One day this could all be yours……

Nick Clegg’s recent suggestion that voters should be given shares when the almost nationalised banks are returned to full private ownership has received mixed reviews.  For many it is a throwback to the eighties and the swathe of privatisations initiated by Mrs Thatcher’s government in her attempt to transform the UK into a property owning share owning democracy. The iconic “Tell Sid” campaign to sell shares in British Gas was perhaps the most memorable privatisation, and the one evoked by many commentators on hearing Clegg’s proposals.

Arguably though, it was the “free” shares which followed the demutualisation of a number of building societies from 1989 onwards that dramatically expanded the shareholder base in the UK, rather than the privatisations of the eighties, and these are probably a better comparison for what the deputy PM is trying to achieve. Therefore Nick may be onto something after all.

Widening share ownership has long been seen as a way of cementing the primacy of capitalism and giving people a real stake in the future wealth generation of their own, and the country’s, businesses. Whilst privatisations and demutualisations have hogged the headlines, the spread of employee share schemes, many of them tax efficient, have also played a key role. Whether through Save As You Earn share schemes, Enterprise Management Incentive schemes or bog standard share option arrangements, the carrot of participating in the future value of the business has become a key component of many employee packages.

“Ownership” of course is an interesting concept in itself. The contrasting styles of the “absentee landlord” institutions and the more “hands on” style of entrepreneurial businesses large and small are clear to see. Dealing with ownership by targets versus ownership by gut feel is a challenge for managers and employees looking to make their own contribution to the success of a business.

The move from employee to owner is an interesting one. MBOs are still a very popular exit route for many owner/managed businesses. However the difference between receiving a regular salary one day and suddenly being responsible for everybody else’s the next is quite a psychological leap, and one that many owners and employees need to think very carefully about when considering this option.

Business ownership theory is often focused on the financial side, hence the bias towards shares. And yet for it to be really effective as a tool for engagement and incentive surely it needs to be mental state as well. People need to feel like owners. Whether it is Nick Clegg giving away free shares in nationalised banks or an owner managed business selling to an MBO team, the head needs to be right if the wallet is to follow. Real ownership I would argue is all in the mind.

SOS – Save our shops!

Monday 4^th July was Independent’s Day. No, that is not a misprint. Shoppers are being encouraged by the British Independent Retailers Association to buy at least one item from a local retailer and celebrate diversity on the high street. A laudable aim and one that I hope the public will take note of and support.

As the sainted Robert Peston points out in his BBC blog, high street struggles are not just a problem for the shops themselves.  Retail landlords are facing the prospect of rapidly emptying properties and downward rent pressures. And that is before any interest rate increases kick in. It is hard to feel too sorry for landlords given the experiences that many retailers had with them during the good times. But there is an awful lot of bank capital tied up in retail development loans and a significant level of default on these loans will once again cast a cloud over the efforts to get banks lending to support economic growth.

Some will say that high street decline was inevitable given the inexorable rise of the internet over the past decade. But even the supremacy of the internet is not a given.  Recent stories tell of a reaction by consumers against online grocery shopping. Shopping remains as much an emotional and sensory experience as a technical and economic one.

Also much has been made of the impact of the VAT increase at the start of the year. However I am not convinced. The VAT cut in 2008 made little real difference given the level of discounting that was taking place at that time and I suspect that other macro-economic inflationary pressures in the economy have had more impact that the increase itself.

Having clients in the retail sector has given me an element of insight into the current situation, and I can say that it is not all gloom and doom. Sure it is tough out there but strong brands who connect with customers are continuing to develop and invest in their businesses. Newly appointed Asda COO Judith McKenna has suggested that retailers can play their own role in improving consumer confidence. The term “winners and losers” is made for the retail industry at present.

However the downturn in business facing many bricks and mortar retailers will not go away. And as stated above it is not just a problem for those retailers and their landlords, greedy or otherwise. It is a problem for everybody involved in the chain of supply. Indeed it is a problem for everybody that likes to “go out shopping”.

No industry has a divine right to survive, and there are plenty of good retailers doing the right things and continuing to thrive. The challenge remains for everybody involved in the industry to look at the way they do things and adapt. And perhaps occasionally for the public to realise that vibrant high streets are actually worth preserving and paying for.