This is a disaster. This will probably be the biggest recession the world has ever seen and fashion and retail is going to get hit hard. What the global spread of coronavirus (COVID 19) shows us is how interdependent our economies have become and what a fragile house of cards it all was in the first place. Those cards are disappearing quickly and the entire thing is coming crashing down.
Fashion brands and companies are in freefall and the current mindset is to cancel everything. Fashion had a problem with unsold inventory well before this. As the industry got bigger and the need for huge quantities to make a profit increased, unsold merchandise and how to get rid of it was a headache for the majority of brands, high-street or ‘luxury’.
It has been reported that garment factories in Bangladesh have now had orders worth more than US$2 billion cancelled by brands and retailers because of the global coronavirus crisis. Orders for nearly 650 million garments, worth a total of US$2.04 billion have been cancelled, impacting on 738 factories and about 1.42 million workers, according to the Bangladesh Garment Manufacturers and Exporters Association (BGMEA).
Just as the Chinese factories start production again, Europe and US are mostly in lockdown with many shops closed and retailers cancelling orders.
Primark is using a force majeure clause in its contracts to cancel its orders, the Times newspaper said. “We are deeply saddened that this will clearly have an effect throughout our entire supply chain,” Primark Chief Executive Officer Paul Marchant told the newspaper.
While much of the SS20 season would have been made despite the reported disturbances in the supply chain from China at the beginning of the year, it’s not too late to cancel high summer stock or the waves of drops, brands, who don’t want to hold much stock, have become used to. Primark has no online sales, so all that stock will be stuck in stores and warehouses.
“We have large quantities of existing stock in our stores, our depots and in transit, that is paid for and if we do not take this action now we will be taking delivery of stock that we simply can’t sell. This is unprecedented action for unprecedented and frankly unimaginable times,” said Marchant.
Marks & Spencer has recently cancelled £100m in clothing orders.
This is the retail equivalent of cutting off limbs to save the vital organs. Brands don’t know how long this is going to last and what shape they and consumers will be in at the end of it. They need to save cashflow. Fashion feels particularly unimportant right now and will be awash with huge discounts to clear stock in the near future, and that’s in an already saturated market. Brands cancelling orders will impact manufacturing countries hard, but this isn’t a frivolous decision, this is a battle for survival.
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We’re often bombarded with marketing speak talking about “local”, but it’s mostly just that, speak. Remember when HSBC used to refer to itself as the “The world’s local bank.”, it meant nothing more than operating in lots of different markets and countries. Local became more about geography than anything else. It joined the group of words, such as luxury, modern and sustainable, that get used all too often, but have become meaningless.
Trying to balance the idea of a much loved local, independent retailer and the scale of a larger chain is the dream of any contemporary brand or retailer. According to CACI Consulting Group’s ‘Location Dynamics” engine, 75% of the UK high streets have the same brand profile. They say “The concept of clone towns is well known, but we believe clone stores are the real issue.”
Left - Welcome to clone town - Can brands decentralise and empower its people on the ground to make decisions?
It’s boring and in a saturated market many cookie-cutter, anonymous chains are no longer appealing to consumers and as such we’re seeing those with too many stores close or reduce their footprint.
“In a market where consumers are seeking localisation and engage in brands that mirror their values it is essential that a store is part of the community in which it sits.” says Alex McCulloch and John Platt, Directors of CACI Consulting Group.
“Customers can buy generic product sold in a uniform way online, they seek out stores for the personal, curated, local and engagement. Brands that therefore dictate homogenous stock and store fit out regardless of the local customer will not deliver that experience and as a result fall away.” they say. “The brands that trust in their people on the ground, invest in them and empower them to know their shopper as well as supporting them with forensic data analysis on what sells, what doesn’t, which marketing worked etc are the ones that will succeed.”
“Data alone cannot fix the problem, but nor can people. Good brands leverage both. A great example of this is Waterstones, finding a similar one in the fashion sector is a challenge – typically independents lead the way here. One fashion brand that doesn’t shine in this area is M&S, which serve up the same store, stock and fit-out regardless of market, and have only just entrusted their store managers to know their own P&L; the antithesis of employee empowerment.”
The type of store finding it hardest to adjust to modern retail was, originally and ironically, the most localised. Nearly every town and city had their own individually named department store up until quite recently. It was only in the early 2000s that John Lewis, with the exception of Peter Jones and Knight & Lee, which is now closed, rebranded each store to the company umbrella name. Tyrrell & Green in Southampton, Bonds in Norwich, Trewins in Watford, Jessops in Nottingham, Bainbridge’s in Newcastle, Robert Sayle in Cambridge and Cole Brothers in Sheffield all disappeared. They were all recognisably John Lewis because of the store interiors and branding, but retained their historical monikers into the 21st century and the affection that each town would have for them.
DH Evans on Oxford Street was re-branded as House of Fraser in 2001 along with many other well known names such as Rackhams of Birmingham and Kendals of Manchester. (It will be interesting to watch House of Fraser’s next rebrand to Frasers in 2020, back to the original Glasgow store’s name, with a new store in Wolverhampton’s Mander Centre following the exit of Debenhams. “Frasers of Wolverhampton” could have quite the ring to it?)
Up until 2018 the Newcastle based department store chain, Fenwick, had individual buyers for its 9 department stores. In order to save costs they centralised their buying last year saying, ”Fenwick has today announced a proposal to modernise and reorganise the business, moving to a functionally led structure while retaining our local focus.
