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.

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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.

Sainsburys at London Colney

Sainsburys at London Colney started life as Savacentre, the JV between BHS and Sainsburys back in 1990. In 2005 the hypermarket was split in two and became home to today’s Sainsburys and Marks and Spencer. The store is roomy, around 25% is given over to non foods and service counters from deli and butchery to cheese and fish run along the back wall. Sainsburys is a very solid food retailer that does most things pretty well. However, there are very few surprises. It is all quite safe and a little antiseptic. In the emerging grocery market where everyone is going to run much faster, is this enough? A genuine price war (as opposed to the phony one we have now) would certainly put pressure on Sainsbury’s margins.

M&S London Colney

M&S at London Colney looked good today. This is one of its group of ideal stores, benefiting from a large single level sales floor, lots of adjacent car parking and serving a reasonably affluent area with spending power. There has been a noticeable reduction in product density across clothing, with more spacious walkways and most importantly, the room to present far more impactful visual merchandising. As usual with Marks, how well this is translated to other, less well-configured stores remains to be seen but history is discouraging. Also impressive is the new footwear scheme which has much more of a proper department feel with sub-brands well delineated. As always, a full food offer looks very impressive and underlines how the dumbded down Simply Food format really does not do M&S Foods justice.

Dunelm – change of CEO

Dunelm is a business which generally slips under the radar. Its stores are out of town and never likely to open in the City or West End – the locations which so often represent the commentators’ radar. And homewares is not a market to very often set the pulse racing. Dunelm is actually an outstanding retailer and its consistently good results reflect a very well-run business which knows its market and what it wants. Sales of £730m and a net margin of 15.9% underline its quality. The company also announced that its CEO Nick Wharton is stepping down, having done a great job over the past 4 years or so. It appears that his strategic direction was deemed to be too cautious. He will be replaced by Will Adderley, part of the founding family and himself formerly CEO. He has been Executive Vice Chairman for 4 years.

Intriguingly Will’s father Bill, who founded Dunelm, acquired an equity stake of just over 3% in M&S in October last year. This represented a much needed vote of confidence for Marc Bolland who was under substantial pressure at the time.

Monsoon and branding

Monsoon stores nearly always look good, and a bit different. It retains its slightly quirky, Eastern-influenced boho-style feel. Under the leadership of John Browett performance has returned to its traditional levels after a blip in 2012. For some time I have wondered about the Monsoon brand and the extent to which its highly stylised look still retains its appeal. Recent results certainly suggest it retains a loyal base of customers.

Nevertheless, these customers will age. Will Monsoon age with them, or will it look to attract the next cohort? Either way is a significant challenge to a business with a very unique narrow handwriting with specific appeal.

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