Comment – Retail Gazette https://www.retailgazette.co.uk Sun, 17 Dec 2023 23:52:09 +0000 en-GB hourly 1 https://www.retailgazette.co.uk/wp-content/uploads/2024/02/cropped-rg-logo-32x32.png Comment – Retail Gazette https://www.retailgazette.co.uk 32 32 Black Friday 2023 teaches us to focus on value, not deals https://www.retailgazette.co.uk/blog/2023/12/black-friday-2023-value/ https://www.retailgazette.co.uk/blog/2023/12/black-friday-2023-value/#respond Sun, 17 Dec 2023 23:33:35 +0000 https://www.retailgazette.co.uk/?p=151159 The all-important retail golden quarter has undoubtedly seen a rocky few years.

The impact of the pandemic has been followed by economic uncertainty and high inflation, leading to tightened budgets.

However, with no lockdowns to contend with and inflation beginning to come down, the hope is among retailers that increasing consumer confidence can lead to a bumper Christmas and fruitful 2024.

While things are looking up for the sector, there’s no doubt that traditional shopping habits are changing. Black Friday is a useful barometer for this.

Kelly Askew, Accenture
Kelly Askew, Accenture

Indications suggest that transaction volumes, footfall and sales were all down or flat this year, as consumers failed to respond to promotional activity and discounts.

This provided a sharp contrast to last year, where shoppers looked out for good deals, in spite of predictions that the cost-of-living crisis would dampen the event.

In fact, our recent survey of over 2,000 UK adults has suggested that people are less engaged with big sales moments this quarter, with over half (57%) saying that they were not planning to take advantage of Black Friday or Boxing Day sales, despite the cost-of-living crisis continuing to be front of mind.

What does this tell us about consumer priorities when prices climb? And how can retailers protect market share and boost sales in the run up to Christmas and beyond?

Cutting back

Shoppers are undoubtedly still struggling financially this Christmas. Our research showed that two-thirds (64%) of UK adults are planning to cut back on their spending – although this is a slight decrease from the 70% who said they would cut back in 2022.

This is spread across the high street, with 44% planning to reduce spending on presents, almost a third (32%) on eating out in the festive period, and 29% intend to reduce spend on food and drink at home.

Many may have anticipated that, in this context, big promotional moments around Black Friday and Boxing Day could have been bigger than ever, as consumers searched for deals to cut the cost of Christmas shopping.

However, in recent years, it appears that scepticism has grown over the genuine value of these deals. As people look to more considered and sustainable shopping, impulse purchases on cut-price items may be on the decline.

Don’t just slash prices

This change in shopping habits calls for retailers to adapt and find new ways to drive sales with shoppers.

Many have responded already by bringing festive trading discounts forwards, stretching promotions across longer time periods.

This gives consumers more time to make considered purchases, and brands more time to bring themselves front of mind ahead of the Christmas shopping crunch.

Black Friday

However, what is arguably more important than steep discounts is giving customers good value for their purchases.

This isn’t just about price – it’s about emphasising longevity or quality of products to help customers justify their purchases while budgets are stretched.

Retailers should also focus on delivering value in a personalised way. Instead of blanket discounts, retailers could leverage data and insights to offer discounts on products that a customer often purchases, or showcasing products they are likely to be interested in based on previous spending.

Value perception also comes from delivering a seamless experience across different channels – from in-store and online experiences, to marketing.

Customers who have a positive interactions with a brand at every point in their journey are more likely to maintain loyalty, throughout the year as well as the festive period.

Black Friday and other golden quarter sales periods can often feel like a race to the bottom, but that’s not how consumers are shopping any more.

Instead of slashing prices to draw consumers in for set days a year, retailers have a great opportunity to develop loyalty for the long haul.

They should be focused on proving that they’re worth people spending money on, particularly in a time where budgets are tight – helping to create a merry Christmas for consumers and brands alike.

Kelly Askew is Accenture’s retail strategy and consulting lead in the UK and Ireland.

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2023/12/black-friday-2023-value/feed/ 0
Not dead yet: Why the UK high street needs a reinvention to stay relevant  https://www.retailgazette.co.uk/blog/2023/09/high-street-reinvention/ https://www.retailgazette.co.uk/blog/2023/09/high-street-reinvention/#comments Tue, 05 Sep 2023 06:38:14 +0000 https://www.retailgazette.co.uk/?p=143900 The future of the high street has been a source of debate and column inches for years but never has the bricks-and-mortar model been put under more strain than during the Covid-19 pandemic, when retailers were forced to shut, and then totally reimagine how they serve shoppers.  

