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Tuesday, 03 December 2019 15:10

ChicGeek Comment Making Or Scraping It Through 2019

Black Friday dales retail salesI said it at the start of this year if you’re a brand or retailer and you can make it through 2019 and into 2020 then you’re probably going to be alright. This year has been tough, very tough, and we’re well into the most important segment of the year for some retailers. It’s do or die for many brands who are on their uppers while trying to flog customers theirs. 

This period of physical retail contraction is more painful the larger you are and we’ve waved goodbye to some very well known retailers and brands this year which could no longer survive under the perfect storm of online competition, retail saturation and squeezed prices, increase in the minimum wage, Extinction Rebellion/consumption debate, Brexit uncertainty and a snap General Election, cost of returns, prolonged discounting and high business rates and rents. 

Christmas has always been a crucial time for retailers, but if it’s your single focus and main time to make profits then you need to rethink your business model and marketing. Many businesses with this old fashioned idea are many of those disappearing or have disappeared. But, it still matters, and a bad Christmas period will see many more retail business announcing their demise come the new year.

The lead up hasn’t been good, but a lot of spend could be skewed by the juggernaut of Black Friday. Sales decreased by 1.3% in September 2019, the worst September since BRC (British Retail Consortium) records began in 1995.

The following month, high street shoppers bought 0.6 per cent more goods in October 2019, representing a drop from 1.3 per cent sales growth recorded in October 2018, but still representing the retail industry’s best performance since April, according to figures compiled by the BRC and KPMG. Looking at a three-month average, which allows for month-to-month fluctuations, total in-store sales of non-food items dropped 3.6 per cent, while food sales grew 1.6 per cent (or 0.5 per cent on a like-for-like basis). 

According to Barclaycard, "consumer spending in November (2019) showed a muted 0.9% growth year-on-year as Brits plan for a frugal festive season”.

So far, so bad, but Black Friday was the biggest ever. According to retail intelligence firm Springboard, retail footfall on Black Friday was up 3.3% in comparison with the same day in 2018, with shoppers mostly hitting the shops after work. Black Friday spending rose 16.5% on 2018, Barclaycard said. They said spending was higher as of 10am that morning and “sustained” that high level throughout the day. They said the number of transactions then reached a “new peak” between 1pm and 2pm on Black Friday. Barclays, which has been monitoring real-time transaction data for Black Friday, processes almost £1 in every £3 spent in the UK.

“We recorded a new peak of 1,184 transactions per second between 1pm and 2pm, which is up on last year’s 1,087 by around nine per cent,” Rob Cameron, CEO of Barclaycard Payments told City A.M.

“The volume of transactions has been up all week and in terms of purchasing, we have seen a high level on spending from midnight all the way through.

“This is fantastic news for retailers, with our data showing that transactions have also been strong throughout the week,” says Cameron. “With many retailers spreading their deals out throughout the week, they will be encouraged to see this hasn’t cannibalised sales volumes on Black Friday itself.” he told City AM.

The volume of transactions on Black Friday rose 7.2% year-on-year, while the volume of transactions on Cyber Monday - the following Monday - was so far up 6.9%.

While this discounting could affect margins, it appears the hype of Black Friday and perceived discounts is something retailers are taking advantage of. The consumer title, Which? warned that few real deals were available, with most goods cheaper or available for the same price at other times. It found that just 4 of 83 products they studied last year were cheaper during the Black Friday promotions.

Black Friday benefited from falling on or just after payday this year with many people paid on 28th of the month. Black Friday has been big, but has is been big enough? The last few years saw many retailers see a wash of sales just before Christmas which allowed them to limp on into the next year.  It appears that retailers are finally understanding how to play the Black Friday game; getting rid of unwanted stock while holding firm on in-demand products. It will be interesting to see the level of returns and this giant spike can be difficult to manage, especially for smaller retailers which less stock holdings. 

The retail figures show a consumer holding tight until to Black Friday, and it will be interesting to see, now those purse strings have been loosened, whether it continues in the final few weeks until Christmas especially with the distraction of a General Election bang in the middle of that. See you in the next decade?