“These proposals are part of a broader strategy to modernise the business and to invest in both Fenwick’s multichannel offer – including IT upgrades and ecommerce – and its flagship Newcastle store.” Previously each store ran autonomously.
It is understandable the desire to have everything centralised under one name and buying team. It saves costs and doesn’t confuse the customer. It also makes more sense because of the internet and having one unified website, but it loses the personalisation and affection that people had for these brands and nobody wants to think that their town or city is the same as everywhere else. (In out-of-town shopping centres it doesn’t matter quite as much because their isn’t so much ownership of place).
Right - Do clone towns need a pop-up Banksy store like this one in Croydon?
This reblanding doesn’t take into account British idiosyncrasies or quirks and our love of personality. Many chain stores want bland boxes. The historical nature of the fabric of many of these older brands and their buildings have been looked at as a problem, money pit and not conducive to modern retail rather than embracing their uniqueness. It’s only poor and long term under investment that has let these retailers down. Liberty of London wouldn’t be the same if it was in another building. The building is the brand.
"There is a fear that localised = expensive. It doesn’t need to – you know a Waterstones when you go in it and the branding is universal, but each store manager has autonomy over the look and feel of the product, what is on promotion and maintains local charts etc.” says McCulloch and Platt, Directors of CACI Consulting Group.
"Chains need to trust that their staff on the ground can make decisions on how they sell and give them space to do so within the brand framework. Equally they should be able to use POS data, online sales data and customer data to inform the manager on which lines have worked, which initiatives drove sales and how to better them.”
Engaged employees make better employees especially if they are personally invested in decisions. It’s the opposite of automation and the robotic attitude to manual shop employees.
“By trusting in the people on the front line, educating them, training them and supporting them through data will you also likely see key staff retention increase because staff will be empowered in their roles.” says McCulloch and Platt.
Is the design of stores an issue here and how can design catch up with consumer behaviour? “I’m not sure design is at fault here, there are many truly innovative stores and spaces in the market. The issue is more typically underinvestment in stores and a homogenous approach to stores. A brand can tailor its social ads based on geography and consumer (a 20-year-old single male in London will get served a different ad. to a 28-year-old mother of two in Liverpool) but don’t consider the same approach and nuance with their stores.” says McCulloch and Platt.
Facebook has been putting ‘Beacons’ into stores to send consumers personalised ads and to track their movements. Retailers also need to work backwards from this and tailor the stores to the people who are frequenting them. They could find out this information from peoples’ Bluetooth being turned on and then change the buy of the store according to the breakdown of the consumers and visitors.
Obviously, not each and every store is identical. Stores are different in size and can accommodate different levels of ranges. Some chains specifier different product for different locations, but, it’s more a mindset and preconception that they’re all the same which is the main problem here. People want to be pleasantly surprised. “I’m-not-going-to-go-in-there-because-I-already-know-what-they-sell-and-I-can’t-be-bothered” is the modern attitude to many chain stores. The more individual or local they were perceived to be, the more often you’re likely to take a look. If you want anonymous and clinical you’ll shop online, it’s about pride of place.
The next time you arrive at your local mainline railway station have a look at the retailers lining the concourse. Where once it was Boots, a few Upper Crusts and a plethora of deep-frying fast food outlets, is, today, being replaced by retailers who previously wouldn’t have been seen dead amongst the pigeon droppings and leaky roofs.
Following the huge success of retail rail developments such as Birmingham’s New Street and London’s Kings Cross/St Pancras, investors, who still want to invest in retail developments, are looking to where the people are and those symbols of the Victorian steam age are ripe for reinvention.
Rail travel is having a renaissance, in the last 20 years the number of people travelling on the UK rail network has doubled, and looks like it will continue to do so with its lower carbon impact and trends such as Sweden’s Flygskam - Read more here - making people think more about their travel decisions and the impact it has on the environment.
Left - Artist's impression of the new Waterloo development of the former Eurostar terminal
According to the Office of Rail and Road, rail passenger journeys in Great Britain in 2018-19 reached a record high of 1.759 billion. It increased by 3.0% compared to the previous year and was driven by a 3.9% increase in the London and South East sector.
London’s Waterloo is the busiest station in Britain for the 15th consecutive year, despite the total number of passenger entries and exits falling by five million to 94.4 million.This fall was in part due to a three-week closure for upgrade work in August 2017, which brought the former Eurostar platforms back into use after they were vacated in November 2007.
In the rest of the UK, Glasgow Central retained its position as the busiest station in Scotland and 11th in the overall list, with passengers using it 32.9million times this year, and Cardiff Central was top in Wales with more than 12.9 million entries and exits, making it 33rd overall.
We’re seeing a new golden age in rail travel and retail and property investors want in. Waterloo has unveiled plans to convert the former Eurostar terminal into a 135,000sq ft shopping mall to open in spring 2021. Called 'Waterloo.London', forty glass-fronted stores and restaurants will form a new “upmarket shopping destination to rival St Pancras International”. The new scheme is being developed by London and Continental Railways (LCR) – the UK government-owned property development firm and the company behind the redevelopment of St Pancras International train station. A mezzanine and public spaces will run along a new pedestrianised street called the 'Waterloo Curve’. Time Out Market will be an anchor tenant, consisting of 17 restaurants and three bars across two floors.