Kelly Askew, Accenture
Kelly Askew, Accenture

Since then, the sector has staged an impressive recovery, but it continues to weather a challenging macroeconomic backdrop, thanks to high inflation and a cost-of-living crisis that has caused households to tighten their purse strings.

All of this has been playing out amid a shift in how we shop, with more people turning to online.  

However, shoppers have yet to fall out of love with the high street altogether. In fact, our recent survey found that, of those who had visited their local high street in the last year, nearly 8 in 10 (78%) would feel sad if it was no longer an option for shopping.  

While the UK’s affection for high street shopping persists, there are clear warning signs that it’ll require reinvention if it’s to survive. Almost half (47%) agreed that their high street is no longer relevant and needs to change.  

So how can local retailers keep people coming back in-store? And what could the high street of the future look like?  

Key to staying relevant will be adapting to changing consumer needs and shopping habits. Right now, we know that one thing is front of mind for consumers and businesses alike: cost.  

For retailers, rising input costs for things like raw materials, wages and energy have put an unprecedented strain on their margins. While this is likely to continue to present a challenge in the months ahead, there are marginal gains businesses can make to streamline their operations. 

How tech can transform retail

Technology is a crucial part of the solution. For instance, making some in-store or logistics functions automated can enable businesses to save money. This in turn could enable them to pass on some of these savings to consumers, while making their in-store offer go further.  

As well as streamlining logistics, technology can enable local retailers to evolve their customer service offering. This is an area that bricks-and-mortar retailers have traditionally always been able to excel in versus online. 

People shop in-store because they want to see the products in person and purchase it instantly, they want advice, or they simply like the experience.  

John Lewis customer experience desk
John Lewis’ customer experience desk

Here, technology can help. The introduction of automation and AI could help to transform the role of retail employees, by freeing them from some of the more menial tasks that prevent them from interacting meaningfully with customers. 

As tasks such as restocking shelves become automated, staff will be able to focus their time on other more engaging aspects of their job, which require a crucial human touch. 

For instance, we could see greater numbers of consultative advisers who would support customers with expert advice to inform their purchase decision in stores. This could also help to drive footfall, with shoppers returning to the store if they believe that the advice they’re being offered adds value to their shopping experience.  

Alongside customer service, undoubtedly, one of the biggest changes that consumers will see will be the personalisation of the shopping experience.

We’ve already started to see this from retailers such as M&S which, at the end of last year, trialled an AR app called List & Go that allows shoppers to upload a list and be guided to where each product is in their local M&S. 

M&S List & Go app

Looking ahead, AI-driven systems could be used by retailers to customise prices or create special offers for individual customers when they walk into store. All of this will allow retailers to make their customers feel valued and special, and more likely to visit their high street.  

At a time when shoppers are being even more selective about where and how they spend their cash, the future of the UK high street lies in its relevance and ability to meet local needs. 

For many businesses, it will be about focusing on affordability, customer experience, and tailoring their offer to local demand. 

Whether that’s through investing in their customer service offering or using AI and automation to enhance the in-store experience, technology will play an important role in ensuring that the UK high street is fit for the future.  

Kelly Askew is Europe retail strategy lead at Accenture

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2023/09/high-street-reinvention/feed/ 1
Retailers that prioritise sustainability can boost sales and enhance brand equity https://www.retailgazette.co.uk/blog/2023/07/retailers-prioritise-sustainability/ https://www.retailgazette.co.uk/blog/2023/07/retailers-prioritise-sustainability/#respond Thu, 27 Jul 2023 05:30:08 +0000 https://www.retailgazette.co.uk/?p=141313 Operating a successful retail business is challenging at the best of times, let alone amidst a cost of living crisis and rampant inflation, with margins squeezed from all sides. With consumers forced to tighten their purse strings and reduce discretionary spending, retailers are focused on competing successfully for sales and shoring up brand loyalty, while tackling rising return volumes.

Ben Balfour

Returns has been one of the thornier issues impacting the industry in recent years; several major brands have blamed financial under-performance on difficulties associated with returns. In an effort to determine the extent of the ‘returns crunch’ affecting the retail sector, and the strategies in play to find a solution, we teamed up with Sapio Research to poll 100 UK retailers and 1,000 consumers.

The results revealed that returns are posing a significant challenge for the sector, with 51% of retailers experiencing a rise in items being sent back. 28% have seen returns leap by as much as 30% while 17% reported an increase of as much as 40%.

However, while retailers are understandably focused on boosting sales and tackling the issues at the coalface, there’s a real risk that other more long-term priorities could be neglected in the meantime.


