This Week in Retail: Winds of Change

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This week we explore how different retailers are facing the challenge and opportunity to evolve their businesses to win the battle of survival the industry is going through

The main topic of the retail stories this week is change. First up are those that have failed to change successfully. There is one name atop UK retail’s “troublemaker” list in the last 7 days, and it is Debenhams. Adding to the increasing pressure on the High Street, Debenhams have fallen into administration and are at the mercy of their lenders. Some of the reasons cited for this unfortunate turn of events are the less than convincing online efforts, coupled by an aggressive store expansion and stagnating sales. Only time will tell if Debenhams will turn into a poster child of the tug-of-war between physical and online retail, but it absolutely reinforces the critical impact of continuous and carefully managed digital change in this battle of survival.

Making a grand appearance on the stage is a constant retail game changer in recent times – Mike Ashley. Is he the hero or the villain (an ongoing question these days…)? Well, media coverage suggests he is closer to the “bad guy” category; or maybe he is the ultimate retail anti-hero – driven by his own motives and interests? He certainly comes across pretty harsh in this case – suggesting that Debenhams board members “take lie detector tests” and that the takeover by lenders is “nothing short of a national scandal”. Admittedly, he does hold a 30% stake in Debenhams, which might be in danger now that everything is in the lenders’ hands. Perhaps a plebiscite among the retail community might shed some light on how we feel about his actions. Send ‘Aye’ if you support Mr. Ashley’s approach in the Debenhams case or ‘No’ if you do not approve of it. If we get enough data in, we will announce the results after shouting ‘Order, order, order’ for a while as it is fashionable these days…

One the other side, one name that very much left the ‘troublemaker’ list this week by implementing change successfully was Tesco, who announced Full Year results that suggests their darkest days are behind them. Like for like growth in the UK, profits up by 28% and a strong dividend growth gave the brand and its shareholders something to cheer after five difficult years. There was a general analyst view that this time, the numbers have been driven by transforming their stores and buying operating models rather than not investing in the right things, as was the case in the past. There’s lots still to do at the retailer and expect lots of continuous change in the coming years, but from buying Booker, shutting their historic head office and loss-making stores in the UK and abroad, they have clearly shown that big decisions are not something they are afraid of – perhaps the greater lesson for the rest of the market.

Before we wrap up for this week, let’s also check on a ‘change in progress’ story across the pond where Walmart is experimenting with a new ‘curbside pickup’ model, which analysts claim will create a $35bn opportunity in retail soon. Buy-online-pickup-at-curbside (perhaps ‘BOPAC’?) is a service offered by Walmart and other US chains like Kroger, Target and Whole Foods which allows the customers to remain in the comfortable interior of their vehicle, while a helpful store employee packages and brings their online order to the curbside. While it really looks like BOPIS 2.0 (buy-online-pickup-in-store) when it comes to reducing shopping friction, it begs the question to whether it is applicable outside of the US and their notorious driving culture. However, it also represents an obvious and exciting opportunity for in-store automation and robotics in the execution of the service – both hot topics for retail in which Walmart have made headway recently. So, don’t be surprised if soon enough you notice a line of cars slowly inching next to the curb towards a group of store employees (or robots) holding packages in front of your local Tesco or Sainsbury’s.

Author:


Stoyan Petrov

Senior Consultant, Customer Engagement

Retail customer engagement & loyalty.

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