“Waterloo.London will set a new benchmark for progressive retail and transport destinations in the UK,” LCR development director Adrian Lee said. “Brands will have a truly unique opportunity to tap into a market of Waterloo’s 100 million passengers, the 20 million tourists that visit the South Bank every year, and its surrounding vibrant community and growing office population.” he said.
Over in West London, new plans have been unveiled for Victoria station, the UK’s second busiest station with almost 80 million passenger journeys a year, and said to be biggest overhaul in its 168-year history. Developers plan to take off the roof of the station, creating a giant concrete and steel box around the 19 platforms to allow the building of towers above. The Duke of Westminster’s property company, Grosvenor, developer Landsec and Victoria’s Business Improvement District, have held secret discussions over the past 18 months on developing London’s second busiest station. Details are still vague at this stage, but no doubt retail will feature heavily on the lower floors of the station. The current dated looking shopping centre at the back looks tired and isn’t integrated into the station design well enough.
Right - Waterloo.London will feature a TimeOut Market with 17 restaurants and 3 bars
Much needed modernisation of infrastructure has been a catalyst for cities to develop and reinvigorate themselves. Birmingham’s New Street station went from voted one of the worst buildings in the UK to a modern shopping centre with trains attached when it reopened in 2015. A huge John Lewis department crowned the mirrored steel exterior and has become a symbol of the regeneration of Britain’s second largest city.
These redeveloped train stations have quickly become favourites places where people choose their leisure time rather than simply travelling through. The top four UK stations for customer satisfaction according to Transport Focus data were London King’s Cross (96%), London St Pancras (95%), Birmingham New Street (92%) and Reading (92%), all having undergone major refurbishments in recent years.
The most successful rail retail development has to be St Pancras International, the glamourous home to the international Eurostar service. The station’s arcade area was built primarily as a beer store and 150 years later, and £800 million spent, it has, since its 2007 opening, continued to add premium retailers such as Fortnum and Mason, John Lewis, Godiva, Benugo, Nespresso, Fratelli, Chanel, GANT and Hamleys..
Today, it attracts approximately 50million visitors a year and 1 in 6 of those who visit the station do not catch a train. Total retail sales at St Pancras International during the Christmas trading period (22nd October to 31st December 2018) grew 6.3% year on year.
St Pancras International saw strong growth across all retail categories, including a 4.1% year-on-year growth in food sales, and an 8.7% growth in non-food categories. The station’s 6.3% like-for-like growth over the festive trading period, significantly outperformed the wider UK retail sales results, which were flat year-on-year and -0.7% on a like-for-like basis from December 2017.
People are time poor and combining a journey with a great shopping experience is one way to entice money out of people’s pockets. Consumers are increasingly lazy and no longer want to travel just to go shopping - Read more here - they want shopping integrated with the rest of their lives and their increasing desire to travel. Airports hold too many restrictions, so train stations are becoming an increasing focus. You rarely see empty retail units at stations. Developers need footfall and when yours in the tens of millions, it's difficult to see it not working. City centres will shift towards these rail hubs and they will no longer be the entry point but the destination.
While the majority of UK cities are struggling to deal with the implosion of their high-streets, London is a juggernaut that keeps people spending. Thanks to tourist dollars and and an increasingly high-spending visitor, Bond Street, arguably London’s premier luxury shopping street, has seen a raft of new openings hoping to tap into London as the global retail destination. From Alexander McQueen to Loewe, this historical street has seen glorious new retail spaces tailored to this exclusive location open to entice more money from shoppers.
Left - Alexander McQueen's new three storey store
The Office for National Statistics has just released the final International Passenger Survey (IPS) results covering 2018 and it’s still looking good for London. While the number of visits to the UK in 2018 fell slightly (-3%) - 2017 was a record - to 37.9 million, the data from the last 10 months shows visitors spending huge amounts and are visiting Bond Street, in particular.
Data from Global Blue, a tourism shopping tax refund company headquartered in Nyon, Switzerland, shows that the average spend on Bond Street among international visitors increased by 4% year-on-year from January to October 2018. International shoppers spent a huge average of £1,341 per transaction during this time.
Global Blue has also just opened its first VIP Globe Shopper Lounge on Albemarle Street in Mayfair, just a stone’s throw from Bond Street. According to their figures, the top spenders were visitors from the UAE, Qatar and Hong Kong. UAE shoppers spent £2,074 per transaction, up 19% year-on-year. Qatari shoppers spent £1,964 per transaction (up 7%), while Hong Kong shoppers spent £1,837 per transaction (up 15%).
Interestingly, the biggest increase was seen amongst Indonesian visitors, averaging £1,551 per transaction, up 20% compared to 2017.
Right - Staircase in the new Celine menswear store
Paris is London’s closest luxury shopping competition and the 'yellow vests’ or Gilet Jaunes protests have been affecting its attractiveness and is putting off visitors. "We lost between one and two growth points in 2018 due to the yellow vests," said Mathieu Grac, Global Blue's vice president of intelligence strategy.
The weakness of the pound is making shopping in London more attractive and better value for money. The Chinese, in particular, have always chosen Paris over London, but this could be starting to change with new stats show record breaking results for the end of 2018 for London. Visits to the UK from China in this period were up 52% to 94,000 – the 9th consecutive record quarter for visits. These visitors spent £160 million in the UK between October and December 2018 – 30% up compared to the same period in 2017. In total there were a record 391,000 visits from China to the UK in 2018, up 16% on 2017.