Subscribe to Retail Gazette for free

Sign up here to get the latest news straight into your inbox each morning 


Sustainability is one of those priorities.

Although the research demonstrated the depth of the challenge caused by effectively managing rising volumes of returns, it also highlighted an interesting consumer shift in environmental awareness, coupled with growing consideration about the individual impact on carbon emissions when making purchases and sending products back.

With shoppers increasingly linking their purchasing habits to their environmental profile, it’s important that retailers don’t divert attention and investment away from sustainability.

37% of retailers report that consumers are more thoughtful about the volume of items they order, due to the environmental impact, and that this is causing shoppers to think harder about reducing their returns. When we spoke with consumers, 32% told us they had ordered fewer items due to concerns about sustainability, while a quarter have even felt guilty about sending goods back to retailers.

Sustainable returns could well be the next major battleground for retailers. As environmental consciousness increasingly begins to impact what we buy, and how we make returns, it’s vital that retailers and brands remain focused on making changes now. Failing to do so risks falling behind the competition, damaging brand equity and denting future sales.

Some brands have already identified the shift taking place around returns and customer expectations, with 36% planning to invest in making their supply chain and returns processes more sustainable.

 

Given that around just one-in-ten retailers manage to return 76-100% of returned items back to Grade A re-sellable stock, it’s clear that the industry has some way to go. 11% of retailers send returned items to landfill, 16% recycle goods sent back by shoppers, 13% donate items to charity and 41% – the majority – sell products via discounted channels.

If retailers are to compete successfully on sustainability – and avoid being left behind – now is the time to invest in supply chain improvements, making the necessary changes to not only reduce the environmental impact of returns, but to transform the entire process from start to finish.

Retailers should take a holistic view across their operations, from the sourcing of materials and products and how they’re transported, through to storage, dispatching items to the customer and, of course, returns. Many improvements can be made using modern, bespoke software to create a transparent supply chain with a ‘control tower’ view. Such an approach can enrich the flow and availability of data, providing the insights required to minimise wastage and maximise efficiencies – a great first step towards improving sustainability.

Undoubtedly, the financial impact of returns – both for retailers and consumers – will continue to rank highly over the coming months and years. However, this shouldn’t blinker the importance of other factors. Nearly a third (31%) of consumers are as concerned about the cost of sending products back, as they are about the environmental impact. Enhancing supply chain sustainability is growing more and more important for customers, and retailers need to ensure they are taking the necessary steps to remain relevant.

Click here to download a copy of our latest eBook, with more detail on the impact of the returns crunch on the retail industry, our consumer findings and the options for retailers in tackling rising return volumes to improve margins and cut costs, while maintaining free or low-cost returns.

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2023/07/retailers-prioritise-sustainability/feed/ 0
THG Ingenuity CEO: ‘We don’t talk about digital transformation, we just do it’ https://www.retailgazette.co.uk/blog/2023/06/thg-ingenuity-ceo/ https://www.retailgazette.co.uk/blog/2023/06/thg-ingenuity-ceo/#comments Thu, 15 Jun 2023 11:00:26 +0000 https://www.retailgazette.co.uk/?p=137905 Never has a year in my career gone as quickly as the last 12 months.

The reason is simple – the environment I work in encourages me to be the best version of myself. The opportunity I see today remains as incredible as it was a year ago. And the task at hand requires relentless focus and stretch. As they say, time flies when you’re having fun!

People have asked me why I joined THG. I answer in two parts:

  • In Matthew Moulding, I found a brilliant entrepreneur who deeply cares about the business he has built, and I knew I could learn a lot from him.
  • In THG, I found a company with real heart and ambition, where I could channel my experience and passion.

One year on, I wasn’t wrong.

I am blessed to have worked at some brilliant organisations in my career. THG is the first organisation I’ve worked at that is truly digitally native. We don’t talk about digital transformation, we just ‘DO IT’.

Data point: back in 2016, THG built and launched 74 webstores in 12-months, fully operational with localised consumer propositions. I wonder how many organisations could do this in 2023?

Over the last year a wide variety of people in the enterprise world and my network have asked me, ‘What does Ingenuity actually do?’ I love to describe it as a ‘superhighway for brands’, a complete commerce solution built on 18 years of hard graft.

Every time a CEO and their board visits our campus, we always get the same response – ‘Wow! We didn’t realise you had this breadth and depth of capability.’ Somehow, it still amazes me every single day too.

This business has been built with the goal of solving some of the most complex problems in the world of retail and ecommerce by acquiring the right capabilities, internalising them at the optimal cost, adopting them on our own retail brands and platforms and then externalising them to global consumer brands and retailers, to help them accelerate their plans – the essence of what ‘Ingenuity’ stands for.

