Welcome to This Week in Retail! As usual, we have an action packed set of stories this week including some specific success at Sainsbury’s, some surprising progress made at Matalan, a FTSE 100 place for athleisurewear giant JD Sports, the rise of the pop up store and a look into the world of luxury fashion at Burberry, Gucci and Chanel.
We start this week at Sainsbury’s, with news released yesterday that CEO Mike Coupe collected £3.9m for the past year notwithstanding significant staff renumeration changes and a widely publicised failed merger with Asda. Despite profits dropping by 42%, and a like for like sales decrease across major stores from the previous year, many renumeration packages across senior positions were higher. This has resulted in widespread media attention as Sainsbury’s have faced a tough year of intense competition from direct rivals alongside a race to the bottom with the discounters. At the other end of the spectrum, we ran a story a few weeks ago picking up on the key drivers behind JD Sports high street success, which has shown no signs of slowing down. Core to this prosperity has been an attractive multi-channel proposition, digitisation of their stores, harnessing the rise in the “athleisurewear” sector and competitive pricing attracting a wide demographic of customers. This has seen the business announced in the FTSE 100 this week with a market capitlisation of £6bn, with M&S only just hanging on in the inaugural club. On a similar topic, Matalan have also announced a 50% rise in profits, with online sales increasing by 30% over the past 12 months in a very competitive market including the likes of Primark. With a heavy store footprint, it will be interesting to see how Matalan use their network to drive yet more multi-channel sales. Whilst looking at this success, it is certainly worth noting that retail sales this month “had the biggest decline on record” falling 2.7% from the same period last year, making JD Sports and Matalan’s performance even more impressive.
Moving on, we look at the rise of pop up stores in the retail space. One of our articles summarises this well, describing the movement as “an adrenaline shot to retail” by giving the capability to showcase items in an engaging setting, without the need for expensive real estate, centered around a long-term commitment to a specific geography. Pop ups work well as they pick up on several emerging retail themes. They create an air of exclusivity, urgency and personalisation that isn’t always apparent in classic brick and mortar retail, whilst also allowing the retailer to test new product lines and experiences in a safe setting. Overwhelming success can always lead to further listings across selling channels, so what’s not to like? Amazon has answered that question positively announcing this week their intention to open ten new pop up stores across the UK dubbed “Clicks and Mortar”. The stores will hold items across 100 small businesses, steering clear of the big corporate giant rhetoric, whilst appealing to a market keen to support boutique and local businesses who are offering a captivating and fresh product range.
Our final highlight stories this week revolve around fashion. We have a great piece on Burberry and how they are using AI and Robotics in their two factories in the North of England to not only improve efficiency and quality, but also to motivate a highly skilled workforce. In a similar vein, Chanel and Gucci are going to focus on engaging customers to their brand. They are setting up Experiential Product Centres (labelled as Atelier Beauté at Chanel) and Personal Shopping Services to gather data on customers without having to directly sell products. This allows them to offer them a more personalised shopping experience when the selling element actually does get introduced.
Have a great weekend!
Senior Consultant, Retail Supply Chain