Amazing to see retail taking such a beating on the stock market today. All triggered by Next’s results which in themselves were not unexpected. More than any other quoted retailer, Simon Wolfson carefully manages market expectations to ensure no great surprises. Clearly, even he cannot force the market to take what he says about the trading outlook at face value. And equally clearly, the market has failed to do so.
This is by the toughest retail climate seen in modern times. Taking this observation to be gloomy is simply delusional. I know of no retailer out there that isn’t having to run much faster and many excellent brands are feeling the heat. The symptoms are there to see across the industry in physical and digital channels. And in responses. Most retailers have store closure programmes. Most retailers are culling people. Dealing with the cost line is all very well but it fails to address the core problem – weak sales.
A diet of discounting is only going to undermine brand perceptions and make sales weaker still. It is extremely difficult to communicate and added value message while discounting. Some leaders tell me that its different customers…that some only buy on mark down. I’m not convinced this is sustainable. Too many retailers try to please too many customers simultaneously and as a result, don’t really please anybody. Have confidence in your offering. Don’t discount outside seasonal clearance. Without this you cannot have genuine brand and price integrity aka trust. And without trust you are not going to be a player in this market for too long.
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