Overall, UK visitor spend in 2019 is forecast to be £24.9B, up 7.8%, on a forecast of 38.8m visitors.
While many designer brands are closing stores and trimming their global retail network, others are realising that in order to stay ahead, you need to invest heavily in the world’s finest locations. The days of copy-cat, identikit stores are over and brands know they need to make something unique for its location.
Proving this point is the new ‘Casa Loewe’. The Spanish brand, Loewe, owned by LVMH, and famous for its puzzle bags, has opened a three storey boutique designed in the vision of creative director, Jonathan Anderson. Like an art gallery with clothes, but with a personality and warmth, the London store features work by a selection of internationally renowned artists, including three oak sculptures by Ernst Gamperl (winner of the LOEWE FOUNDATION Craft Prize in 2017) alongside 15 photographs by Alair Gomes, the ‘Vulcano Table’ by Anthea Hamilton, a long- standing LOEWE collaborator, William Turnbull’s 1956 sculpture ‘Idol 4’ and Grayson Perry’s ‘Mum and Dad’ vase.
Left - Casa Loewe showing Anthea Hamilton's 'Vulcano Table'
It feels a very creative space and is one of the few luxury boutiques on Bond Street to give you this full idea of a lifestyle. The sales assistant I spoke to said Anderson was often in the store talking to them through the product and also making sure things were working correctly. She also said they had a great many Chinese customers.
Further down Bond Street is the new Celine menswear boutique. The first time Celine has done menswear under new creative head, Hedi Slimane, it feels very déjà vu in the Saint Laurent mould and looks like all those other marbled minimal retail palaces from brands such as Neil Barrett or End Clothing in Soho. On the corner of New Bond Street and Grafton street, in the old Boucheron store, it is exactly what fans of Slimane will want and the quality of the clothes do look good. Downstairs is a compact tailoring area and while none of the extra skinny clothes had a price tag on, the raised front doors are automatic, just in-case those super-skinny rockstars don’t have enough strength to open them. Disappointly, this concept will look the same the world over.
Into Old Bond Street, Alexander McQueen has amalgamated all three of their London stores into the large, former DKNY outlet. The three storey boutique is a beautiful, sweeping space by Chilean architect Smiljan Radic, his first retail project. It truly flows with giant glass tubes linking the floors and acres of matt walnut covering every surface including the two spiral staircases.
The ground floor is home to womenswear and the first floor to menswear. The top floor is like a museum, probably hoping to capitalise on the popularity of ‘Savage Beauty’, it illustrates the artistry of the current collections while being dotted with archive pieces. This area will also be used to host a programme of exhibitions and talks aimed specifically at inspiring students. It left me with a renewed respect of the work of the brand which I’ve often dismissed since McQueen’s death. There was a men’s coat, hand embroidered with silver graffiti, on sale for £100,000.
Stella McCartney has moved her store from the Edward Barber & Jay Osgerby designed Bruton Street to Old Bond Street. A difficult space, it is linked by a huge metal staircase reminiscent of the tanks at Tate Modern. More concrete and terrazzo, the front ground floor is peppered by giant boulders and moss. A small glade of silver birches decorate a roof garden and 'Airlabs' technology makes this the first indoor commercial space in London with the cleanest air possible.
The store carries all the brand’s collections including women’s and menswear ready-to-wear, accessories, lingerie, swimwear, kids, eyewear, fragrance and adidas by Stella McCartney. Stella McCartney said, “Old Bond street, it’s probably one of the most prestigious retail locations in the world. And for me being born and bred in London and having our business headquarters there and design studio, it’s an incredible honour for us. This store really tells the story of the World of Stella McCartney; incorporating sustainability, fashion and luxury.” Louis Vuitton’s giant Bond Street store is also being refurbished and will hopefully offer something bespoke to this prestigious location.
Right - Stella McCartney's ground floor showing boulders running through the centre
What this group of shops show is the huge investment still going into physical retail. If you’re going to entice those shoppers, you'll need to offer something original, something they'll want to investigate and explore and ultimately an experience of buying something truly great and memorable. By working and competing as a group, it gives more incentive to brands and people to make this the greatest destination and a positive cycle of openings and continued openings will keep this firmly as one of the most thriving luxury retail destinations in the world.
There was a time when ‘if you build it, they will come’ rang true for retail. Large out-of-town sheds have been encouraging people to pile into their cars since the 1980s. But, traffic is slowing and retailers are starting to realise that in order to survive, you need to go to the people, because they won’t be coming to you.
Left - B&Q's new neighbourhood concept, GoodHome by B&Q
People’s time is precious and the thought of driving to a shop, potentially getting snarled up in traffic or fighting for a parking space, when you could simply go online, is making these expensive retail parks less and less viable. Following the march of the supermarkets with their local formats other retailers are now realising it’s all about ease and convenience if you’re going to compete with online. Mix in the fact that car ownership and young people passing their driving tests is falling, then you have a perfect storm for the retail parks and out of town shopping centres.
In a sleepy suburb in South London, Wallington, Zone 5, home and DIY retailer, B&Q, has just unveiled its new smaller format, “GoodHome by B&Q”. The new, boldly coloured and contemporary space offers automated key cutting machines, touch screens to browse the range, a complimentary coffee machine and “over 6000 products available today”. It is a warm, compact space with friendly staff to offer advice, in comparison to one of their rundown, draughty mega stores, run on a skeleton staff, without anybody to help or offer advice. This is the first of these neighbourhood B&Qs which they hope to roll out nationwide.