What has personally stood out for me at THG is the obsession to ‘detail’ in everything we do. I’ve heard many global brand leaders talk about being consumer-centric, consumer-obsessed – all well and good.

But what I have learned at THG is that there needs to be a very big shift in mindset and muscle for consumer brands to switch from getting to the back door of a retailer (which they excel at), to getting to the front door of a consumer – and be obsessed about it at every single touchpoint every single day.

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2023/06/thg-ingenuity-ceo/feed/ 2
Reinventing the supermarket: From checkout-free to pre-ordering https://www.retailgazette.co.uk/blog/2023/04/reinventing-the-supermarket/ https://www.retailgazette.co.uk/blog/2023/04/reinventing-the-supermarket/#respond Fri, 21 Apr 2023 05:54:23 +0000 https://www.retailgazette.co.uk/?p=134433 Aisle, counter and checkout – the grocery store format is one which is familiar to all of us.

When you imagine a typical supermarket, this format and layout has remained largely unchanged since my grandparents were doing their weekly shops.

Kelly Askew, Accenture
Kelly Askew, Accenture

This was turned on its head when the Covid-19 pandemic hit.

Overnight, consumers and retailers alike were challenged to rethink and adapt. We saw a higher reliance on online shopping, a new demand for instant grocery orders, and a resurgence in shopping locally.

At the same time, for some, in-store grocery shopping was a rare opportunity to get out of the house, so the experience was more important than ever.

Whilst we’ve shed some of the habits of the pandemic, some of the shopping behaviours have remained popular, and there is an opportunity to improve the grocery store model to suit the best of both worlds.

Research from Spryker last year revealed that more than half (60%) of consumers in the UK buy at least some of their groceries online, though only 16% of people ordered all or most of their groceries via the internet.

There’s no question that the convenience and ease of online transactions have been ingrained in our day-to-day, but with people enjoying a combination of channels for grocery shopping.

How can retailers merge the online and offline experience to improve the customer journey even further?

Using tech in the grocery shop

Technology holds the answer, and this can go further than self-checkouts, which still require shoppers to queue.

“Rather than displaying items we buy week-in-week-out on the shopfloor, a futuristic store format could have these items in storage for people to pre-order ahead of their weekly shop.”

For example, thanks to artificial intelligence, image recognition, sensors and barcodes that scan customers’ phones at the store entrance, Just Walk Out technology (JWO) allows shoppers to simply enter a store, take what they want, and leave, avoiding the dreaded queue at checkout.

Whilst Amazon Go and Amazon Fresh are perhaps the best-known examples of this technology in action, other British retailers are experimenting with similar innovations.

For instance, as part of its investment in new digital services, M&S has introduced a Scan & Shop service, which lets customers use their phone to scan and bag food items as they shop, and pay directly via the M&S app before exiting the store.

M&S Scan & Shop
M&S Scan & Shop

Not only does technology make the customer purchase journey as streamlined as possible, but the retailer can remove excess cost and waste through reimagining the grocery store format.

Updating the physical store layout will better cater to the merging of online and offline shopping.

We all have certain items or categories in our weekly shop that we buy week-in-week-out, that we don’t necessarily need to look at or feel before purchasing, such as toiletries, cleaning items or tinned goods.

Rather than displaying these items on the shopfloor and making people peruse every aisle, a futuristic store format could have these items in storage in a separate part of the store for people to pre-order ahead of their weekly shop.

“By reinventing the store format, the whole purchasing process in store can be quicker, easier and more enjoyable for shoppers.”

The picking and packing of these items can be carried out by robotics and AI, enabling these tasks to be automated, freeing up store workers’ time.

Instead, they can focus on customer service and value-added tasks, whilst reducing the need to restock as many shelves on the shop floor.

Once the customer heads in store for collection, they can then browse and purchase the rest of their shopping list based on what they want to see in person, allowing for more experiential shopping.

By reinventing the store format, the whole purchasing process in store can be quicker, easier and more enjoyable for shoppers, whilst giving businesses more opportunity to experiment with the store layout and operate in a more cost-effective way.

Embedding digital innovations into the bricks-and-mortar experience through new technologies is a sign of businesses looking to the future.

By investing in things like JWO technology or allowing customers to pre-order certain items, businesses are giving customers a quicker, easier and more enjoyable weekly shop, while simultaneously reinventing their store operations.

In a world where the future of the high street is under pressure, the retailers who are willing to reimagine the in-store experience will come out strongest.

