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FTSE 350: General retail faces myriad challenges

The landscape for general retailers continues to evolve, with each business facing its own unique set of challenges
January 28, 2016

How customers interact with the UK high street is still evolving. With the advent of discount retailing, online shopping and click-and-collect, traditional general retailers are being forced to change the way they do business. 'General retail' is a tricky term because it encompasses different kinds of businesses, from motor retailers to stationery and even funeral directors. Each business has its own cycle, and some are faring better than others as we take this snapshot.

Motor retailers still find themselves in a market 'sweet spot'. Lookers' (LOOK) shares are up 13 per cent year on year, with the group harnessing its strong balance sheet to remain acquisitive in a market ripe for consolidation. The group was able to negotiate new lending facilities with its banks last year, which allowed it to purchase Addison Motors for nearly £90m. Addison, which trades as Benfield Motor Group, is expected to boost Lookers' annualised sales by around 20 per cent and give an immediate lift to earnings.

Other members of the general retail sector aren't finding themselves in such an upward cycle. Discount retailers are struggling compared with their German cousins in food retailing, who continue to steal market share from British middle-market rivals. Maybe that's because food is food, but quality still speaks where homewares, clothing and general merchandise are concerned.

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