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Published in Fashion
Monday, 08 April 2019 16:14

ChicGeek Comment Many Happy Returns?

serial returners asos instagram online retail etailersReturns cost money, lots of money. Free delivery and no quibble returns are starting to become a strain on online retailers and it seems ASOS has had enough. The British fast-fashion giant recently announced it was cracking down on ‘serial returners’.  An extension in its returns policy - items can be returned up to 45 days after purchase with a cash refund up to 28 days and credit thereafter - was also issued with a threat to investigate and ‘take action’ if it notices anything unusual with people returning more items than usual. If it suspects someone is wearing and returning goods, or ordering and returning ‘loads’, it may deactivate the account.

Left - ASOS' returns are costing them dearly

ASOS is one of the world’s largest online retailers, particularly amongst younger demographics, and its ease of ordering and returning is, arguably, part of the their success and growth story.

Becky, 29, says “I think it’s against the whole nature of online shopping. When you go into a shop you can take 10 items into the changing room and not like any of them, e-retailers need to expect the same thing to happen with their sites and customers should be able to return the items they don’t want.

"I buy a lot from ASOS and return a lot simply because it doesn’t fit right or because it doesn’t look how I expected it to when I bought it.” she says. “If it starts impacting how quickly refunds come through – or if I start having refund requests declined – then it definitely would discourage me. I love ASOS though – majority of my wardrobe is from ASOS, now, where they host so many brands – so I’m intrigued to see what happens!”

This issue is experienced by many retailers. Research conducted by resource planning platform Brightpearl, who surveyed 200 retailers across the UK, found more than a third of shops have seen an increase in serial returns over the last year. As a result, 45 per cent of retailers, including ASOS and Harrods, said they were planning to blacklist repeat offenders. It can cost double the amount for a product to be returned into the supply chain as it does to deliver it and in the UK, it can pass through seven pairs of hands before it is listed for resale. This all takes time and money.

Meli, 26, says “I’m glad that this prevents people returning used items as I’ve had something sent to me from ASOS before that was definitely used. However I’d hate to be blacklisted for genuinely returning items that don’t fit/I don’t like!

“I often order in bulk with multiple options and different sizes then do a try on at home to see what I like best, and return the rest. I think the real problem is sizing as ASOS stocks so many different brands, it’s hard to rely on standard sizing to be the same across all.” she says. “If I was blacklisted then it would certainly drive me to other online retailers or just shop directly with the brands that ASOS stocks. For now, it will make me think more carefully about exactly what I’d be likely to keep if it did fit.” says Meli.

Earlier this year, Zalando started a trial in which it would attach very big clothing labels to items to make it more difficult to ‘wear and return’ or post on Instagram. That label reads: “Dear customer, feel free to fit this article and try it, but if this label is removed, it will not to be accepted as a return by Zalando.”

serial returners Zalando instagram online retail etailers

Retailers have somewhat encouraged some of this behaviour with their ‘try-before-you-buy’ options. Consumers can order what they like and then just pay for what they keep. This encourages over ordering and a large number of returns. Amazon currently restricts this service to between 3 and 8 items. 

Research from Barclaycard found that almost 1 in 10 UK shoppers have bought clothes online with the intent to wear them for social media and then return them. Surprisingly, it was the older demographic, men and women aged 35 to 44, with 17 per cent, revealing that they are guilty of shopping only for their #OOTD. The research also found that is was men who were more inclined to shop and return as they are more ‘socially self-conscious’ than women - with 12 per cent admitting to posting a clothing or accessory item on social media and returning it to the retailer afterwards.

Right - Zalando taking on the 'Serial Returners'' with their large tags 

Lois Spencer-Tracey, fashion blogger, says, “Must confess, I'm a bit annoyed by this. I probably send back 80-100% of an order I receive purely because of their sizing and my body shape. Nothing to do with my Instagram or blog.”

Last year, Next announced it would start to charge customers a £1 fee for returns they make through a courier or through a Hermes Parcel Shop. The collection charge will be applied for each collection, regardless of the number of items collected. Returning items at any of Next’s retail or clearance stores in the UK remains free.

ASOS are playing the fashion police by admitting had resorted to checking people’s social media accounts in a bid to catch out consumers who wear clothes before sending them back, and falsely claim they have not received items bought online.

“I’m a massive online shopper. I find it so much easier to just order clothes in and try them on at home because then you can try on a full outfit, matching with the shoes and accessories you want. It’s so much easier to do in your own home rather than in a squished changing room. And usually returns are easy with things like collect+ which is much better than working out when you’ll next be in town to take clothes back to a store.” says Becky.

