Winning - the secrets of success
We all know this is the toughest retail market anyone has ever seen. And we also know that of all sectors, apparel is by far the hardest hit. It's easy to understand why. If retail spend is split into wants and needs, no sector is so dominated by wants as clothing. Everyone has been hit but the pain is not democratic - some feel it much more than others.
Despite the undoubted pressure, there will be winners. A small number of players who will exit this period competitively stronger than they went in. I will focus on four outstanding retailers, each totally different and strong in very distinct ways.
Primark, commonly thought of as seriously wounded because they do not have a transactional website. Well yes, to a degree. It has certainly meant that while shut, the stock just built up in warehouses. But Primark knows exactly its strengths and who it aims for. It has a very tight proposition, does not stray far from its core and is able to apply its model in a clear and focused way. No one will be allowed to beat its prices and its owners are long term players who are not unduly influenced by short term results.
Reiss has spent the last few years doing the opposite of most - it has actively increased its costs. It understands that its quality positioning can only be defended and grown through investing in product design and fabric quality. It has built a team able to enhance the brands quality credentials and this in turn has delivered revenue growth.
The death of the department store has been exaggerated, although there will certainly be far fewer. Selfridges remains an exception. Another rule it breaks is being spectacularly successful while selling someone else's product. Through dynamic curation and constant investment in a constantly changing environment, the sum of the parts always exceeds its individual values.
Lastly Next, not a brilliant retailer in the narrow definition but an outstanding example of combining brilliant strategic thinking with pragmatism. Echoing Amazon's decision years back to build a marketplace for third party brands, Next totally understood what its fundamental competitive strengths are and decided to allow other retailers access to its financial services, website, logistics and fulfilment, all at a price. Its Label platform is delivering fantastic revenue and profits growth, with massive further potential.
There is much to learn from the thinking behind these outstanding role models.
TPC provides advice and consulting services in price architecture, mark down optimisation and demand forecasting to leading retailers in the UK and USA. If you want to discuss this content or think a conversation might be helpful, do reach out to Richard.firstname.lastname@example.org