbury's took last year and Tesco in 1993.

Only a few years ago most supermarkets had section managers for each division. There would be a meat manager, an off-licence manager, a fruit and vegetables managers, and so on. This might mean a dozen or so jobs, often more because of longer store opening times.

But the advance of electronic point of sale and other systems has made such jobs redundant. Now, electronic till systems log exactly how many Gala melons are being sold and order new ones immediately without a fruit section manager getting involved. Modern systems can even take account of the weather and order accordingly. Staffing levels, once worked out by hand, can now be done by computer.

This could get worse. Safeway has been testing an automatic scanner at a Solihull store which, in the longer term, could see the end of the check- out person. Under the new system, customers scan their own purchases but must hold a membership card so the store knows who they are. The company is expanding the trial to another three stores this summer, though it denies jobs will be lost as a result.

The continued march of the superstore groups, in spite of fears of market saturation, is one reason other retailers are suffering.

Analysts had expected that the stricter planning regulations on out-of- town shopping developments would be good news for the high street. In fact. the superstore groups have kept expanding but in different ways. They are extending and modernising existing stores. They are also adding new formats, such as the Tesco Metro chain of smaller, city centre outlets and the trial of Sainsbury's Central, a smaller town centre concept.

The expansion of supermarkets into newspapers, magazines and entertainment ranges such as CDs and videos takes trade away from stores such as Woolworths, part of the Kingfisher chain, and WH Smith. These stores find themselves caught between the specialists - such as Our Price music shops and Dillons bookshops - and the superstores.

Hilary Monk, of Verdict Research identifies several trends. "The big shopping centres are doing well at the expense of smaller ones and we are seeing quite a lot of polarisation take place. All the big retailers want to be part of the same successful developments. Then we are seeing some of the large mixed retailers such as WH Smith and Woolworths coming under pressure from both specialists and the out-of-town operators.

According to Verdict, the key tenets of retail success in the 1990s are quality, value and giving customers what they want. This is harder to get right than it sounds.

Marks & Spencer has shown that the reliability and quality of its brand can produce profits that will break through pounds 1bn next year. Equally, the problems at its Brooks Brothers subsidiary, where it failed to wake up to the penchant for more casual dressing ,shows that if the product is not right, the customers simply go elsewhere.

Next, the reinvigorated retail chain, has shown that getting the right merchandise at competitive prices will have customers flocking through the doors. The Next winter sale was over in a week while others struggled on through the whole of January. Etam, the women's fashion chain had problems earlier this year when poor merchandise decisions left it with unwanted stock.

Sir Richard Greenbury, the Marks & Spencer chairman, was right on Tuesday when he said the high street was a tough environment where there were no easy profits any more. The expanding tentacles of the supermarket chains are likely to make it even tougher.

The jobs check-out

Number of Net new

new stores jobs


Sainsbury 12 6,000

Tesco 24 4,000

Safeway 17 -1,300

Asda 5 1,500

Iceland 55 11,000

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