Primark has only scratched the surface

Primark has only scratched the surface - geographically and socially http://www.telegraph.co.uk/finance/comment/damianreece/9659685/Primark-has-only-scratched-the-surface-geographically-and-socially.html

Amazon.com opening huge fashion photo studio in NYC

Amazon.com opening huge fashion photo studio in NYC http://www.geekwire.com/2012/amazon-open-40000-square-foot-fashion-photo-studio-nyc/

Contrasting Tale of Two Retailers - ASOS and Marks & Spencer

I have been regularly tracking the developments for both these retailers over the past few years on my blogs. But the growing contrast between their performance couldn't be more obvious than comparison of latest financial performance numbers. To be fair, M&S and ASOS is not a like for like comparison. M&S is your traditional, conventional, respected high street retailer. Probably in league of its own along with only a few other retailers such as John Lewis. While ASOS is the new kid on the block, fresh, young, vibrant and bold online retailer who has challenged every conventional retail wisdom and won almost on all occasions. Both are highly successful and set benchmark in a way for their respective retail segments. Hence the comparison is far more interesting because, in reality this is not so much a comparison between two retailers rather between two different retail business models. 

Photo Credit: Reuters/Paul Hackett

As for the actual financial performance, Marks and Spencer have posted the worst trading results in three years, with clothing and homeware down 6.8 per cent. The company said that clothing sales had been affected by stock issues, as well as the wet weather. In the first half of the year, M&S said it had run out of some of the best selling womenswear. These are the weakest set of quarterly figures the retailer has published since spring of 2005. Food sales in the UK rose 2.9pc but this was not enough to offset the slump in general merchandise, dragging total group sales down 0.7pc

Photo Credit: ASOS

In contract ASOS has had an impressive year, posting results ahead of expectations. Profits jumped 43% to £40.9 million. Revenues also showed strong growth, with the company taking £495 million compared with £340 million the previous year. The company's international business lead the growth, with sales up 103% over the period, while UK sales only grew 7%. Australia, Russia, Singapore and China were highlighted as sales-boosting countries, while new websites were launched in Italy, Spain and Australia.

Above financial highlights drop enough hints about the reasons behind this contrasting performance:

• Focus on international growth strategy and its successful execution
• Successful adoption of new and evolving retail technologies
• Product and portfolio innovation
• Identification and strategy for growth customer segments
• Better Supply-Chain integration with new technology distribution models
• and i am sure there are a few more core retail seasonal trends, weather impact etc.

Let me also qualify my thinking on this blog by stating that though these are contrasting results, I have no doubt that M&S is and will remain one of the strongest retailers of the conventional high street model. And even M&S is implementing a few new technology led multi-channel strategies successfully. However, the new and evolved Retail Reference Architecture continues to differentiate ASOS from its conventional competitors. And to an extent, retailer like ASOS is creating new market places where traditional retailers are struggling to reach and expand. The company's website attracts 16.6 million unique visitors a month and had 8.7 million registered users at the end of June. Technology is a key enabler for ASOS and this is proven by the fact that, ASOS sells more than 50,000 branded and own-label product lines, with around 1,500 new lines being introduced each week. This is agility in action and this is yet again a classic case study of how technology can truly provide a competitive advantage to business and operations of an enterprise.

References:

M&S Official Corporate Website

The Telegraph

Reuters

ASOS 

How Innovative Retail Architecture is Boosting Profits at ASOS 

The Simplified Retail Reference Architecture (version 1.0)

Tesco buys UK music site We7 for £10.8m

Tesco has purchased We7, a British digital music service, which attempted to rival Spotify, for £10.8m.

The service attempted to go head-to-head with Spotify in 2009 as streaming began to take off. However, it lost that battle as Spotify’s star continued to rise – launching around the world - while We7 was forced to end its costly free on-demand streaming offering. Instead, the site co-founded by Steve Purdham and the former Genesis frontman Peter Gabriel, has focused on providing personalised radio stations to its users in an attempt to differentiate itself in an increasingly competitive marketplace. 

It is understood that Tesco, which currently has a 91 per cent stake in the company but will purchase the remaining nine per cent within the next few weeks, plans to launch additional digital music services on the We7 platform in the coming months. 

