Watching the stories of doom and gloom being consistently broadcast on TV and written about in the media got me thinking. I thought back to a store managers’ conference at Vision Express where the CEO based his talk upon the following statements from great industrialist George Buckley, the former chairman, president and chief executive of 3M.
He said: “Every company in the world is dying. The core of its business is dying because of competitive attacks, the end of life of its products and maybe even the cannibalisation of its products. The trick is knowing it, calculating how fast you are dying and then working out how much more stuff you need to put in at the top to counteract what is leaking out at the bottom. If you only focus on short-term results and not on replacing that core or expanding your capabilities, then you die.”
This perfectly pitched and intuitive quote echo’s my previous thoughts on good customer experience. There are the high-flier retailers that continually replace and expand its capabilities and others who have had difficulties or have disappeared from the high street altogether.
Flying high – revenues and profits
Next – a staple of the high street, it got into the direct market very early through Next Directory – gaining experience that its impending competition was going to have to develop. Seasonal printed catalogues that had to be delivered to the customer’s home and the classic mail-order conundrum of returns becoming a core part of the business, meaning that these problems needed solving early.
By moving Next Directory online, it enabled a more flexible offer to be built, and this has further evolved into a platform for brands – significantly adding to the offer available in their high street stores. As with many direct businesses, Next owns a significant business offering credit for customers, which is also growing steadily. In announcing 2019 results, Next said it “believes the online fashion market represents a ‘long-term threat’ to its retail business but potentially, a much larger opportunity for the group as a whole”.
JD Sports – grown by understanding what they are excellent at, expanding globally, product exclusivity and knowing what its market wants.
Advertising campaigns using contemporary sporting figures and social media influencers continue to link relevance to its target market. Easy to shop in-store and online, integrated with a good, reliable, delivery network means convenience and simplicity to take ownership of your purchase.
Impacted by the countrywide slowdown in spending, JD Sports retain the freshness of range among the brands that its customers want, meaning that it is still number one in athleisure wear. Other fascias and acquisitions are built with a strategic eye, meaning that they add to the business, not drain from it.
Failing to counteract the leaks
Jack Wills – a quintessentially British brand, it was gradually dying until they fell into administration, and were eventually acquired by Sports Direct. Over expanding into expensive locations, while not making the sales to cover the costs. A staggering fact uncovered by Verdict Retail stated that just 4.1% of UK clothing shoppers aged 16-24 (their target demographic) shopped at Jack Wills in the past year.
The main reason given for this was that the range did not change much with a heavy reliance on sweatshirts and hoodies that never picked up on fashion trends and too much heavy branding on its products. Add to that the premium price tag, and it is clear that the eye was firmly taken off the ball.
HMV – a victim of the change from physical to digital products, and realising it too late. When music moved from vinyl to CD to digital download, they were left behind. Then, in the world of Netflix and Amazon Prime, the physical DVD and Blu-Ray sales dried up. Now with a new owner, stores are being revamped and a new flagship has been launched in the UK in Birmingham. How will it fare?
Office Outlet (formerly Staples) – failed to see the change in consumer behaviour in its core markets. As the dependency on paper and filing lessened, and as the printer industry actively targeted businesses with managed print solutions, there became less of a need for the stores’ estate and a retail model. Home consumers swerved the brand as it was too business-focused, and businesses found other ways to get the supplies that they needed.
M&S – the much loved high street store committed the cardinal sin of having a heavily promoted product and failed to execute on it. At its recent results announcement, M&S revealed it had failed to stock enough of its new range of jeans as worn by the television presenter Holly Willoughby. The CEO told investors that the errors had led to “the worst availability I have seen”. Disappointed customers are reluctant to give a second chance so let’s see what the next set of results look like.
For those fashion stores who target the older customer, I expect that there will be an interesting evolution. Where customers previously fitted into simple demographics, there is no longer a view that getting older means changing the place where you shop. Older consumers are shunning the stores that are traditionally seen as providing ‘fashions for the older consumer’ and we can see the impact on the financial results. Will this even be an evolution? Maybe a revolution is required in these stores.
Christmas is on the horizon and competition is there from pure-play online retailers but as we value experiences more and more, retailers have to work harder and harder to get us to spend with them. To repeat George Buckley’s point from earlier: “If you only focus on short-term results and not on replacing that core or expanding your capabilities, then you die.” This begs the question: “Who will be next?”