In October, 2018, IKEA, the ultimate in out-of-town-spend-all-day-and-dine retailers, opened it's brand new mini store – the IKEA Planning Studio – on London’s Tottenham Court Road. It specialises in kitchens and bedroom storage and is more a showroom than a smaller version of the larger store. This week, IKEA launched their first store in central Paris. “Paris is a magnet of trends and fashion,” said Jesper Brodin, chief executive of the main retail arm of Ikea, Ingka Group. “We hope to use the Paris store as a loudspeaker for the rest of the world. If we are successful we could do a lot more of these.” he told The Financial Times.
The new IKEA store in Paris is 5,400 sq m across two floors and includes a 150-seat restaurant. About 1,500 items are available to buy in-store. Located in Paris’ 1st arrondissement, it will be followed by similar openings in Lyon and Nice. “There’s not a typical online customer or offline customer; people are mixing channels,” said Mr Brodin. “They still want to be able to touch the product and have a physical experience of the product”, he said.
Over in America, the luxury department store chain, Nordstrom, is rolling out its ‘Nordstrom Local’ formats. First trialled in California, it is now planning two in New York to complement its new full line department stores opening at the end of summer 2019.
Right - Inside B&Q's new smaller format, GoodHome by B&Q
According to the company’s research, Manhattanites don’t particularly want to leave their neighbourhoods if they can help it which is the crucial reason for adding these hubs. The smaller stores will not carry merchandise, they are places for online pickups and returns, as well as services like tailoring and personal styling.
The first Nordstrom Local opened in 2017 in Los Angeles, where it, now, has three shops. Some offer individual services, like manicures or shoe repair, based on their location. Most importantly, the company said customers who visited a ‘Local’ spent on average two and a half times what other Nordstrom shoppers did and made returns earlier, which allows the retailer to turn its inventory faster.
What many large retailers and shopping centres rely on is the car and the attraction of free and easy parking. Government-backed research shows that the number of teenagers holding a driving licence has plummeted by almost 40% in two decades.
The number of young people with a driving licence peaked in 1992-94 at 48% of 17 to 20-year-olds. By 2014 only 29% of the age group had a licence. Among people aged 21 to 29, the number of licence holders dropped from 75 to 63% over the same period. The decline in car use was more rapid among men than women.
The study, published in Feb 2018, said that rejection of car ownership was likely to become the “new norm” as more people communicated online rather than face to face.
Left - Nordstrom Local in Brentwood, LA
Commissioned by the Department for Transport, it found that changes in living circumstances meant that most young people no longer gained a driving licence or regularly drove a car. It said that a rise in lower-paid and less-secure jobs, a decline in home ownership and an increase in university participation had an impact on how people used transport. The study also cited the high cost of driving and a preference among young people to communicate online. It quoted figures showing that young men aged 17 to 29 were spending 80 minutes more per day at home in 2014 compared with 1995. Women in the same age group spent 40 minutes more at home.
The study by the University of the West of England in Bristol and the University of Oxford, said that many young people had become “accustomed to a lifestyle in which private car use is less central than it has been for previous generations”. The report added: “It is possible that the changes in young people’s travel behaviour described above are the first phase of a social change that will continue through successive generations.”
If this trend is continued by successive generations than it will be bad news for out of town shopping centres with poor public transport. It could also mean, in future, entire families will be without a car or driving license and unable, or, will find it more difficult, to visit these huge out of town shopping centres or retail parks.
It is already starting to take its toll on shopping centres with footfall down and retailers reducing the number of stores they run or open. At the beginning of this year, shopping centre landlord Intu took a £1.4bn hit on the value of its properties. Intu said the value of its portfolio dropped 13.3% to £9.2bn during the year. The drop in property values pushed the company to a loss of £1.2bn, down from a profit of £203m a year earlier
Retailers are realising that transport is key and is where the volumes of people are. Walk through St Pancras station or New Street station in Birmingham, and the range and quality of the stores is nothing like the sad Upper Crusts or Boots of a few years ago. From Tiffany to Ted Baker, these stations are much more glamorous and attractive places to quickly pick things up or drop things off than they were before and compete just as well with any modern shopping centre.
Right - Inside a Nordstrom Local, LA, California
One British retailer proving the value in travel retail is W H Smith. W H Smith could have disappeared like its main products; magazines, newspapers and music or been flatlined by Amazon on books, but instead has flourished by going for convenience and the captive audience of people in stations and airports.
Since WH Smith demerged its news distribution business in 2006, the travel business has been able to grow its profits in every year since. The size of the business has increased from 309 stores in 2007 to 867 in 2018. With the acquisition of American airport retailer, In-Motion, it will probably have more than 1,000 stores by August 2019.
WH Smith had 581 stores in the UK at the end of August 2018; 149 were at airports,127 in railway stations and 131 in hospitals. Around 125 are located in motorway service areas and are franchised stores, with the remainder in workplaces and bus stations. Internationally, it had a total of 286 stores located in airports, recently opening eight stores in Madrid Terminal 4 and six outlets in Rio de Janeiro. While not the most exciting of retailers, it shows that you can thrive if you go where the people are.
Smaller and more cost-effective neighbourhood shops could be the answer for some brands. Businesses built on big stores will need to think about how people get to them if they are to survive. The automated car will offer some relief to the out of towners, if and when it arrives, but it feels like it will continue to become a strange concept to drive large distances out of your way to go shopping, especially for the younger generations.
