Onilne halo effect with physical retail CACIJust as Boohoo shutters all Karen Millen and Coast stores and relaunches both exclusively online, it could be worth rethinking their strategy. We often think of physical retail going head-to-head with online. It’s one or t’other. The digital upstart appeared, grew quickly and is making the former, and in many cases painfully, contract as we head towards a new balance of consumer retail. But, before you decided to close all your stores in your retail network, there’s something you should know. Ninety per cent of all UK retail spend if influenced by a store and, according to research by CACI Consulting Group, across the UK, online sales are 106% higher within a store’s catchment area. Fashion, in particular, was 127% higher. 

CACI Consulting Group provides solutions to make the best possible location planning and customer targeting decisions for brands and this UK wide survey was conducted with over 2,500 consumers across 20 different brands. They are calling it the ‘Halo Effect’ and it describes the uplift in online sales due to the presence of physical stores. “We know that stores facilitate showrooming and click & collect and we can quantify them as well, but what was less known until today is the uplift that stores have on what were considered ‘pure play online sales’ – or what we characterise as the ‘sit on the sofa with an iPad, get it delivered to your house or office shop’. These sales are twice as likely to take place within a store’s catchment than outside it – demonstrating the effect that physical stores have in driving online sales.” says CACI.

The catchment area is defined using drivetimes based on where 80% of customers who spent in store come from according to the survey data. The size of the catchments therefore varies by brand so, for example, John Lewis has a much larger catchment than a Boots.

“The presence of a physical store gives a customer the security of knowing that should something go wrong there is a store you can go to. In addition, seeing the store as they go to work and shopping puts the brand front of mind and builds trust with the shopper, and store led marketing in the catchment area reinforces the brand. All of these secondary effects drive online behaviours up. It is no coincidence that bar a few notable exceptions some of the biggest online brands also have national store networks: Argos, John Lewis, Next. This is also why Amazon are increasingly exploring what a network might look like.” says CACI.

Fashion, in particular, was noticeably higher at 127%, why is this? “We believe that fashion is higher because it is more of a discretionary purchase. This has two impacts – you are more likely to see it, consider it and then purchase later, at home (a subconscious showrooming) and you are also more likely to return it, particularly if you live within a store’s catchment. Therefore, being near a store triggers increased engagement.” says CACI.

For every £1 spent online outside a store’s catchment, £2.06 is spent online inside a store’s catchment. According to CACI, consumers still value a trip to the shops. Although frequency is down, average spend is up per visit and net promoter scores in shopping locations have increased by almost a third. Suggesting we’re more, rather than less, satisfied when we visit. “In this environment the role of the store can be far more nuanced. No longer a place that just shifts stuff, it is simultaneously a marketing hub, fulfilment centre, experiential destination and showroom.” says CACI.

Norfolk Natural Living's founder, Bella Middleton says, "The fact that online sales are 106% higher within a store's catchment is not a surprise. Nor should it be. It is evidence that the internet simply cannot replace the trust and community feel of visiting a physical retail store. 

"At Norfolk Natural Living, we have a retail store in Holt, Norfolk, and a website selling our products internationally. Despite some incredible media coverage having grown awareness of our sustainable products internationally, we still see more orders from within the Norfolk area than any other region. 

"To me, this is an opportunity for retailers to remember that the internet isn't everything. It is fast, convenient and comparatively easy to manage your business online, but people still cling onto that desire for trust and community. Even if they ultimately put their card details into a website rather than a card reader.” she says.

It appears that people also like local online. “As an online retailer based just outside of Sheffield when we have looked at our regional sales we found it really interesting the sheer volume of sales we have in counties close to home compared to further away and when our website shows us the locations our customers are from there is a spike in cities within a 35 mile radius.” says Lucy Arnold from Lucy Locket Loves, a women’s sportswear brand.

Could these kind of stats be the motivator to see pure play online retailers open physical stores? “We already are and the false distinction between on and offline will only blur further.” says CACI. "If you are a pure online retailer today, you only have 15% of the available spend in the market open to you because 85% of consumer spend touches a store. In addition, your competition online will often already have a store network and operate at a competitive advantage in marketing and brand awareness. In those circumstances why wouldn’t you go play in store?”

Is there any evidence where stores have closed and online sales have gone down? “Mothercare is the clearest one. As they embarked on a store closure program, they have seen online sales fall as well.” says CACI.

Is this information compelling enough to keep stores open is the real question? If rents and rates drop then stores will have a far brighter future and this type of online ‘Halo Effect’ will be another reason to keep stores open or be reopened. Having the shops in the right places to maximise this catchment area theory is key and reducing overlapping stores will be the obvious step for those with a larger retail network. It’s all about finding the perfect balance and looking at physical and online working together rather than against each other. 

