Retail has always been a highly dynamic industry, intensely competitive and fighting for a share of the wider consumer spending pot. This is an industry used to dealing with a constant diet of change. However, the change we are seeing today is far more profound than anything the past has thrown up. We are now seeing by far the most challenging period in retail history. A reshaping of the industry’s structure and economics is unfolding, and most of the real change is yet to happen.

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Monthly Archives: October 2014

Tesco’s Main Board

So Tesco has appointed two new non-execs. And one is a former Ikea CEO. The fact that he will be the only retailer on the company’s Main Board is surely fundamental? While the media attention has recently focused on the financials, the underlying issues faced by the company are retail ones. They have to do with a business which has lost its empathy with customers and forgotten how to sell to them. This is the background to the financial errors of judgement.

Whatever mea culpa might emerge from the various investigations, Tesco needs to wrest back control of its own destiny and this is all about retailing. Does it have the skills to do this? The huge decline in its share price doesn’t just hurt institutional shareholders. It makes senior executive retention and recruitment much harder. I suspect that just one retailer on the Main Board will not be enough

M&S Baby is born

Marks launching M&S Baby is an interesting one. The idea of pulling all its baby-related products maybe sound on paper but does it sync with footfall and the way people shop? The company’s core customers have aged over time and are now in Grandparent territory. Will they represent sufficient demand on their own to justify a separate, dedicated Baby department? I very much doubt it.

I suspect that in order to work M&S Baby will have to attract material footfall from the core market: existing Mums of young kids and Mums to be. There will be very little existing footfall from this group to build on. The numbers will be extremely challenging. Given pressure on sales and margins right now, I would have thought the opportunity costs of this initiative would have been quite off-putting.

Fashion feels the heat

With everyone’s attention on the free-for-all in food, there is blood on the floor in fashion. With September unseasonably warm and some high temperatures promised for the end of this week, selling Autumn fashions has proved extremely difficult. This is why there are so many sales on so early in the season.

This warm weather has gone on for so long now that sales lost will not be recovered and everyone’s trading performance will be hit. Of course there is no democracy in the marketplace so some will be hit harder than others. Next’s decision to move to further segment its seasons has been done in very timely fashion. This will insulate it to some extent. M&S is less likely to escape the fallout. In spite of improvements in product quality Marks has found it difficult to make progress, even when demand across the market at large has been reasonably good.

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