When New Look announced, at the beginning of this month, its menswear was going online only, it solidified what we already knew; high-street fashion is struggling, badly. It was only a few years ago, when the ‘dapper’ three-piece skinny suit was at its zenith and pocket squares were furnishing top pockets, that the good times were rolling and Britain’s high-street menswear retailers were expanding.
Left - Momager Kris Jenner loving an adidas tracksuit but with a Gucci bag or Fendi keyring
Back in 2016, New Look was busy rolling out menswear stores in university towns, appealing to those on a budget wanting fast fashion. New Look was fairly late to the menswear party, following in the footsteps of brands like Topman, River Island and Moss Bros, but it had lofty ambitions. They opened 22 menswear stores in places such as Shrewsbury, Exeter, Maidstone, Derby and Nottingham. They are all now closed, wth New Look saying in a recent statement, “New Look is removing menswear from its UK and Ireland stores but will continue to sell the range online and on third party platforms,” such as ASOS and Zalando.
So, what happened? Sportswear happened. Branded sportswear has been the main fashion story for the past few years. From trainers to tracksuits, sportswear is everywhere and on everybody.
Recent results from sportswear behemoth, JD Sports, illustrates its growth and dominance. JD Sports, which is now more than three times bigger than arch rival Sports Direct, almost-doubled revenue in its latest results for the 52 weeks to February 2, 2019. Revenue was up an incredible 49.2 percent to £4.7 billion for the period compared to the year before, with profit before tax increasing by 15.4 percent to £339.9 million pounds.
JD Sports’ results includes its acquisition of the Finish Line business in America. The brand was bought for around £400 million in June 2018, and saw JD Sports take ownership of Finish Line’s 600 stores in the US.
JD Sports executive chairman, Peter Cowgill, said in a statement: "We believe that our acquisition of the Finish Line business in the United States, the largest market for sport lifestyle footwear and apparel and the home to many of the global sportswear brands, will have positive consequences for our long-term brand engagement whilst significantly extending the group's global reach. We maintain our belief that Finish Line is capable of delivering improved levels of profitability.” JD Sports said it stayed clear of reactive discounting while offering a point of difference in the goods it sold.
This American dominance, particularly of the internet and social media channels, has helped grow this market. When American football is coming to Wembley and there’s even talk of baseball making inroads into this country, then you know the power of the American online world we now live in. When you see Kris Jenner wearing a full adidas tracksuit on multiple episodes of the Kardashians, instead of the luxury labels she used to be wearing, it really illustrates how far this trend has come and it’s global.
JD Sports is now in 10 countries in mainland Europe with its first store in Austria at Mariahilfer Strasse in Vienna opening in the next few months. The JD fascia saw a net increase of 39 stores in the period with new stores in all of the retailer’s existing territories as well as its first two stores in Finland. In Asia, JD Sports has opened its first stores in Singapore, Thailand and South Korea with its local partner Shoemarker Inc, and now has 16 JD stores, including 14 conversions of the multibrand Hot-T fascia which was acquired in the previous year.
New Look recently closed all of their stores in China, Belgium and Poland, 85 stores in the UK and, potentially, those in France and Portugal too. It has returned to profit after its underlying operating profit came in at £38.5 million to Dec 2018, compared to an underlying operating loss of £5.1 million for the same year-to-date period the year prior, but like-for-like sales are still falling, they’ve just slowed.
These woes aren't just restricted to New Look. The fall in the value of these high-street companies is illustrated by Arcadia recently buying a 25 per cent stake in retailers Topshop and Topman back from US investor Leonard Green for $1 or 76p. It was rumoured the US private equity firm bought the 25 per cent stake from Sir Philip Green’s Arcadia in 2012 for £350 million. That’s some devaluation.
Another British high-street brand suffering from the dominance of sportswear is Moss Bros. The menswear retailer recorded a £4.2 million loss for the 52-week period ending January 26, 2019, compared to a profit of £6.7 million the year prior. Revenues were down 2.1 per cent to £129 million and like-for-like sales dropped 4.3 per cent. Interestingly, full-year figures showed that like-for-like hire sales plummeted by 9.3 per cent. People aren’t even renting formalwear now?! Moss Bros chief executive, Brian Brick, said it was an “extremely challenging” year. “We suffered from a combination of a significant stock shortage and extremes of weather, alongside sporting distraction in the first half, which impacted footfall into our stores,” he said. That “sporting distraction” was the World Cup with people no doubt wearing yet more sportswear.
“Looking forward, in common with many UK retailers, we continue to anticipate an extremely challenging retail landscape, particularly within our physical stores, as a result of reduced footfall and rising costs.” he said.
This sportswear as a fashion trend is slowing, but sportswear is beyond a trend, now, and it’s a lifestyle and ease of dressing that is resonating around the world and to every age group. These once dominant British high-street stars are contracting and they are cutting off limbs (menswear) to save the vital organs. Karl Lagerfeld once said, “Sweatpants are a sign of defeat. You lost control of your life so you bought some sweatpants.” He couldn't be more wrong.
The simple narrative of big shops are dying, department stores are dinosaurs and physical retail is on its knees just doesn’t ring true. Primark is bucking the trend, and, to really the ram the point home, has just opened not only the world’s biggest Primark in Birmingham, but also officially the largest fashion retail store in the world according to the Guinness World Records. Move over Topshop!
