Global warming, don’t you just love it! Or not. Back in April we were all sweltering and being warned not to waste water as this summer was going to be a scorcher. Cancel those holidays abroad, we won’t need to fly anywhere to get a great tan. Just sit in your back garden and soak it up.
But about the only thing they were right about was the ’soaking it up’. That seems to be the problem with this global warming business. Temperatures too hot -it’s global warming. Too much rain - it’s global warming. Winter’s too mild - it’s global warming. If all the ills of 17th century England were blamed on witchcraft it seems that in the 21st century, the villain is going to be global warming.
Please don’t misunderstand me. In no way am I belittling the misery and distress being suffered throughout the country. And while the TV usually shows peoples’ houses or pubs, I am sure that somewhere in the midst of all that water will be a number of fellow traders whose petrol stations have suffered the mud and sludge treatment.
I cannot imagine what it must be like to have to cope with seeing your business devastated in such a way, and my heart goes out to you as you try and rebuild your lives. It’s strange - in years gone by it was often the custom to build a site at a higher level than the adjoining road. In those days it was done to make the site more visible - I wonder how many traders have had cause to give thanks for that little marketing quirk.
While most of us may have escaped being actually submerged, we have all had to sit and watch as our year-on-year sales figures plunge more heavily into the red. As far as retail goes, in many respects we’re the lucky ones. We may not have sold the volume of drinks, ices and barbecues that we would have anticipated, but at least it’s unlikely that our stockrooms are bulging at the seams.
Out on the high street, meanwhile, it’s carnage. While the stores quite like a little rain as it keeps the punters off the beach and out of the garden, what we’ve had these past two months does not qualify as a ’little rain’. The garment rails are stuffed to overflowing while those container loads of clothes that were ordered 90 days ago just keep on arriving.
And because the hypers moved away from just being grocers it means they are really suffering as well. Asda and Tesco didn’t decide to sell the latest Harry Potter book for zilch on a whim - they did it because they were desperate to attract customers into their stores. And by the same logic it means, I’m afraid, that we are going to be stuck with those 5p-a-litre-off-fuel vouchers for quite some time.
All of which brings us nicely to the great shop versus car wash debate. Suppose you’ve got a site doing reasonable volume and a smallish shop. You’ve got enough spare land and capital to either build a 2,000sq ft shop or put in a rollover wash housed in a proper ’building.’ Which do you go for? In the past I would always have said the rollover.
Assuming an overall outlay of £200,000 (although it can be done for less), a decent wash should pull in £55, 000 a year. Take off your maintenance contract, chemicals and water and you’re left with £50,000. A 25% return with no extra staff.
Build a bigger shop and, at 20% gross margin on your incremental sales, you need £250,000 extra turnover for your £50,000 profit plus another £150,000 to pay for your extra staffing costs, repair contracts, waste disposal etc. Even assuming the extra £8,000 a week turnover is possible, that’s an awful lot of shelf filling and hassle just to make the same return. And a rollover isn’t usually something Tesco Express will build.
But then, of course, there’s the weather. Car washes need ice cold winters and hot dusty summers. And we’re back to that bloody global warming again!