Wednesday, 25 September 2019 22:18

Exhibition Zandra Rhodes: 50 Years Of Fabulous

Zandra Rhodes 50 years of fabulous fashion textile museum exhibitionA new exhibition celebrating five decades of Zandra Rhodes’ namesake label opens at the Fashion and Textile Museum. Zandra Rhodes: 50 Years of Fabulous is the largest ever exhibition dedicated to the seminal British designer and museum founder.
The main space hosts fifty looks - one from each year of Rhodes’ career; from a 1969 ankle-length kaftan, screen-printed in silk chiffon to a 2018 fan pleated jumpsuit in a dramatic shimmer satin.

Left - Everybody knows her shocking pink hair, Dame Zandra Rhodes

Zandra Rhodes 50 years of fabulous fashion textile museum exhibitionTheChicGeek says, “Dame Zandra is a true fashion artist. She’s everything a great British designer should be; colourful, fun, artistic, creative, generous and a true personality. The shocking fuchsia pink hair has made her a fashion icon and her image and name resonates far outside of fashion circles.

Right - One dress from each of her 50 years

Her peak was in the 1970s, but the quality of her designs and screen printing make many of her dresses timeless despite heavily referencing this decade.

It makes sense to choose one dress for each year, but it always makes things feel quite bitty and random in an exhibition setting. I think it’s better to show the best collections in groups.

The major problem I have is I’ve always thought the Fashion and Textile Museum a drab and awkward space. It’s disappointing that a museum so colourful on the outside feels dark and claustrophobic on the inside. They really need a good retail designer who knows how to dress and light a space to give it a luxe feel. Zandra Rhodes 50 years of fabulous fashion textile museum exhibitionFashion exhibitions should tap into the shopping desire aesthetic and entice you in. (Bit like Dior did at the V&A recently). You only have to look at the YSL Museum in Marrakech to see a small fashion museum working really well. See more here

Left - Designs up to the present day

Zandra Rhodes 50 years of fabulous fashion textile museum exhibitionI know the budgets are bigger, but this space doesn’t do justice to Zandra’s talents and every other exhibition I’ve seen here. 

Here prints, displayed like saris, show her pinnacle as a textile designer, but disappointingly there aren’t any images of celebrities like Princess Diana and Freddie Mercury wearing her designs. There are no fashion shoots or glossy images to make the clothes become real, glamorous and take them out into the world. There is a fashion show reel, but it is easy to walk past.

Right - Freddie giving good Rhodes

Zandra Rhodes 50 years of fabulous fashion textile museum exhibitionUpstairs there are a few costumes from the operas she has designed in San Diego and images from her sketchbooks, which, again, show what an artist she is, but it’s never as fun as the person.

Dame Zandra Rhodes is a legend and to have survived for 50 years, being this creative, is no mean feat. She is somebody definitely worth celebrating.”

Until 26 January 2020

Left - Zandra's textiles full displayed

 

 

 

 

H&M Third Party Branded Goods selling

To be a retailer today you need many fingers in many pies. Think a centipede Paul Hollywood and you’re getting some idea. So, it was with interest to hear the latest announcement from the world’s second largest fashion retailer, H&M. They’ve decided to start a pilot selling products from external brands.

While they have sold third party brands in some of their more premium chains before, it’s a first for the mother brand. H&M’s main, eponymous brand has been neglected and struggled as the company’s strategy was to roll out retail chains such as Arket, Weekday and &Other Stories.

The bottom end of the market is tough with margins continually squeezed. H&M’s huge undersold inventory, an undeveloped online offering and falling profits - for the eighth quarter in a row the Swedish fashion chain reported a decreasing profit, despite having recently achieved turnover growth - has taken its toll on this retail behemoth.

Left - Swedish fast-fashion giant is piloting a new strategy

It needs a new strategy and has clearly been watching the likes of ASOS and Zalando be all things to all people and expand rapidly.

A company spokesman said “The H&M brand will now develop our offer of external brands. The purpose is to complement our offer with external brands to add excitement and energy and we see great opportunities for growth and to find new customers,”.

You can charge more for branded product without the need to hold large amounts of stock. It also widens you target market, especially amongst men who still like branded items. While it’s not clear which brands will be sold, it’s likely to be dominated by sportswear. This is an area that has seen huge growth with the likes of JD Sports smashing their earnings. JD Sports’ last half-year revenues jumped 47% to £2.7 billion on the back of a 10% surge in like-for-like sales. Sportswear has higher margins and appeals to more age demographics.

One of the more traditional high-street retailers to make this third party brand strategy work is Next. Its ‘LABEL’ concept is now turning over £350 million in yearly sales with huge growth seen over the last few years. Brands such as River Island, adidas, Boss, Superdry and Fat Face sit alongside beauty and home. It’s the contemporary department store.

In their latest financial statement, they say they “continue to develop the business through the addition of new brands, increasing the breadth of offer with existing brands and (from early this year) offering items stocked in our partners’ warehouses through Platform Plus"

"‘Platform Plus’ allows our customers to order un-stocked items directly from our partners’ warehouses to be delivered through our network.

