The zombies, and why we can't grow until their demise

N1AK

Graham_Devon wrote: »

....can the housing market ever recover on it's own steam, without the zombies being wiped out?

I'm not sure the analogy can be made to property from retail. The argument for it in retail is that by killing off an under performing business a better one will replace it; that isn't the same as a house being repossessed for example.

The issue with retail and 'zombie' retailers is that we really don't know what the high street of the future will be. The old economic model doesn't work because web based businesses can sell most things cheaper. Retailers either need exclusivity: Some clothes manufacturers, to treat shops as show rooms: Games Workshop or price control: Apple

I really think the future of retail may include shopping centres that charge for entry in return for a voucher to spend. That way people who use shops to pick a product before buying online would have to pay something for the service they are using. However, until someone works out what this future model will be there will be a steady collapse of shops.

Generali

wotsthat wrote: »

I thought the housing market had fallen and, in real terms, continues to fall.

Transactions up, more FTB's getting deposits together, and lending up.

Maybe the market has fallen as much as it's going to and is now recovering?

Maybe.

The housing market in the US is definitely recovering. Housing starts are up over 20% YoY (latest figures to come in the next few days) and building permits issued are up over 25% YoY. Case-Shiller 10 and 20 City single family averages (kinda like the UK's Land Reg HPI figures) show small real (inflation adjusted) returns.

Where the US leads, the UK often follows. Just sayin'.

somethingcorporate

Some things are too big to fail, banks being one, property prices are a second one.

They may have some relatively small stagnation periods and falls but I doubt much more as too many people have a vested interest. HMV failed because their competitors were cheaper and better - what is a cheaper and better alternative to houses? At present there is not one.

HAMISH_MCTAVISH

Property prices in the US are rising because the US has at least partially fixed it's mortgage credit crunch.

$40 BILLION dollars a month of QE into RMBS will do that.

And of course, a recovery in the housing market is also feeding into a recovery in the wider economy.

The UK has not yet fixed it's mortgage famine, although FFL is a bit better than the previous tinkering around the edges there is still a long way to go, so we remain in the doldrums economically. But with an election coming in just 2 years, the current situation will not be allowed to continue much longer.

Generali

HAMISH_MCTAVISH wrote: »

Property prices in the US are rising because the US has at least partially fixed it's mortgage credit crunch.

$40 BILLION dollars a month of QE into RMBS will do that.

And of course, a recovery in the housing market is also feeding into a recovery in the wider economy.

The UK has not yet fixed it's mortgage famine, although FFL is a bit better than the previous tinkering around the edges there is still a long way to go, so we remain in the doldrums economically. But with an election coming in just 2 years, the current situation will not be allowed to continue much longer.

It's also just that the economy in the US is getting better.

I went to our strategy briefing this week and during the quieter moments I started flipping through the numbers bit of the handout. It wasn't long until a pattern was clear: US numbers are almost all up a bit on last year. Payrolls are better, newly unemployed are lower, housing starts are higher, retail sales are higher (just). The PMI (a measure of how companies see the near future) is very positive.

The US (and thus most of the rest) aren't out of the woods but they're getting there and that's a big thing.

Wookster

Generali wrote: »

Where the US leads, the UK often follows. Just sayin'.

True, though the US has done things quite differently to us, they have let house holds go bust and banks have written off an awful lot of debt, meaning they have a better idea of their actual position. Credit is expanding (again) in the states where as it is still contracting here (which doesn't bode well for any sort of massive recovery).

There was an interesting piece on Newsnight yesterday about the state of the high street. The founder of Leon was on, and was very positive about the high street, but he did say that rents were far too high and that someone was going to have to take a haircut in order for the high street to recover. Well worth watching.

tara747

N1AK wrote: »

I'm not sure the analogy can be made to property from retail. The argument for it in retail is that by killing off an under performing business a better one will replace it; that isn't the same as a house being repossessed for example.

The issue with retail and 'zombie' retailers is that we really don't know what the high street of the future will be. The old economic model doesn't work because web based businesses can sell most things cheaper. Retailers either need exclusivity: Some clothes manufacturers, to treat shops as show rooms: Games Workshop or price control: Apple

I really think the future of retail may include shopping centres that charge for entry in return for a voucher to spend. That way people who use shops to pick a product before buying online would have to pay something for the service they are using. However, until someone works out what this future model will be there will be a steady collapse of shops.

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N1AK

tara747 wrote: »

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A business model like Costco where you pay for a membership but then get lower prices. The membership cost stops people just walking in to window shop before buying online; worst case is that people pay a membership fee and then don't buy anything in which case you still have the fee.

My comment about shopping centres is based on a model where, for example, the Trafford Centre charges £10 per person to enter but receive a £10 voucher/card in return that can be used at stores inside. The £10 would then be distributed to stores in the centre or used to decrease rental costs.

As you would have to pay £10 to get into the centre it would discourage people who just want to hang about without spending (improving staffing for genuine customers) and would discourage people from going in to try products without buying (as they are paying £10 to do so).

grizzly1911

N1AK wrote: »

A business model like Costco where you pay for a membership but then get lower prices. The membership cost stops people just walking in to window shop before buying online; worst case is that people pay a membership fee and then don't buy anything in which case you still have the fee.

My comment about shopping centres is based on a model where, for example, the Trafford Centre charges £10 per person to enter but receive a £10 voucher/card in return that can be used at stores inside. The £10 would then be distributed to stores in the centre or used to decrease rental costs.

As you would have to pay £10 to get into the centre it would discourage people who just want to hang about without spending (improving staffing for genuine customers) and would discourage people from going in to try products without buying (as they are paying £10 to do so).

I know what you are saying but I am sure they would see foot fall drop.

It is the one thing that irritates me about Go Outdoors, you can't buy anything, at less than a penal price unrealistic price, without a current "Discount card".

Do you really get cheaper prices at Costco or is it particular hot spot purchases that make you think you do?

N1AK

grizzly1911 wrote: »

I know what you are saying but I am sure they would see foot fall drop.

Oh they definitely would but what's the viable alternative? Shops that do well on the high street have exclusivity (Apple etc). If you don't have that then you can't compete on price against supermarkets or online sellers.

Perhaps the model wouldn't work for Jessops but being a showroom for Amazon definitely didn't do very well. If Jessops had charged £5 for a membership (returned as spending voucher) and priced competitively with online stores (only ~5% more) then when my gf was buying her latest camera we'd have found and bought it there. As it was she used them as a showroom and then bought it elsewhere for noticeably cheaper.

Another option might be to position yourself as a service provider rather than retailer. Jessops could 'sell' advice, training etc and help you source what you want at the best price.