Spread over 5 floors, and 160,100 sq ft in size, the new store boasts womenswear, menswear, kidswear and homeware, plus the largest ever Duck & Dry beauty studio, the first in-store barbers salon from Joe Mills, and 3 dining experiences, including a Disney Café. If it sold washing machines it would be classed as a department store.
Left - Primark's new Birmingham mega-sized store
While nobody seems to know what is going on at Debenhams, and Mike Ashley is hoovering up brands like a hyperactive Dyson - we’re still not sure what he is going to do with all these companies - Primark is an illustration of very large physical stores still opening and doing well.
With no e-tail presence, Primark is where all the other department stores’ physical customers have gone, not to mention Marks & Spencer’s and Next’s. Primark’s Adjusted Operating Profit was £843m in 2018, with revenue of £7.477b, up from £7.053b the year before.
According to local press, Birmingham Mail, “The new Primark megastore Birmingham has been jam packed for four days in a row. Crowds of people flooded into the 160,000 square foot shopopolis when Primark opened its doors 15 minutes early at 9.45am on Thursday, April 11. Ever since our live Primark updates began, the five-floor giant has been packed from the basement to the roof with shoppers - and diners - keen to see what all the fuss is about.”
Primark needs large stores to make its business model of pile-it-high-and-sell-it-cheap work. Only this week, another Primark opens in Milton Keynes. centre:mk see its new 75,000 sq ft store open in the heart of the shopping centre and is the largest new store to open in centre:mk in the last 25 years. Over 3 floors, Primark was the most requested brand by the centre’s 25 million visitors in exit surveys over a number of years.
Kevin Duffy, Centre Director at centre:mk, said “We are thrilled to announce that Primark will be open on the 16th April and joining our fantastic selection of fashion and beauty brands at centre:mk. This is a key moment for us – the new flagship store will be the single biggest store since we introduced Marks & Spencer to centre:mk nearly 25 years ago. Primark is a firm fashion favourite, and so we look forward to attracting more visitors by expanding the centre’s fashion retail mix.”
Primark are expanding into Slovenia, this year, and continuing to grow in America. Primark currently has 9 US stores clustered in the north eastern corner, but plan to open a store in Florida in late 2019. While its expansion has been slow and steady, it was ranked in the top spot on a list of the 100 fastest-growing retailers in America by the National Retail Federation's Stores magazine, which used sales data from Kantar Consulting. In the US, specifically, Primark sales were up 103% year-on-year.
Urban Outfitters is another brand looking to expand with larger stores. Planning to open 15-20 new stores annually for the next five years, the US-based retailer has 50 stores in Europe, including 28 in the UK and Ireland. Emma Wisden, European Managing Director, said the retailer has identified several key markets of interest within Europe that it is underexposed in, which it will be pursuing imminently. Speaking to Drapers, she said, “Urban Outfitters is in the fortunate position of being one of the ‘disruptor’ brands in fashion at the moment. We are opening stores, not closing them, unlike so many of our neighbours on the high street. Ecommerce is, of course, increasingly important, so it is crucial to constantly evolve omnichannel shopping. However, bricks-and-mortar retailing isn’t going anywhere soon.”
Right - Primark's Duck & Dry Beauty Studio in Birmingham
Urban Outfitters has increased its European store portfolio by more than 30% over the past 12 months with new stores in Vienna, Milan, Paris, Eilat and Düsseldorf.
These two retailers illustrate the polarisation of physical retail. Bad, boring retail is dead, and while people are attracted to Primark for the prices, by adding hairdressers and restaurants, they are giving people more reasons to visit and stay longer. Primark’s phenomenal success is allowing them to think beyond cheap clothes and their tie-ups with Harry Potter and Disney at pocket money prices is a guaranteed success.
Urban Outfitters is clearly riding the retro, sportswear trend, but being a shop of discovery and fresh ideas and brands allows a chance for constant change if the buy is right.
Many retailers with large stores are finding it hard to balance business rates, rents and falling footfall, but Primark and Urban Outfitters are proving, clearly, that people still want to leave the house.
The biggest retail opening of 2018 was Coal Drops Yard in Kings Cross. This former Victorian railway sidings for coal coming into London from the north has been transformed, thanks to Thomas Heatherwick, into a contemporary retail destination.
Left - Koibird in Marylebone
While the kissing roofs are elegant and memorable, the rest of the development is less inspiring. The brand list is the type concocted by an architect who is shopping like a design magazine rather than the realities of retail in 2019. It feels a bit 10 years ago and doesn’t acknowledge the recent Guccification of the world. We really doesn’t need anymore boring “designer” shops.
A case in point is the Paul Smith store. Housed in the former Bagley’s nightclub, you’d expect some sort of crazy ecstasy interior: testament to the many clubbers who wore Paul Smith on the dance floor. But, no. There’s even a white wall.
It’s 2019 and we’re in the “Age of Bonkers” when it comes to retail and if a shop doesn’t have you reaching for your phone to take a picture straight away then they’re clearly doing something wrong. Retail needs to wow, it needs to shock, it needs to entertain, otherwise you can get everything else online.
You need people to mouth “that’s cool” when they walk in or see something, especially when you’re trying to create a destination, as is the case here. This isn’t need: this is visitor attraction with the hope of souvenirs purchased. It’s that excitement and rush of shoppers' adrenaline that makes people glad they left the house. It’s not just about being conceptual, it’s about fun, wit and being relatable and current.