“In March this year we started selling items in this way with three of our partner brands. These items are offered to customers on a 48-hour delivery promise. Items are injected into our warehouse and then delivered through our courier and store network. For example, a Platform Plus item ordered on a Monday, is transferred to our warehouse by Tuesday and delivered to the customer on Wednesday.” they say.

“When customers order Platform Plus items with other items stocked in a Next warehouse (available in 24 hours) they can choose to receive one consolidated delivery, offered in 48 hours. Alternatively, customers can choose to split their delivery and have stocked items delivered in 24 hours. There is no additional charge for the split delivery. Currently, 50% are choosing to consolidate their order.”

Next says Platform Plus is more than a marketplace. “Platform Plus differs from many marketplaces because, rather than despatching parcels directly to consumers from third-party warehouses, items are inducted into our distribution network. The advantages of operating in this way are: We can consolidate orders into one delivery which can materially reduce distribution costs. Items can be delivered through stores which currently receive 50% of all our Online orders and we have visibility and control of all orders through our own trusted networks and tracking systems. This allows us to ensure quality of service and in the event of any delivery issues or queries, customers have one point of contact.

It seems to be working for Next with full price LABEL sales in the first half of this year up +26% and total sales (including markdown sales) up +29%. They expect full price sales in the second half top 2019 to be up around +13%, more in line with their original full year estimate of +15%. The expected slowdown in growth in the second half is mainly due to errors and stock shortages in their Lipsy - owned by Next - ranges which they believe will slowly be corrected.

Next Label Branded Goods selling

For the full year, full price LABEL sales are forecast to be up +19%. Total sales (including markdown sales) are forecast to be up +21% with net margins, after central overheads, forecast to be around 15%. 

In this retail environment this is very impressive. Sales are a combination of wholesale and commission, and although they make lower net margins on commission sales, they encourage their partners to adopt this model because they believe it generates higher sales growth. In the first half of this year commission sales grew by +32% compared to wholesale which grew by +18.5%. It's also less risky.

As of August 2019, they have four clothing brands operating on Platform Plus and plan to add at least ten more later this year, with more to follow in 2020. 

Last month they also agreed a licensing deal with Ted Baker to create and sell Ted Baker children’s products. They intend to launch the first collection in Spring 2020.

Right - Next's Label sales over the last four years

Next, thanks to its Directory, has fine-tuned its delivery and database over many years and is trusted by its customers. H&M, on the other hand, doesn’t quite have the online reputation, but, being able to return to store could be a massive positive for consumers.

It will be interesting to see how fast and big they go with this concept and the brands they decide to stock. Third party branded goods allows for a faster turnover of brands and product, less risk, especially under this commission model, and the subsequent cool and elevation that can rub off on a tired umbrella brand.

Consumers are addicted to newness and H&M needs to try something new. This idea has the potential to work, though it is getting increasingly competitive, it just needs to judge when the sportswear trend will finally end, which brands connect with their customer and what the next big trend will be.

Tuesday, 24 September 2019 11:31

Menswear Product Of The Week The Half Kilt

fashion menswear product of the week COS half kiltSomething in fashion will always come along to push you out of your comfort zone. It’s a good thing. After seeing the SS20 pleated dresses for men at Louis Vuitton - pictured below - I thought I was ready for some pleats. Add in the kilt tradition, plus Dior’s now signature side sash and the timing feels right.

fashion menswear product of the week COS half kiltCOS has this half kilt - a full kilt would probably use too much fabric and be too expensive - but it gives you that Dior side-sash look. 

An Asian man stopped me in the street in this and asked me if it was ‘cultural’. Must be the red hair!

You do really need to get the matching trousers, but it’s something dressy, yet different and would look great at a dinner or smart winter party.

Left, Right & Below Left - COS - Pleated Wool Kilt - £115

Disclosure Trousers & Kilt #Gifted by COS

Below - Dior Men, Below Right - Louis Vuitton SS20

 

 

 

 

 

 

 

fashion menswear product of the week COS half kilt

fashion menswear product of the week COS half kilt

fashion menswear product of the week COS half kilt

fashion menswear product of the week Fred Perry Nicholas DaleyFred Daley has a ring to it! Fred Perry has teamed up with British designer, Nicholas Daley, in their first collaboration. Taking inspiration from his parents’ club nights and their role in igniting reggae sound system culture in the UK, Daley has exaggerated Perry’s signature polo shirt with his 70s styling.

Daley’s mix of Caribbean and Scottish heritage is blended here in a boxy fit shirt with thick intarsia hem and sleeve details.

Left & Below - Nicholas Daley X Fred Perry - Striped Knitted Shirt - £175

fashion menswear product of the week Fred Perry Nicholas Daley


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