Kelly Askew is Europe retail strategy lead at Accenture

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2023/04/reinventing-the-supermarket/feed/ 0
Asda’s petrol stores acquisition will get it motoring again https://www.retailgazette.co.uk/blog/2022/09/asda-growth-opportunity-co-op/ https://www.retailgazette.co.uk/blog/2022/09/asda-growth-opportunity-co-op/#comments Fri, 02 Sep 2022 08:03:32 +0000 https://www.retailgazette.co.uk/?p=117105

Asda was given a gift from the gods this week when The Co-op sold the Issa brothers its portfolio of 132 petrol forecourt sites

The supemarket’s owners, the Issa brothers, have pinpointed convenience as a key tenet of their growth plans, which on paper makes complete sense.
Convenience stores continue to outperform supermarkets. Just last week data from NielsenIQ revealed that convenience store sales jumped 5.4% in the four weeks ending 13 August, with sales volumes up 2.7% compared to a 3.8% sales volume decline at supermarkets.
The big problem in the Issas c-store masterplan was how it was going to grow this part of its business rapidly.
Asda is a late-comer to the c-store party with a fledgling convenience business, especially compared to Tesco and Sainsbury’s. The c-store space race over the past decade means that many of the prime sites had already been snapped up.
The Co-op petrol station store acquisition solves that problem and gives Asda a ready-made portfolio of profit-making c-stores – the shops acquired made £53 million EBITDA on £863 million sales in the year to June 2022.

SUBSCRIBE TO RETAIL GAZETTE FOR FREE

Sign up here to get the latest news on Asda and the UK grocery market straight into your inbox each morning


But why does The Co-op want to sell the business?

The Co-op is offloading the stores, which it says are “non-core”, and will reinvest into its “core” c-store business, along with pricing and reducing its debt.
The Co-op has been suffering of late with annual pre-tax profits plunging £70 million and has been vying to cut costs by both scaling back projects and cutting 400 head office jobs.
The store sale is more about boosting its balance sheet than getting rid of an underperforming part of its business.
What is non-core for The Co-op looks to be spot-on for Asda. The supermarket’s new owners, the billionaire Issa brothers, made their fortune in petrol station retail through EG Group. It’s an industry they know well and see a huge opportunity for Asda in.
The grocer already has a fledgling petrol c-store business with 36 Asda On The Move shops with plans to roll this format out across EG Group’s petrol stations “as quickly as this can be achieved”.
Petrol forecourts can be lucrative places. Retailers have a captive audience and price, which appears to be the be-all in grocery retail right now, is less of a factor.
Shoppers grabbing a sarnie and a pint of milk when topping up their petrol don’t tend to think “could I get that cheaper at Aldi?’.
The Co-op has gifted Asda a great growth opportunity in the fastest-growing part of the sector.  It’s a growth opportunity that is much needed as the grocer is struggling in a market where the discounters are a more attractive shopping option than ever for hard-up consumers.

Asda like-for-like sales, excluding fuel, fell by 1.9% year-on-year in its second quarter to 30 June and plunged 9.2% the quarter previously.

It may only be 132 stores but this acquisition will put Asda on the map in convenience store retail and puts the accelerator on the Issa brothers’ growth plans.
It also shows how Asda’s acquisitive owners are well-placed to pounce on opportunities to get the grocer motoring. The rest of grocery retail beware.

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2022/09/asda-growth-opportunity-co-op/feed/ 1
Kingfisher’s Henri Solere: The cost-of-living crisis is a moment for own brands to shine   https://www.retailgazette.co.uk/blog/2022/07/kingfisher-henri-solere-own-brands/ https://www.retailgazette.co.uk/blog/2022/07/kingfisher-henri-solere-own-brands/#respond Fri, 29 Jul 2022 12:00:18 +0000 https://www.retailgazette.co.uk/?p=114671 As households feel the pinch of the rising cost of living, nearly every retailer is starting to see a shift in how their customers are spending. 

With shoppers looking for ways to cut back, own brand products, which are typically sold at a lower price point, are seeing a rise in sales. 

In the 12 weeks to the 12 June, Kantar reported that sales of own label products rose 2.9%, and leading retailers have said that they expect own brand sales to continue to climb. 

Own brand products have a number of benefits for consumers, and against the current backdrop of rising living costs, affordability has leapt to top of the list. 

Kingfisher chief offer and sourcing officer Henri Solere
Henri Solere

At Kingfisher, our own exclusive brands – or OEBs as we call them – are 15-30% cheaper than branded products. Our OEBs have significantly grown in popularity in recent years, up 19% since 2019 and now account for 45% of Kingfisher Group sales.  

