Leader: Time To Get Out Of Town

I do not shop at furniture outlet MFI and I play only one game on my home computer, so no retail market apart from the food one makes much out of me. But I cannot help but be surprised by the slow-down in retail and the number of big names which are presently in trouble ? really struggling or going down in flames.

There are a number of reasons for this. Out-of-town shopping malls aren?t just the places the Rug Rats go on Saturday mornings to annoy middle-aged folk and imitate their role-models in Eastenders. They are pioneering a fundamental shift in shopping patterns which has left town centres all over the country empty and falling into rack and ruin.

Now Lanacashire-based LST, formerly called Leisuresoft, is putting a creditors? voluntary arrangement (CVA) into place for the company following its recent collapse. The leisure market is collapsing in on itself with alarming speed. Why?

First, most games are rubbish and rarely see a second upgrade. The only really good ones are old stalwarts which have been around for years. And the market is overpriced and overloaded with firms trying to make a quick buck.

During the inevitable maturing process of the IT industry there is a shake-down of those players that will just never make it. The runts of the pack live, wither then die. Unfortunately they often badly damage the profitability of business partners that unwittingly get tied into what look like lucrative business plans, but which actually have all the veracity of a drunk?s notes on a cafe napkin for his first blockbuster novel.

And as the IBM reseller Anglo Technology Group ably demonstrated, it is easy to go to the wall not dragging most of your business suppliers into insolvency, but leaving behind an organisational web of companies that can take years to unravel.

Computer retail in some sectors is plunging into a spiral of falling margins ? high costs and low volume because of fundamental shifts in buying patterns. But at the same time dealers overall have experienced strong growth in both turnover and productivity. Vars also show every sign of continuing growth and stability for the rest of this year.

The retailers that will survive will be the out-of-town sites which can pull in the customers and make the quick sales. Whether they can train their staff to do that will be a key element in the survival equation.