A phrase in this video of Martin Sorrell struck me as the classic mindset trap that we are in. The idea of ‘riding out’ seems to be the go-to mantra of last resort for business leaders. What a complete waste of time. If that is all the person/company/brand that wants my money has got in their locker then I’m not handing over a penny.

Nowhere is this mantra more exposed than on the high street. Of course overleveraged consumers aren’t going to be buying anything. This time there isn’t going to be a rescue from cheaper lending, more plastic or property bubbles. Everything is maxed out, including UKplc (as Danny Alexander and the tiresome government have a habit of reminding us).

‘Where’s the growth strategy?’ Richard Lambert, former CEO of the CBI asked the government by way of a parting shot.  He might want to ask his members for whom ‘riding it out’ seems to be  all they’ve got. Both sides are waiting for the other to come up with a plan –  meanwhile descending into anaphylactic shock when the Primark barometer dips.

Ever smaller margins, £2 vests, angry disoriented shopppers. The high street, ground down by big retail, has become a painful part of life. How tragic for the centers of our cities, the last places where we come out in large numbers and physically take part in life (and the economy).  As things stand, it’s clear that for a county like the UK that the high street as we know it will never be the same again. Riding it out isn’t an option. Retail needs a big reset.

What’s needed

We need high streets to compete on experiences not pitiful margins. Oxford street needs to become a mass collaboration hub. Managers need to take an away day out to a Games Workshop to play Warhammer. Property developers need to think about making spaces that aren’t just eco efficient hangars but that are made to encourage interaction, engagement and learning.

Big retail needs to understand that me-too environmental creds, watertight sourcing and a few jobs + tax doesn’t make them a good corporate citizen – that is (not even) the minimum requirement for existence!

If big retail wants to become an active participant in the future (and survive) it needs to shift away from the ‘ride it out’ mindset (proven to be bust) and think about making a difference to peoples lives. Engaging with customers needs to be built around learning and experience. Rented space needs to become a destination in its own right where people visit to find the tools they need to live a more rewarding life. Transforming assets of brand, floorspace and marketing budgets away from a £2 vest transaction into helping people live well is the only way out of this.

You can find out more about some of these ideas in these posts below. Resetting retail: Saving our cities is a project that we are doing this year mapping out what this change could come to look like. Get in touch if you want to get involved or find out more.

Retail Reset pt.I: Saving our cities
Retail Reset pt.2: Warhammer away day

This is a short research note prepared for a conference in Mozambique. It explores post-crisis opportunity in really going for a water tight approach to sustainability across the board in tourism development.The event explored universal design, access and inclusion as a key part of development of this sector in Mozambique. For more on the great work around universal deisgn visit the Rolling Rains Report.

If you are interested in tourism and development there is an event at the ODI next week where Jon Mitchell and Caroline Ashley will be discussing their book Tourism and poverty reduction: pathways to prosperity. He wrote a good post on this subject back in Jan.

This is a good bit of BBC World service audio on Africa and the recession and the effects of mass tourism on wildlife behaviour etc.

Do get in touch to discuss issues raised in greater detail. Equallly, if you need any research notes, articles, commentary or slides put together for any projects you are involved in just contact me.

A few other recent comment pieces can be found here:

Brazil at COP-15 : Out in Front

Rio2016: More than a coming out party?

Howard Davies, former Chairman of the Financial Services  Authority, current Director of the London School of Economics spoke at the LSE last night about where China was up to with its financial reform (download slides here). Davies, a member of the advisory boards of the China Banking Regulatory Commission (since 2003) and the China Securities Regulatory Commission, is ideally placed to talk about reform and the impact of the stimulus.

Davies main tenet: The crisis has meant that China will reform its financial system in its own way and at its own speed. Additionally, the crisis has not derailed the party’s development policies so don’t expect much dramatic change in the model for now.

Key insights:

• The global recession has seen financial reform slow
• China aims for min of approx 6.5% growth rate to maintain its development policies and keep absorbing rural workers -gov target of 8% for this year is reachable
• Whilst the surplus will have decreased, lowering ‘global imbalances’, the effect is modest
• Exports did not drop sharply, rather growth has levelled off
• Stimulus was a quick, not measured response to crisis of global consumer confidence to avoid a compete meltdown of an economy so geared towards exports
• Money went of shovel ready infrastructure projects- good for environmental upgrading – to State Owned Enterprises (SOEs) via central government allocation
• Could/should have spent the stimulus on creating better social safety nets- but gravity of the situation compelled them to rush the money out.
• The Chinese consumer is growing in confidence – based on Mckinsey consumer survey 2009 (below). Mckinsey China consumer survey 2009 parts 1 and 2
• Non-performing loans will rise linked to indiscriminate, and size of, fiscal boost – but no need to fear asset bubbles highlighted by The Economist

For me, what stands out is the reluctance to try and build social safety nets and these are seen as incompatible with boosting (internal) demand.  However, providing more social goods will dampen peoples appetite for hoarding cash for medical expenses etcetc. This paper from the UNDP Poverty Centre 2007 provides more detail on the impact of the Bolsa Familia.

This article from the Carnegie Endowment for International Peace has plenty of data and asks some good questions about sustainability of China’s model:

While maintaining growth is essential for social stability, there is little doubt that China is also serious about industrial restructuring and macroeconomic rebalancing. It seems probable that China will be able to grow at 7–8.5 percent in the next few years and that the share of consumption in GDP will increase.

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As firms grapple with a brutal economic downturn, they are taking a long, hard look at the resources they devote to everything from supporting charities to making their activities carbon-neutral.

That is hardly surprising: cutting back on CSR, or “sustainability” as it is sometimes known, would seem to be a quick and relatively painless way to save money. Cassandras who felt many CSR initiatives were little more than publicity stunts in the first place predicted that they would perish as soon as the economy fell off a cliff.

Self-interest also explains why many companies are intent on creating greener supply chains, in spite of the costs. Mars and Cadbury, two confectionery-makers, have separately announced plans to increase the amount of cocoa they source from sustainable sources because both are concerned about future shortages if production practices do not change. IKEA is also fretting about one of its most important raw materials. The Swedish furniture giant has agreed a plan to increase the amount of wood in its products that comes from responsibly managed forests between 2010 and 2012.