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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.

Richardtalksretail is focused on analysing this change, anticipating the implications, and mapping how the key players across the various sectors are dealing with it. The regular Blogs in this public section of the site are a taster of the much more detailed analysis and forecasts in the premium section, reserved for subscribers.

If you want to know more, please get in touch.

What you get

Promotional Intelligence

2017 Week 25

Non-food retailers on promotion this week: 77%
Equivalent for same week last year: 79%
  • Our predicted significant hike in promotions this week proved to be spot on
  • Last week’s index rise is eclipsed this week, going from 63% to 77%

  • Week 25 sees major hike driven by 35 more major retailers launching Summer Sales
  • This week, all the country’s leading department stores are on sale, while fashion and footwear both shot up to 75%
  • One of the biggest increases is in home furnishings where this week, 90% of major retailers are running a sale

  • The four week outlook is very clear: the plateau at around (or just below) 80% of all non-food retailers has been reached
  • By Week 28, we will see retailers begin to move back to full price – how soon this happens will be a good reflection of the strength of current trading

** We track promotions daily by sector and company to support promotional optimisation programmes – for details contact admin@richardtalksretail.co.uk

Amazon, Whole Foods, and way beyond

The significance of Amazon’s deal to buy Whole Foods goes way beyond the deal itself. I have been discussing how and where the company would adapt its tried and tested model in order to crack the food market – it was clearly not going to achieve this by simply applying the standard model. So this is part of the answer. And it demonstrates an ability to be self-critical, acknowledge a weakness and how it might best be addressed, and act.

Owning Whole Foods and a relationship with high frequency customer engagements will be transformative. The opportunity to both serve existing customers remotely, and new customers with access to a store is important. But so too is the broader possibility of consolidating food with non-food deliveries and its positive impact on fulfilment economics – already largely unmatched but this raises the ante further in the medium term. How will any other retailer match Amazon’s fulfilment service without damaging its own economics?

A more subtle message from this deal is around physical shopping and the often asked question: does the store have a future? Well clearly Amazon thinks so, and they have been the number suspect behind the death of shops. A vote of confidence from what might have been thought the most unlikely source.

One last point. Food is the largest retail market, and next comes fashion. Like food, really successful selling of clothing requires a totally different approach to Amazon’s traditional model. How long before some strategic fashion acquisitions accelerate Amazon’s takeover of clothing too?

Promotional Intelligence

2017 Week 24

Non-food retailers on promotion this week: 63%
Equivalent for same week last year: 61%
  • Week 24 has produced the sharpest rise in non-food discounting so far this year
  • At 63%, the index is at it highest since Week 5 and the end of the New Year Sales

  • As the chart above shows, 2017 continues to track last year very closely
  • Fashion, footwear and department stores have lead the way with some 75% of retailers going on sale this week coming from one of these 3 sectors
  • By market position, premium retailers have been by far the most active in launching price promotions this week

  • The very close tracking of last year’s promo index makes the likely trajectory over the coming weeks and months very clear
  • Next will see another significant hike in promotions, taking us up towards the 80% levels of last year

** We track promotions daily by sector and company to support promotional optimisation programmes – for details contact admin@richardtalksretail.co.uk

Promotional Intelligence

2017 Week 23

Non-food retailers on promotion this week: 53%
Equivalent for same week last year: 57%
  • Headline non-food promos fell 7 points, down from 60% in week 22 but …
  • … still no sign of price rises coming through

  • This year continues to track 2016 very closely
  • Sharp increase expected in next few weeks as Summer Sales kick in

  • Most sectors down (7) and majority of rest unchanged (5)
  • Footwear is the exception – we expect to see a significant increase in footwear promotions next week

** We track promotions daily by sector and company to support promotional optimisation programmes – for details contact admin@richardtalksretail.co.uk

Tesco, Booker, Days, M&S and Body Shop

A quick tour around the retail week so far provides some interesting stories. Here are some, with some rapid response views. The CMA finally tells us what we already knew – it will spend ages and lots of our taxes in looking at the Tesco Booker deal. I’m clear – it should not be allowed because it will give Tesco too much power. Who actually owns Booker’s C-stores is far less important than who supplies them. The whole point of being part of a buying group is to “benefit” from concentrated sourcing. The CMA should do its job, protect the consumer, and red card the deal.

Days Department Store may be a store with departments, but that does not make it a department store. Arcadia’s Outfit stores incorporate Philip Green’s brands but that too isn’t a department store. I can’t see the traditional Jaeger customer shopping next to a Peacocks shopper, or a traditional Jane Norman shopper. The various brands will converge, otherwise putting them side by side will not work.

The newly appointed M&S Strategy Director seems to have no actual retail experience. The newly appointed head of Marks’ clothing has no apparel experience. This is a market where even those with loads of experience are struggling. And before you say “well, sometimes you need an outsider”, that never applies to surgeons or pilots. However, it does seem to apply to Presidents of the USA so maybe these appointments will be a raging success!

Finally, the process to sell Body Shop is nearly at an end. I have always thought this business would be worth more as a brand (with freedom to supply any stores) than as a retailer. So far this year it has been on sale in all but 3 weeks, materially more than the same period last year. Trading is clearly tough, but this also reflects maximising cash to ratchet up the price. How much that will compensate for all those expensive leases remains to be seen.

** We advise retailers on strategy and analytics. We also track promotional activity across the UK’s key retailers. Get in touch for details admin@richardtalksretail.co.uk

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