Sink or swim? How retailers are adapting to a fast-changing market in radically different ways

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In this week’s edition Nick Graham discusses some of the major movements among retail brands this week – from luxury giants to discount behemoths – and analyses the value of experiential retail in helping retail businesses adapt to rapidly evolving markets.

Hi All,

Welcome to our 124th edition of This Week in Retail! Once again, my turn to write the editorial coincides with a big week in retail with stories ranging from the most significant acquisition of the year in the luxury sector, to a re-branding of one of the most controversial low-cost retailers. No spoilers here, read on to find out more…

We start this week with the news that LVMH (Louis Vuitton Moët Hennessy), the multinational luxury goods conglomerate has announced its long anticipated acquisition of jewellery powerhouse Tiffany. Despite perhaps being made famous by Audrey Hepburn and Deep Blue Something’s “Breakfast at Tiffany’s” in a range of nineties movies – the deal is certainly worthy of attention with the group committing to a princely sum of £12.5bn to take over the business. The drivers behind the deal were put down to two key factors; to increase LVMH’s presence in the jewellery sector and to further grow out its business in the US. As seen with much of the luxury industry, particularly the likes of Burberry, Gucci and others only becoming more “premium”. I think this will push Tiffany further up the luxury scale, attracting a new audience, and higher prices in underexploited geographies. With a brand like Louis Vuitton behind the deal and all its recent success, I think this could end up being a very smart acquisition.

Starting with luxury, we now go the other end of the spectrum to one of the most highly publicised low-cost retailers of the year; Sports Direct. It has had a year full of controversy with its owner Mike Ashley at the helm. Most recently the brand announced its imminent re-branding to Fraser’s Group to “reflect the changing profile and consumer proposition of the group” and re-position its retail offering. It will be interesting to see how much this model merges with Ashley’s other portfolio of brands including House of Fraser and Debenhams. With the high street taking no prisoners, the need for a rejuvenated business model and proposition has been laid bare for all these businesses over the last few months.

Our final story for this week sits with one of the hot trends we’ve seen over the course of the last couple of years; experiential retail. But how exactly do you take it from an expensive and frequently gimmicky initiative, all the way through to something which is genuinely innovative, whilst boosting the top line? MatchesFashion seem to have answered this question in seeing revenues and profits rise year on year, despite having taken the experiential retail experience seriously. It doubled up its stores as event spaces, new concept launch venues, and invested in cutting edge technology. On top of this, it uses specialists from a range of service industries to truly tailor its in-store experiences. This works nicely against another story we have this week on the many pitfalls retailers find in putting style over substance in-store.

Have a great weekend!

-Nick G

 

Author


Nick Graham

Senior Consultant, Retail Supply Chain

Digital Fulfilment Operations and Logistics

 

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