Agencies hit by retailer slump

High street Comms industry losing out as retailers feel full force of the economic downturn.

Loss: Borkowski PR worked on the Zavvi account for nine years
Loss: Borkowski PR worked on the Zavvi account for nine years

The PR industry is being hit by high street names going bust, with Land of Leather the latest firm to inflict misery on its agency support.

The company stopped working with financial shop Hudson Sandler when it went into administration earlier this week. Hudson had worked on the account since the firm floated in 2005, handling its financial PR, crisis management and corporate reputation.

Other agencies have also been affected by retailers being forced into administration. Siren PR quit its six-figure account with MFI in November after six months working for the retailer. The agency had worked through the firm's management buy-out in September but took the decision to stop working with MFI after encountering difficulty getting a clear message through to stakeholders.

ZPR lost its six-figure account with Woolworths following the retail giant's collapse last year. However, because of Woolworths' widely known precarious financial position, account fees were being paid in advance.

Consumer shop Borkowski PR has been forced to make two junior staffers redundant following the loss of its long-standing client Zavvi. Borkowski had worked with the music chain, formerly Virgin Megastores, for nine years, bringing in £60,000 a year in fees.

Other agencies to stop working on clients include Powerscourt, which handled financial PR for Waterford Wedgwood for four years. Also Peppermint PR stopped working with Adams Kids, an account it held since May 2008, when the company went into administration in December.

This week the British Retail Consortium (BRC) released figures showing a 3.3 per cent fall in UK retail sales values and predicted 2009 would be a difficult year for retailers.

PRCA director general Francis Ingham advised agencies to protect themselves from clients potentially defaulting.

'Ensure that you have a signed contract before you start. Take one month's payment upfront; this then counts as the final month's payment should the contract end,' he advised. 'Agencies must stop working if the client is in arrears with payment. If a client didn't pay for a product then you'd demand it back but you can't get time back.'

 

HOW I SEE IT - Kevin Taylor, President, CIPR

'PR does not live in a recession-proof bubble. If you need to cut costs, do it quickly but with compassion.

Be open and honest with staff throughout any changes. Your duty is to look after the staff that you are keeping.

Avoid over-dependence on one or two clients at all costs.'

3.3% - Fall in like-for-like retail sales from Dec 07 to Dec 08*

2.6% - Fall in like-for-like retail sales from Nov 07 to Nov 08

7 - Number of consecutive months sales have fallen

Source: BRC.

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