Retail Talk – January 2007
24-01-2007
Retail Talk…
Going Up +
+ After much negative talk from retail analysts, think back to early December when headlines were along the lines of: ‘The Worst Festive Period for Retailers in Years.’ It seems retailers sat up, took note, and worked harder than ever to protect their margins. Results show that the final quarter of 2006 are better than expected due to stores holding their nerve and not giving away margins by excessive discounting.
+ Retailers have been commended for the lessons they have learned over the Christmas period. Spot-on buying, sticking to core product areas and a creative approach to promotional activity ensured positive results.
+ Reports reveal that the increase in the National Minimum Wage has not affected retailers as badly as previously predicted.
+ Online retailers benefited from a 40% increase in sales in the forth quarter of 2006 increasing retail sales online by GBP1bn to GBP3.5bn compared to the same period in 2005. The message to retailers without transactional websites is that they are losing out. Recent online success stories include: www.johnlewis.com www.asos.com and www.topshop.com
+ www.asos.com met 285,000 orders in November and December 2006, as sales increased 80% for the four weeks to 10 December. Asos chief executive Nick Robertson said: “We had a great Christmas. The fact that we continue to outperform the online market in general is testament to our buyers, our proposition, and the enduring appeal of Asos amongst our customer base.”
Going Down ––
– Despite retailers turning around those negative predictions over Christmas analysts maintain that the first quarter of 2007 will prove even more challenging. Once the sales subside – the drop in demand and rising production costs will add further pressure to a notoriously tricky time of year.
– Customer demand is expected to decline in the first quarter, interest rate rises, an increased focus on reducing personal debt and a rise in utility bills – are all contributing factors to the reduction in footfall over the coming months.
– Gap, the chain store giant has parted ways with its chief executive Paul Pressler, the decision is said to be one of mutual agreement. Gap’s sales figures have been dropping over the past two years and its stock has fallen by 62% since 2000. The decision over Mr Pressler has led to speculation that Gap may well sell off parts of the business. Mr Pressler will temporarily be replaced by Gap’s non-executive director Robert Fisher. Gap has more than 3,000 stores worldwide, retail analysts believe that Gap’s poor performance is down to uninspiring collections and increased competition from the likes of supermarkets offering the same styles but cheaper.
Everybody is Talking About…Green Retailing
Eco Plan – M&S Leads the Way…
All of a sudden ‘Green Retailing’ is the new buzz word and it’s everywhere. Marks & Spencer has announced a business-wide £200m “Eco-Plan†which will impact every part of the chain stores operations over the next five years. The plan maintains that the company will become carbon neutral, will no longer use landfill and sourcing will set new standards in ethical trading that will benefit both employees and customers.
Jonathon Porritt, Founder Director of Forum for the Future, who has advised M&S on the plan, said: “This plan sets a new benchmark in the way businesses should be tackling critical sustainability challenges like waste, fairtrade and climate change. It raises the bar for everyone else – not just retailers, but businesses in every sector. We all know that even at the end of these 5 years there will still be a huge amount for M&S to do but we warmly welcome the scale of the ambition of this plan in particular the commitment to include customers and suppliers.”
Green Retailing Conference
The Retail Bulletin in association with Envirowise is holding a one day conference on the topic of ‘Green Retailing’ which is free for retailers to attend. Set for 30th April at the London Marriot, Grosvenor Square, W1, the conference will feature key retail and environmental speakers along with specialist workshops. To find out more visit http://www.retailbulletin.co.uk events section.
Further questions for you to ponder…
+ Should it be a council’s duty to support and protect independent local retailers?
+ Are we turning into a nation of clone zones with the same shops in every town?
+ Surely the rise of the big 4 (Tesco, ASDA, Morrisons and Sainsbury’s) is a result of increased customer demand for cheap and convenient shopping?
We would like to hear your views so feel free to add your comments.
