nickshanagher

In the wake of Morrison's results announcement last week, The Lex column in the Financial Times provided a brief and pithy piece of analysis that is food for thought for businesspeople investing in local shops. Lex says there are two reasons for Morrisons to be wary. First, local shops mainly sell food and this means the margin mix is not as attractive as in a supermarket where you can sell more high margin goods. The Co-op, which I think is a good benchmark for independent retailers to compare themselves to, makes a 3 per cent operating margin in food. Lex contrasts this with Tesco's 5 per cent margin. Second, enthusiasm for the sector could be overdone. While the IGD predicts the local shop sector will grow by 5 per cent a year to 2017, Lex says consumers' love of the high street could be an "austerity-driven blip rather than a long-term trend". Indeed. However, the trend started before austerity and is based on the size of households and the age of the ...