/ UK RETAIL /
rental lease on its stores is around seven years , so it can get out pretty quickly , while it is growing purely through online sales .”
Shutting up shop isn ’ t the only option . As Henderson observes ,
350 % 300 % 250 % 200 % 150 % 100 % 50 % 0 %
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Source : FE Analytics there are plenty of bricks and mortar retailers that are growing – and playing to the consumer squeeze is key . His holdings in Shoezone , convenience store chain McColl ’ s and Bargain Booze-owner Conviviality have performed well thanks to a combination of renting units in cheaper areas , discounting and an astute awareness of customers ’ needs . Matt Hudson , co-manager of the Schroder UK Opportunities fund , points to B & M – an everyday essentials retailer that is expanding fast : “ B & M is putting down more space , but it buys in bulk and sources well from Asia . It ’ s a price-competitive model set up to ensure that low price is passed on to consumers , and they seem to like that .”
SPECIAL SAUCE Businesses that provide specialist products and services are also more likely to thrive and Henderson and Hudson point to Halfords as an example : “ Halfords is a destination if you want to motor or bicycle , so it has a role as a high street retailer as it is not something that ’ s easy to do online . Specialists can buck trends more easily than generalists ,” Henderson argues .
PERFORMANCE OF STOCKS VS INDEX IN 2017
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Games Workshop ( 311.01 %) ConvivialityRetail ( 93.93 %) McolsRetail ( 48.84 %) FTSE All Share ( 13.10 %) Mar Apr
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In no company is the specialist dynamic more evident than fantasy board game manufacturer Games Workshop – the best performing stock on the FTSE All Share last year – and a standout performer for Ashworth-Lord : “ That is really specialist and totally fanbased . The people that buy this product would find this store if it was 100ft underground .”
As Games Workshop shows , a strong brand encouraging a loyal customer base still has a role to play in retailing – despite price becoming ever more important . For Hudson , urban streetwear label Superdry is another good example . Launched in 2004 , the brand has grown through the label-love of the mid 2000s to emerge as a staple for mid-level consumers , while its expansion into Asia and the US is providing support . “ In the UK , [ Superdry ] only has 100 stores , but the real strength has been the way it has distributed the brand globally . It ’ s on trend with the growth of athletic leisurewear and we ’ ve seen lots of stocks in that area do really well ,” Hudson says .
The future of UK retailers is perhaps more uncertain than it has ever been . The pace of growth in online retail has caught many investors by surprise and if Moore ’ s Law is anything to go by , it ’ s not going to slow down . The more short-term headwinds buffeting the sector – namely the post-Brexit consumer squeeze – will die down . However , retailing is going through a fundamental shift and investors must ensure they pick the winners . Hudson summarises : “ The most important thing is that retailers acknowledge these changes in consumer behaviour , how they impact their businesses and have the flexibility to take on that challenge . Those that can embrace the change will survive .” • trustnet . com 5