Hard times on the high street

Twenty-four hours after the Government's cash injection to save banks and oil the wheels of the market, we took a sample of businesses trading in a typical London high street — Upper Street, in the heart of Islington. The truth is many are battling to survive the credit crunch and believe the bail-out will not come close to solving their problems.

Some have seen profits dip by 50 per cent, others are cutting staff and raising prices. All fear for their future.

Manuel Inacio, manager of Brazilian restaurant Rodizio Rico, said: "Food costs more, petrol costs more, gas electricity — it all costs more. But no one is making reservations, our staff are twiddling their thumbs and day by day my till dries up. A lot of small shops in Upper Street have already been pushed aside by the big chain stores but the likes of Starbucks will be fine. Businesses like mine — those that are unique — we are the ones trying to keep our heads above water."

This week a poll by the Federation of Small Businesses revealed the true impact of the recession on the 4.7 million companies it represents. More than 80 per cent of traders surveyed said their costs had increased in the past year and 46 per cent had seen a decrease in customers.

FSB national chairman John Wright said: "The credit crunch is trickling through to the small business sector. Small business survival is integral to the well-being of the British economy and more money needs to be made available to traders to help sustain them and get them through the next year."

THE SALON

Giovanni Hair and Beauty
(and Seconda Mano second-hand clothes)
Trader: owner Giovanni Napolitano, 65.
History: a family business which has been running for 35 years.
Crunch factor: "Times are hard for everyone but we are trying to see the positives. With a bit of work we may even be able to turn the credit crunch around to our advantage," he says.
"We hope customers who have previously visited high-end hairdressers in the West End will have to cut costs and will find they can get the same £200 do at ours for £50.
"Similarly, we expect our second-hand clothing store to do a roaring trade. Our stock comes from stylists straight off the catwalk, from pop videos and fashion shoots. The stylists get 50 per cent of the sale price and we pocket the rest. During times of financial hardship, everyone is on the lookout for a bargain."
Forecast: "It is hard to predict what will happen in the next few years but I am confident we will pull through. Shoe repair shops have seen a rise in custom and so have dressmakers, so clearly people are looking for ways to cut costs. My two businesses offer money-saving ways to enjoy life — even when there is a problem with cash flow.
"My sons Giovanni and Crispian help run my shop. It's important families pull together during tough times and they make me feel confident we can face the recession head-on. Three heads are always better than one."
By numbers: takings are static.

LINGERIE & ACCESSORIES

Precious Lingerie and accessories
Trader: owner Nicola Edwards, 27, and her cousin, sales assistant Ellishia Edwards, 19.
History: the business has only been running for a year.
Crunch factor: "Upper Street has been panicking for several months now," says Nicola. "We were in serious trouble and the only thing I can do to entice customers in is slash all my stock by 50 per cent.
"I buy my garments six months in advance and I have been swamped with bras and knickers which are not selling. The half-price sale has kept us afloat but I'm starting to lose money now and I am worried about finding enough to pay for my next order at the end of October.
"Our type of product is niche and tends to attract customers who want to splash out a little on something fun and frivolous. The materials — silk, satin and lace — make each garment special, so they are a long way from your average white sports bra and bikini brief from Marks & Spencer. Unfortunately, that puts us in a difficult position because it is businesses like ours that get hit first in times of financial crisis."
Forecast: "I feel frightened at the thought of the next two years ahead. Banks have been given more money to lend but realistically it makes no sense for me to take out a loan — I would just be adding to a debt I can't repay. I am hoping that things will start to pick up at Christmas and we can make that boost last through until Valentine's Day, when we usually see a rise in custom."
By numbers: takings are down 50 per cent and the business is making a loss.