Source and more details on Telegraph UK

Evolution of Retailers and Retail Services?

In the past I have written about blurring lines between Retail Services and other vertical services such as Financial Services. As conventional retailers come under more and more pressure from shrinking economic climate they are bound to explore this trend. This will see they expanding into not just multi-channel but genuine growth of their portfolio into other verticals. Latest indication of this happening is the news that leading UK retailer M&S launching their banking services. M&S Bank will open more than 50 branches over the next two years, with the first debuting next month at Marks & Spencer's flagship Marble Arch store. The Bank will offer a current account by autumn.

The fashion and food retailer will target customers with a new current account in the autumn in an attempt to make banking more convenient for its shoppers and encourage them to spend more on M&S products. The bank will be run in collaboration with HSBC, which has owned M&S Money since 2004 and takes a 50 per cent share of profits. M&S, which has 3m customers across a range of credit cards, loans, savings and insurance products, would not reveal whether it planned to charge for current accounts but said it would reward customer loyalty. Talking to the FT, Colin Kersley, chief executive of M&S Bank said, “There won’t be much point banking here if [people] don’t shop here.”

Will other retailers follow in M&S footsteps? Probably they will await the outcome of this experiment before embarking on their own similar adventures, I think. 

Tesco CIO - "We don't have an online strategy, we have a retailing strategy that is increasingly digital"

“I don’t think we have an online strategy, we have a retailing strategy that is increasingly digital. Online is becoming part of the core business,” says Tesco CIO Mike McNamara. “We are starting to make a more significant investment in internet platforms, which we will continue to develop. Digital platforms are now our new equivalent of building shops,” he told Computer Weekly.

The complete interview here....

End of "High Street Retail" As We Know It.....

More than 2,000 UK jobs were axed yesterday, as Game Group closed hundreds of shops after the company collapsed into administration. The beleaguered video games retailer, which had 610 UK stores, was unable to meet a £21m second-quarter rental payment due on Sunday and appointed the accountancy firm PwC as administrator. Is this the end of "High Street Retail" as we know it? Is it the beginning of the end? 


The writing was on the wall for Game for some time now. Earlier this month,the struggling video games retailer had confirmed that a number of its suppliers were refusing to do business with the company, sending its shares down 63% to 1.29p. Back then Game said that while it was trying to resolve the matter "as quickly as possible", it was unsure if its efforts would be successful.

The Game is not the only retail business struggling for the past few years. Almost all high-street retailers have recorded reduced operating margins and profits, if at all they were there. The difficulties at Game are testament to the current squeeze on living costs coupled with a change in shopping habits and games technology. The group has also been battered by competition from cheaper rivals on the internet, such as Amazon and Play.com, and the major supermarkets. Separately, many people now download game Apps direct to tablets or smart phones, rather than buying software to be loaded in to consoles like the PlayStation, xBox on Nintendo Wii.

What the Game story tells us however is something unique where a Technology brand is being eaten by fast evolving technology business models. As Matthew Warman states in the Telegraph, "the story of Game is simply the first taste of what the web is doing to global retail – its products happen to be bought by users who migrated quickly to the web. All other specialist retailers are being challenged online: Whittards, to take just one example, is under pressure from specialist tea and coffee retailers such as Teahorse and Kopi, who will send subscribers superb selections every month, and cater to profitable, premium niches yet don’t have the overheads of high street rents and other associated costs. Many consumers simply see that they don’t have the inconvenience of shopping. Where Game led, even the most aromatic of products is set to surely follow." 

It was not so long ago that another high-profile retail venture went bust in the UK. It was in November 2011 that, Carphone Warehouse announced that it was to close all of its 11 Best Buy stores across the UK. The first Best Buy store in the UK only opened in April of last year. But the outlets failed to make a profit. Carphone Warehouse and Best Buy initially planned to open 200 Best Buy stores across the UK and continental Europe. But clearly they had to abandon those plans well and truly before they could take-off. Is there market left for technology shopping on UK high-street? Probably there is and there will be always that small niche segment of shoppers who prefer to touch their electronic goods, CDs, Games and likes before they buy them. But that segment is shrinking all the time and internet players will certainly be calling the shots in this segment of Retail market.