But while the affordability argument for buying own brand is clear, there remains a lingering perception that own brand can mean compromising elsewhere – whether that’s on quality or on other considerations such as sustainability. 

Products that meet customer needs

That might have been true twenty years ago, but today’s reality could not be more different.  

It is no longer about sourcing the same products for less, but instead about how we can add value as retailers who know their customers inside out, using that insight to design and develop products that truly suit their needs. 

With consumers thinking more about their finances, now is the time for retailers to step up and show what own brands can deliver.  

The truth is that most own brand products have gone through an exceptionally rigorous design, testing and development process. 

For Kingfisher, the development of any of our OEB product starts with our customers’ home improvement challenge – whether that’s in DIY or trade – and we work back from there. We then find ways to develop and supply the product at scale, so great design is affordable and accessible to everyone.  

To give an example, through listening to our customers, we learnt that they need more space efficient, multi-functional areas in their homes, particularly in the kitchen. So, we created the Romesco smart space sink, which has the functionality for a work surface on top of the sink bowl for preparing food or drying dishes when it isn’t in use.

As retailers, we need to make sure we are not just thinking about now but pre-empting what our customers will need in the future. 

For example, our team undertake in-depth trend analysis to identify changes around how we live in and improve our homes, so we can design products that make customers’ lives easier for the long term.  

The success of any of our OEB products is rooted in our ability to truly understand a customer’s problem and create a product that fixes it, with our award-winning in-house design team dedicated to delivering just that. 

“There remains a lingering perception that own brand can mean compromising elsewhere… but today’s reality could not be more different.”

Having an own brand offer means that a retailer has complete control over the process of bringing products to market. Our depth of knowledge and expertise in home improvement means that we have the ability to create products that solve our customer’s challenges, with the reassurance that they are buying from a business that they can trust.  

Making own brands sustainable

The ‘no compromise’ approach doesn’t just apply to quality. We want to help customers live more sustainably, without a price premium. 

Our Erbauer 18V power tools are an excellent example of this. We know that most carbon emissions when manufacturing drills come from the battery and charger, so we’ve developed a product with a battery that can be used in multiple tools thanks to its modular design. In addition, the products’ brushless motors mean they last longer between charges, use less energy and have a longer product life.

Going forward, we’re committed to making sustainable home products affordable and accessible to all.

That’s why, despite the cost-of-living crisis, we’ve increased our sustainable home product target to account for 60% of sales by 2025/26, 70% of which will come from our OEBs.   

As retailers, we need to tackle head-on the outdated myth that buying own brand means buying an inferior product. 

The innovation and expertise that goes into the development of own branded products is remarkable, and the cost-of-living crisis means it has never been important to show what they can do when it comes to affordability and innovation. 

It’s time for retailers to rise to the challenge and prove what own brand is really capable of achieving for consumers. 

Henri Solere is chief offer and sourcing officer of Kingfisher

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2022/07/kingfisher-henri-solere-own-brands/feed/ 0
Amazon’s Tesco price match: UK grocers must pay attention to online giant https://www.retailgazette.co.uk/blog/2022/07/amazons-tesco-price-match-uk-grocers-must-pay-attention-to-online-giant/ https://www.retailgazette.co.uk/blog/2022/07/amazons-tesco-price-match-uk-grocers-must-pay-attention-to-online-giant/#respond Tue, 19 Jul 2022 15:51:51 +0000 https://www.retailgazette.co.uk/?p=114074 The UK grocery market is one of the most competitive in the world. It is dominated by the ‘Big Four’ supermarkets, alongside the likes of Aldi, Lidl, Co-op, Waitrose and Ocado. But now they all need to start really paying attention to Amazon.

Miya Knights
Miya Knights

The global retail giant has been building out its food offer in the UK since launching its  ‘Fresh’ offer online in 2016. Having also now opened a number of physical convenience outlets, it declared its true ambitions Monday by price matching Tesco’s Clubcard prices

I’ve studied Amazon strategy closely for a number of years now and believe this move is significant for a number of reasons: the main one being its intent to grow UK grocery market share at a key time in its growth trajectory, where its traditional sources of profit are waning.

Gaining a foothold in food

Amazon needs food to grow. It is the biggest non-food online retailer in many of the countries it operates in. But, it has historically struggled when it comes to selling groceries. Indeed, it is arguably difficult to see how its Whole Foods acquisition has added value. 

But it needs food because it is the biggest consumer category for spend, accounting for 40% of global retail sales.

