Review of 2018

Posted by Stuart Lennon on

There we are. Another year gone.

I don’t know about you, but I had a mixed 2018.

At the end of this month, I will have been at the helm of Nero’s Notes for two years. As I sat, contemplating this post, I was shocked to receive the e-mail that I am sure many of you received, from Bureau Direct. It announced that after 23 years, they were closing the doors. One of the founders, Jo, wrote

“…we have been sunk by the uncertainty and the discounting that seems to stalk the high street - online is not immune either.”

I have no inside knowledge of the specific circumstances that hit Bureau Direct, but I am familiar with the challenges of retailing in the current climate.

Politics are what they are, and this is not the place to argue them. As a merchant, my interest is in free trade and I make the following observation. Today, I pay no duties on goods from Europe, and I hope that remains the case. Incidentally, I pay no duties on goods from the USA either. There is no economic reason that tariffs need appear.

Discounting - well, that is a tough one. On the face of it, competition is great for the consumer. Vendors with higher volume are able to trade at lower margins and demand keener discount from manufacturers. This leads to better prices for consumers.

Or does it?

Manufacturers appear at trade shows, and court retailers, hoping to get into a market. It works, we take stock and start marketing.

The manufacturer realises that “overnight successes” take a while and starts selling on Amazon at a price lower than the retailers can match.

Great. The manufacturer makes the same or even more profit, with a lower price to the consumer. Good ol’ Amazon.

Obviously, the retailers see no sales or low sales and take no more stock, reinforcing the manufacturer’s view that Amazon is the way forward. Even as Amazon increases the discount that it demands.

The retailers move on, or out of business.

The manufacturer, squeezed by Amazon, finds that retailers won’t take stock, or aren't there any more. The manufacturers only choice is to increase price to the consumer.

Yay!

Oh…wait.

I do not try to make a case for market interference, only that as consumers, we need to look after our retailers. If we don’t, they’ll disappear.

This year, Cult Pens has been purchased by WH Smith, and Bureau Direct has ceased to trade. I’l miss them.

At Nero’s Notes, our sales were 25% up on the previous year. However, the business is not yet cash generative. As shareholder, I have made several loans to the company. As Director and employee, I have not yet taken any recompense.

During 2019, I hope for continued growth. Where I can shorten supply chains, I will. We continue to seek new suppliers, to bring exciting, quality and niche goods to you.

If you like what we are doing, please keep shopping, and please encourage your friends to come shop with us.

Thank you all for your business, and a special thank you to Kayley and Clare, without whom, nobody would get their lovely packages from Nero.


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