DESIGNER MENSWEAR

Zee & Co
Trader: sales manager Tom Bryce, 24.
History: the store has been running for 25 years.
Crunch factor: "People are very wary, and in particular the top spenders are being affected which doesn't bode well for a business like ours," he says. "Every day we see customers come in, look around and walk out.
"The trouble is that in times like these, people are afraid to put their hands in their pockets to buy something that is deemed a luxury purchase.
"We buy in a lot of our labels from France. The euro has gone up so much that our cost to buy and import has soared. This is the same for all the goods we have to get delivered.
"A year ago we may have bought a pair of Converse trainers for £5 and sold them for £29. Now the same pair will cost £10 so our profit margin decreases."
Forecast: "We are hoping our reputation and our loyal customers will keep us going strong. I expect in the short term people will tighten their belts but I think if we can just ride through it, those people will return and trade will pick up."
By numbers: sales have remained static but costs are up.

THE RESTAURANT

Rodizio Rico
Trader: manager Manuel Inacio, 42.
History: open for four years.
Crunch factor: "A year ago we were buying a kilo of beef for £7.50 — now it is £12.50. This is a big increase and as a result I am having to make huge mark-ups and profit margins are decreasing," he says.
"Our restaurant is one of the biggest in Upper Street but now it is empty on week nights and trade is getting less on weekends. This time last year we were already fully booked for Christmas parties and this year we haven't a single reservation. This is all because of the credit crunch."
Forecast: "We have 32 members of staff but with so little custom we do not need that many any more. If this recession continues or worsens, we will have to lay off staff. It breaks my heart but whatever affects the big men affects the little men, too." By numbers: takings are down
25 per cent.

TRAVEL AGENT

Intrepid travel
Trader: manager Simon Graham, 31.
History: running for four years.
Crunch factor: "Last October we were busy and this October we are not so busy," he says. "Travel is seasonal but we have to face facts — people are desperately trying not to splash out and for the most part travel is not a necessity, it's a luxury.
"Taxes have increased and aviation costs and fuel surcharges are being passed on to the customer. If you compare prices in our 2009 brochure to the one for 2008, you can see some of our trips have increased in price by as much as 25 per cent."
Forecast: "We know this situation will get worse before it gets better so we are planning to launch a marketing campaign specifically aimed at people who are taking a career break. People may have lost their jobs but many could be persuaded to spend part of their redundancy package on getting away from it all and taking the opportunity to travel.
"Summer is always our best time of year and the effects of the economic problems didn't really reach us until after the peak season. Luckily a lot of stuff for winter has been booked in advance as well."
By numbers: the company has seen 20 per cent growth year on year but is unsure about 2009.

THE WINE BAR

The Green
Trader: manager Chad Sheldon, 35.
History: taken over by Mr Sheldon in April after the previous company went into liquidation.
Crunch factor: "A few of our regulars were employees of Lehman Brothers when it went bankrupt last month," he says. "They were all in here drowning their sorrows. We are clearly in alien territory and it is difficult to predict the long-term effects.
"Our suppliers are increasing their costs because of fuel surcharges and we have seen a 10 per cent rise in the amount we are paying for products. We have to avoid passing that cost on because raising prices will put off people who are also having to penny‑pinch. It's a Catch-22."
Forecast: "We attract a lot of gay customers and it would seem the pink pound is still strong. But after the excitement of Christmas and New Year we are expecting things to get progressively worse. When that happens we plan to ride out the storm. I just hope that we survive it."
By numbers: takings are static but profits are down 10 per cent.

THE FLOWER SHOP

Angel Flowers
Trader: florist Joan Harden, 43.
History: running for 15 years but recently lost its sister shop in the nearby Angel Centre to "extortionate" rent increases.
Crunch factor: "A lot of our regular clients are big organisations which buy in floral displays for their offices," she says. "The biggest change we have seen is a slump in the number of displays being ordered by restaurants and airports.
"Previously they might have ordered two or three bouquets but now they are making do with one small vase arrangement every two weeks. We buy all our flowers in from Holland and our supplier there buys them at auction. Any cost increases we see from them, we may be forced to pass on to the customer which we will avoid doing for as long as possible."
Forecast: "We have a shop online which boosts profits because we get more custom than just those people who walk by. Our plan is to keep an eye on products, sales and labour costs.
"We use freelance florists so our workforce is flexible — that will help us a lot when times get tough. You never know; when faced with all the doom and gloom of the day-to-day grind, people might start to buy more flowers to cheer themselves up."
By numbers: takings are static.