So, Amazon can only lay claim to being a dominant competitor in the remaining 60%. It needs to increase its grocery penetration to sustain growth. 

Its desire to disrupt the industries and retail categories it enters is also well known. But it has found it difficult to crack UK food in particular because of its well-established brands that already operate in an ultra-competitive market with razor thin margins. 

Right time, right place

As the UK grocery food market is one of the most competitive, it’s easy to understand why Tesco recently introduced exclusive discounts for members of its Clubcard loyalty scheme. The initiative complements its own price matching efforts against the likes of Aldi. 

But this has left Tesco exposed to Amazon’s own price matching move.

While Amazon monitors and matches millions of prices a day, the fact it has never explicitly done so against another retailer until now shows just how much it is willing to give away in order to win. 

At a time when the cost-of-living crisis really begins to bite, Amazon is betting it can ride the coattails of Tesco’s initiative.

The disruptive difference being that its Fresh offer beats the competition by including free 1-hour delivery to Prime members where available.  

So, as Amazon inevitably continues to expand its coverage and harden its competitive stance, its incumbent rivals ignore the threat it represents to their market share at their peril

Miya Knights is the co-author of Amazon and Omnichannel Retail and publisher of RetailTechnology.co.uk

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2022/07/amazons-tesco-price-match-uk-grocers-must-pay-attention-to-online-giant/feed/ 0
Boohoo: Why charging for returns could lead to tears https://www.retailgazette.co.uk/blog/2022/07/boohoo-returns-charge/ https://www.retailgazette.co.uk/blog/2022/07/boohoo-returns-charge/#respond Tue, 19 Jul 2022 13:01:12 +0000 https://www.retailgazette.co.uk/?p=113962 Boohoo has followed Zara’s lead and quietly introduced a charge for customer returns.

It emerged last week that the online fashion giant now charges customers £1.99 for each parcel sent back.

The reasoning behind Boohoo’s move is obvious. The retailer has been hammered of late because of soaring returns.

Pre-tax profit plunged 94%, from £124.7m to just £7.8m in its full year to 28 February, and Boohoo said that a “significantly increased” returns rate, which was ahead against both expectations and pre-pandemic levels, was partly to blame.

At the same time shipping costs have also increased, which makes those increased returns more costly for Boohoo and its bottom line.

Although it may make sense from a P&L perspective, it’s a very risky move for Boohoo.

Returns are a reality in fashion. One in three items of clothing bought online are sent back, according to specialist ReBound.

Although for environmental reasons it would be great to reduce this, the truth is that many of these items are returned for good reason.

Fit can differ wildly from brand to brand in fashion. Although whizzy technology is helping customers to find the right size for them, there is no silver bullet.

In the world of online, our own bedrooms are the changing room where we find out what really fits us.

Of course, it’s not just about fit. People return clothing for a multitude of factors, including the quality of goods not meeting expectations.

With Boohoo’s keen price points, I imagine quality is an often cited reason for return. It is likely to smart with the customer that feels let down by the quality of a garment to be forced to pay £1.99 to return it.

Boohoo vs Zara

There’s a big difference between Zara introducing a returns charge and Boohoo. While Zara shoppers have the option of travelling to their nearest store to try-on the dress they have their eye on, Boohoo shoppers have no choice but to buy – and potentially incur the returns fee – in order to try.

Zara shoppers can also still return goods for free by taking them back to store, unlike Boohoo shoppers.

The biggest problem for Boohoo is that the returns charge makes it less competitive in the fierce young fashion sector where pretty much all major players offer free returns.

If shoppers are uneasy about paying for returns at Boohoo, they can check out similar outfits at retailers that do offer free returns such as Asos, H&M, New Look, Shein and even Boohoo’s stablemates Pretty Little Thing, Oasis, Warehouse or Misspap.

It may well have been wiser for Boohoo to test the waters by bringing in the returns charge at one of these smaller brands first to gauge the impact on demand rather than watch the impact on the biggest business in its portfolio.

I fear that demand will be hit. £1.99 is enough to make Boohoo shoppers think twice.

It may seem a nominal fee but at a shop where you can pick up a dress for less than a fiver, it could be a sizeable part of its customer’s increasingly squeezed budget.

The charge that is being introduced to protect Boohoo’s bottom line, may well end up having a much bigger impact on its top line.

