ThorntonsThe chocolate retailers closures shows businesses cant make money out of trips down memory lane
For many Britons the Thorntons name conjures up happy childhood memories of sucking on toffee and boxes of continental chocolates presented with a flourish on special occasions.
However, businesses do not make money out of trips down memory lane and this week the retailer said its 61 shops were to close permanently, affecting 600 jobs, blaming the changing dynamics of the high street and the impact of the coronavirus lockdowns on sales.
It is the latest retail household name to give up on bricks and mortar stores as the pandemic accelerates the shakeout of high street chains, with close to 10,000 stores shutting in England, Wales and Scotland in 2020.
Quick GuideWhy are UK high street retailers in trouble?
Whats the problem?
Physical retailers have been hit by a combination of changing habits, rising costs and broader economic problems as well as the coronavirus pandemic. In the past few years names such as Mothercare, Karen Millen, Toys R Us, Maplin and Poundworld have disappeared from the UK high street as a result.
In terms of habits, shoppers are switching to buying online. Companies such as Amazon have an unfair advantage because they have a lower business rate bill, which holds down costs and enables online retailers to woo shoppers with low prices. Business rates are taxes, based on the value of commercial property, that are imposed on traditional retailers with physical stores.
At the same time, there is a move away from buying “stuff” as more people live in smaller homes and rent rather than buy. Uncertainty about the economy has also slowed the housing market and linked makeovers of homes. Those pressures have come just as rising labour and product costs, partly fuelled by Brexit and the coronavirus, have coincided with economic and political uncertainty that has dampened consumer confidence.
What help do retailers need?
Retailers with a high street presence want the government to change business rates to even up the tax burden with online players and to adapt more quickly to the rapidly changing market. Retailers also want more investment in town centres to help them adapt to changing trends, as well as a cut to high parking charges, which they say put off shoppers. Many businesses which deal with complex supply chains also want additional help with the new red tape and import charges imposed after Boris Johnson’s Brexit deal saddled them with extra costs.
What is the government doing?
In the December 2019 Queen’s speech, the government announced plans for further reform of business rates including more frequent revaluations and increasing the discount for small retailers, pubs, cinemas and music venues to 50% from one-third. It has also set up a £675m “future high streets fund” under which local councils can bid for up to £25m towards regeneration projects such as refurbishing local historic buildings and improving transport links. The fund will also pay for the creation of a high street taskforce to provide expertise and hands-on support to local areas.
Photograph: Matthew Horwood/Getty Images Europe
Show
Hide
I imagine a lot of people have been reflecting on the closures and thinking, My mum bought me Thorntons toffee. I enjoyed that, it was a treat, and now its gone away from me, says Clive Black, analyst at the City stockbroker Shore Capital.
With supermarket and convenience store shelves now full of confectionery and sweets, it is easy to forget Thorntons prospered at a time when high streets looked very different.
Founded by Joseph Thornton in Sheffield and using the slogan chocolate heaven since 1911, the business rode the 1980s consumer boom, floating in 1987 with its success continuing into the 1990s. At a time when chain store brands were expanding into high streets and shopping centres across the UK, by the millennium it would have more than 450 shops.
From the Sixties onwards Thorntons was a real British treat, says Black. The real affordability of everyday confectionery is way down on where it was in the Fifties, Sixties and Seventies, so there is a cohort of people who will remember Thorntons as a treat.
Thorntons tried to reinvent its stores, adding cafes and moving into ice-cream, but closed half its shops a decade ago. Photograph: Matthew Taylor/Alamy
Thorntons decision to shut up shop is certainly nothing to do with people eating less chocolate with sales on its own website up 70% over the past year.
An extra £500m has been spent on chocolate in supermarkets over the last 12 months, a figure boosted by sales transferring from other outlets affected by restrictions. Britons munched through more than 600,000 tonnes, spending a total of £5bn.
Sales data from grocery analysts Kantar also points to changing tastes, as chocolate a fate that has also befallen gin and beer got a posh or artisan makeover from the mid-2000s.
While fans of Thorntons recall smashing its toffee slabs with a hammer and shunning the coffee creams, today the conversation is more likely to be about the percentage of cocoa in a chocolate bar and the origin story of the beans.
Britons on the whole still reach for milk chocolate, but sales of dark chocolate have increased by 50% over the past five years to reach £380m, while demand for white is up by nearly two-thirds at £150m.
Thorntons decision to start distributing its products in supermarkets means it will have likely benefited from this comfort eating. But its presence in the aisles of supermarket and discount chains has contributed to the downfall of its own stores.
In recent years shoppers started returning products bought in the Thorntons stores run by Mark Rees, who is one of its franchisees. They were finding the product for several pounds less in Wilko and he could not match the price without making a loss on the sale.
If you are going to be a mass channel brand thats absolutely fine, but that doesnt sit with a retail strategy, Rees says. Retail is difficult. It is not just about producing lots of the same product and sticking it on shelves.
Thorntons decision to shut up shop is certainly nothing to do with people eating less chocolate, with sales on its own website up 70% over the past year. Photograph: Tim Gainey/Alamy
So this weeks closures conclude Thorntons long, slow high street death. It had multiple goes at trying to reinvent its stores, adding cafes and moving into ice-cream, but closed half its outlets a decade ago. In 2015, the ambassador rode to the rescue, with the Italian maker of Ferrero Rocher buying it for £112m.
Great Britain’s high streets lost more than 17,500 chain store outlets in 2020
A lack of product innovation over the years meant customers had switched off to the brand, Rees adds. We all see whats happening on social media and there are artisan producers and Hotel Chocolat bringing innovation into the market customers want to be excited.
Ferrero International says it has invested £45m in Thorntons, including trialing new-look stores and cafes and remains committed to an iconic British brand. However, it concluded that as customers change the way they shop, we must change with them.
Other heritage retail brands have done a better job of reinventing themselves for modern shoppers, with Greggs, by contrast, announcing plans for 100 stores openings this year.
With its vegan sausage rolls, green tea and low-cal lunch options, the 82-year-old Newcastle baker is almost unrecognisable after being recast by its chief executive, Roger Whiteside, as a trendy food-to-go chain.
It stopped trying to sell loaves of bread because that battle has been won by the supermarkets, says Whiteside. Greggs was a great brand when I got it we just helped. We focused its direction into a growing market.
By contrast, Thorntons found itself trapped between the old model of running lots of shops and a new order dominated by one-stop-shop supermarkets and internet brands selling direct to consumers, explains Matthew Hopkinson, co-founder of the consultancy Didobi.
You have to understand your position as a product or brand in this new consumer world, says Hopkinson. The problem is maintaining relevance or you suddenly find that your consumer is the people aged 70-plus who still totter down the shops.
{{#ticker}}{{topLeft}}
{{bottomLeft}}
{{topRight}}
{{bottomRight}}
{{#goalExceededMarkerPercentage}}{{/goalExceededMarkerPercentage}}
{{/ticker}}{{heading}}
{{#paragraphs}}{{.}}
{{/paragraphs}}{{highlightedText}}
We will be in touch to remind you to contribute. Look out for a message in your inbox in May 2021. If you have any questions about contributing, please contact us.
The chocolate retailer’s closures shows businesses can’t make money out of trips down memory lane