This is a difficult line for online brands to tread. On the one hand they don’t want to discourage consumers from ordering or being frightened to return things, and, on the other hand, they need to let excessive returners or people who are wearing things and returning them, know they are being monitored. It's definitely easier to return something into a faceless plastic bag than been quizzed by a sales assistant. This is probably an empty threat from ASOS, but does illustrate how serious this issue is becoming for fashion e-tailers. Rather than look at the volume of returns, maybe look at the conversion percentages of sales from shoppers. You don’t want to alienate active and engaged consumers, but neither do you want to service those costing the company dearly.

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Published in Fashion
Monday, 17 December 2018 13:12

ChicGeek Comment November Pain

ASOS profits down black fridayThe darling of British online retail, ASOS, today, issued a statement saying it saw “significant deterioration” in trading in the run-up to Christmas. Blaming the weather and a high level of discounting and promotional activity across the market, it said it lead it to increase its own special offers, which typically eat into profit margins. 

November 2018 is set to go down as one of the worst retail months in recent memory. Mike Ashley, the Sports Direct boss, was recently quoted as saying, “November was the worst on record, unbelievably bad”. He said “No one could have budgeted for that. Retailers just cannot take that kind of November. It will literally smash them to pieces.”

Left - ASOS' HQ - Black cats for Black Friday?

While ASOS only saw a slowing in sales growth - it now expects sales growth of 15% for the year to August 2019, down from 20% to 25% - it also shows the chill running through the entire retail sector.

A perfect storm of lower footfall, Black Friday discounts, Brexit shaking consumer confidence and a highly competitive market in general, is making things very dicey for the retail sector. Retailer, Stuart Rose, formerly of Marks & Spencer, told ITV News, “I sense this is a very slow Christmas … You have the uncertainty of Brexit, people are uncertain about what the future is going to look like next year. [Consumers] have their hands in their pockets. Car sales? Down. House sales? Down. Big ticket sales? Down. I suspect there will be some uncomfortable trading statements in the early part of January.”

Even the juggernaut of Primark is reporting a slowdown. It has warned of “challenging” trading conditions. John Bason, the finance director of Primark’s parent Associated British Foods (ABF), said “I think it is a call on quite mild weather during November and I think it’s affected footfall.” This is important to Primark because it doesn’t sell online. Bason told Reuters that while sales at stores open more than one year were “just positive” in September and October, they had turned negative in November. 

On a brighter note, overall consumer spending rose 3.3% year on year in November, but it was the lowest growth since March, despite the boost from Black Friday, according to Barclaycard. Clothing spending contracted by 2.9%, the biggest fall since October 2017, while spending on household appliances was down by 14%.

One thing interesting to note is ASOS mentioning its slowdown in Europe. It said trading conditions across Germany and France, which account for 60% of the retailer’s EU sales, have become significantly more challenging, which means this is a wider problem than Brexit. ASOS said “The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years. We have recalibrated our expectations for the current year accordingly.”

Primark Birmingham profits down black friday

So, let’s look at this weather. According to the Met Office, “November began with relatively cold quiet weather, but from the 3rd to 14th it was mild with a predominance of southerly winds. It was cold with easterly winds from the 19th to 26th, with frequent rain or showers for the east and south-west. It turned very mild, wet and windy in all parts of the country from the 27th onwards. The provisional UK mean temperature was 7.3 °C.” This up and down weather isn’t particularly unusual for November and we had two decent cold spells to help shift more seasonal, colder weather stock. The weather is always an easy excuse for retailers reporting bad figures.

Right - Primark is opening its largest store in the world in Birmingham this month

Black Friday, though, is wiping out profit margins for retailers with consumers expecting huge discounts and it’s stopping people from hitting the high-street. UK retail endured the biggest drop in footfall for the month of November since 2009. It also marked the 12th consecutive month of footfall decline. Discounts were made for online; no pushing and shoving to then leave disappointed. If they’ve got it, it’s in the basket, and you probably don’t buy anything else while you’re there unlike if you’d gone to the high-street or a shopping centre.

Laura Ashley just announced it was closing a further 40 stores and, last week, Bonmarché issued a profit warning and Blue Inc fell into administration.

Many retailers will be praying for a good Christmas, but to make up these sales in the three weeks to Christmas will be tough, especially with so many factors working against them. Primark and ASOS are strong retailers and will weather this storm, but many will not. To continue the weather metaphors, this could be the hardest frost to hit the retail sector in many years and anybody small or not hardy enough will be dead before the winter is out.

Published in Fashion

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