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2022/07/boohoo-returns-charge/feed/ 0
Primark may be late to the online party but it could bring fizz https://www.retailgazette.co.uk/blog/2022/06/primark-may-be-late-to-the-online-party-but-it-could-bring-fizz-2/ https://www.retailgazette.co.uk/blog/2022/06/primark-may-be-late-to-the-online-party-but-it-could-bring-fizz-2/#respond Tue, 21 Jun 2022 14:09:33 +0000 https://www.retailgazette.co.uk/?p=112023 Lovers of cheap fashion rejoice! Primark has finally bitten the bullet and ventured into the world of online shopping. 

Ok, it’s not quite a full online offer, but its announcement that it will start offering click-and-collect on kids products from 25 stores in the northwest later this year is still a dramatic about-turn for the value fashion giant who just last year was resolute in its decision to shun ecommerce.

The retailer was convinced that it wasn’t possible to make money when selling its low-cost wares online.

Last January John Bason, finance chief at Primark owner Associated British Foods, told Retail Week: “If you go online, or even click-and-collect, you’re going to be adding costs,” he said.

“A third party needs to pick and pack individual items, and as soon as it comes out the carton it costs money. If it’s a pair of £1 flip-flops, by the time you’ve picked it your profit is gone. If it’s a £3 item, by the time you’ve picked it and packed it, your profit is gone.”

How will Primark make online work?

Bason makes a valid point. Profitability is a challenge online, particularly given customer expectations of low-cost delivery and free returns. This is bound to be even more of a challenge with Primark’s low price points. 

But what Bason fails to acknowledge is that Primark doesn’t have to play by the tried-and-tested rules of ecommerce. Such would be the demand for Primark online that it could set its own rules and protect its profitability.

When shops reopened after lockdown, across the country the store with the biggest queues outside was Primark. Its brand is one of the strongest on the high street as shoppers love its mix of on-trend fashion and homewares at astonishly low prices.

If it wants to charge £5, even £10 for delivery, it could. If it wanted to introduce a minimum spend of £50, it could. If it wanted to charge for returns, it could. Shoppers would still lap it up.

As it turns out, Primark has been very thoughtful about how it ventures into online. By pushing a click-and-collect-only offer, it is helping drive more footfall into the stores that it has invested millions in opening.

The expectation is that click-and-collect will drive incremental sales in stores when orders are collected but the retailer is using the trial to understand how much incremental spend is made, and in what categories. Click-and-collect also takes away the question of what to do with returns, which retailers such as Zara have started charging customers for. 

Primark will offer free returns to store and can monitor what level of products are taken back.

Click-and-collect is also a simpler and more cost-effective way to do online, though admittedly there are challenges around not letting the operations impact store standards.

The rationale to start click-and-collect in kidswear is also a smart move. It’s a category that Primark has strength in but an area in which space limits the size of its offer in store. Online gives it an opportunity to offer a much wider range, including toys and even furniture.

This is particularly compelling for shoppers like myself who live near a smaller provincial Primark store and rarely make the trek to a big flagship.

The click-and-collect offer effectively gives that provincial store the inventory of Primark’s biggest flagship, and more.

In fact, Primark says it will give kidswear shoppers up to 2,000 options via click-and-collect, which is up to four times the amount of choice in its smaller stores.

More than that, 40% of the product Primark will offer will be exclusive to click-and-collect shoppers. This means Primark can effectively use click-and-collect as a testbed to gauge the popularity of product and adjust buying volumes.

If it takes off via click-and-collect, Primark could increase order numbers with suppliers ahead of launching items in stores.

A significant opportunity online

Make no mistake, this is a big move from Primark, not some never-to-be-mentioned again trial that is quietly ditched. 

Boss Paul Marchant says the click-and-collect launch is the culmination of two years’ work, while Shore Capital analyst Clive Black points out that Primark has made a significant investment to enable the trial. 

This includes bringing in a new Oracle platform and upgrading its EPOS system as well as hiring key personnel from the likes of Asos, Farfetch and Expedia.

Associated British Foods boss George Weston told analysts that click-and-collect represents “a significant opportunity for the business”.

The big question is why didn’t the retailer venture into online sooner? Just think of the sales it could have retained during the pandemic. In the first half of its 2021 year alone, the value retailer estimated it lost a whopping £1.1 billion in sales during lockdown.

One can only imagine that the C-word played a role in convincing the retailer to take the plunge into online. With further lockdowns possible, an stores-only business is risky in this increasingly volatile world.

It may be late to the party but Primark has clearly been considered in its approach. All should be watching to see what lessons are learnt. It could well create a new – and more profitable – model for online shopping.

Click here to sign up to Retail Gazette‘s free daily email newsletter

]]>
https://www.retailgazette.co.uk/blog/2022/06/primark-may-be-late-to-the-online-party-but-it-could-bring-fizz-2/feed/ 0