We often forget how experimental retail once was. From the Victorian pioneers of the department store to the independent boutiques of the 60s to the cool minimalism of the 90s and this was all pre-internet. Now, it’s more important than ever to give physical retail a fighting chance and bonkers it should be.
Examples include Koibird in Marylebone and Gentle Monster, the Korean eyewear brand, who opened their first UK store on Soho’s Argyll Street last year, both creating and refreshing interiors that stimulate and keep people coming back.
The Koibird store recently closed for two months while the interior was changed from their beach concept to their ski store. Founder, Belma Gaudio, established Koibird out of her frustrations of not being able to find clothes to match her holiday destinations. The new ski concept is another instagrammable interior featuring the colourfully rounded Koibird “K”. “Koibird is on a mission to inject some much needed playfulness into skiwear.” Gaudio told British Vogue when she recently unveiled it.
Right - Gentle Monster Argyll Street, Soho
Gentle Monster, a Korean sunglasses and optical glasses brand founded by Hankook Kim, was established in Seoul in 2011. “I wanted the products to look as if they were being exhibited.” said Kim in 2016. Today, they have over 40 stores worldwide and employ 6 people to design its eyewear compared to 60 people to design the store visuals. This shows the priority of their interiors within the company and the Seoul flagship is transformed every 25 days.
While these types of continual makeovers can be expensive, it can also be minimised with enough imagination. This is the traditional idea of changing windows becoming a fully immersive and experiential retail experience.
Fragrance is something physical and as such, Ostens, a new perfume brand by Laurent Delafon and Christopher Yu, has created a pop-up store in Marylebone, to showcase its debut. Open until the end of February, it is an abstract showcase of their new brand.
“We love Gentle Monster, we love spaces that drag you in , that speak to your curiosity. And this is the main idea behind Ostens: olfactive curiosity and discovery through the exploration of the ingredients.” says Delafon.
“So, we set up the space in 3 distinct areas, part of ‘journey’ taking you from the ingredient to the perfume: the Rose oil from Isparta, in the neon lit front room, magnified and presented like an objet d’art.” he says.
"All the rooms are appealing, they are fun, they are instagramable, and they are attracting people that wouldn’t necessarily been attracted by a ‘normal’ perfume shop.” says Delafon. “If you create spaces that are enjoyable, exciting and surprising places for your consumers to interact with the brand, you enhance their experience, and you make the whole purchasing act much more than simply about the product.” he says.
“The idea is to change the whole set-up of the store every two months. Like an art gallery would change its exhibitions. We intend to move Ostens to a central location, where the store will be more of a white box in which we will be able to rotate sculptures, videos installations, theatre sets, interactive displays..To parody Magritte…’this is not a perfume shop’!” says Delafon.
Left - New fragrance brand, Ostens, launching with a bonkers pop-up shop in Marylebone
Retailers are fighting for people’s time. You need something to grab people’s attention, make them stop and have a desire to enter and explore. Half the battle is getting your product in front of people, then at least you have a chance of a sale.
The home page on Koibird’s website reads “Never Boring…” and this is exactly how physical retail needs to think.
Easily the most anticipated retail destination - we can’t use ‘shopping centre’ anymore, can we?! - of the year, and the final piece of the huge Kings Cross jigsaw, Coal Drops Yard mirrors the life of the entire area. From industrial power to warehouse parties to sanitised private/public spaces, this could be a micro model of London as a whole over the last 100 years.
Now reimagined by Thomas Heatherwick, who has joined the two ‘Kit-Kat’ pieces with a sweeping roof which lightly touches across the divide. This was the kiss Kings Cross/St Pancras was waiting for and not that cringeworthy sculpture greeting you as you disembark off the Eurostar.
Opening today, with over 50 new stores, it’s currently only about 50% open, and the most stunning aspect, the Samsung store inside the roof, is far from finished.
Firstly, the architecture is great. What could have been clunky, the roof is elegant and sweeping. Reslated in the original Welsh tiles, Heatherwick works his magic and creates something modern yet respectful to the original. This is the human scaled, brick built industrial Britain that is a joy to bring back to life.
Situated just down from Granary Square and up from the main stations, Coal Drops Yard opens out into a generous V shape with two main levels of shops and restaurants. This feels like the type of retail space you want to give yourself time to explore.
There’s also another space on the other side of the main block called Lower Stable Street that is for smaller and start-up businesses. It has touches of the Southbank with the concrete.
There are a few restaurants - Barafina, Casa Pastor and wine bar The Drop, but it feels the mix is too heavy on the retail, today, especially with the need to drive traffic. People don’t need to go shopping anymore, but they do need to eat. You could easily use the space in the middle for market type concepts.
They’ve made an effort to have a mix of brands - COS, Paul Smith, Tom Dixon, Cubitts, Universal Works, Rains, Aesop, Maya Magal, Miller Harris and Le Chocolat and there are a few that are new to me.
You want to explore, but there’s no element of surprise. The retail mix is dry. It’s from the Monocle school of aching design, devoid of personality. This feels like stylish retail from 10 years ago. We’re in the age of Gucci, of bonkers, of wanting-to-get-my-phone-out-and-take-a-picture-mental, not a single one of the finished shop fits was worthy of an Instagram. Even Paul Smith has produced one of the most conservative shop fits I’ve ever seen from him. You’d think he would have tapped into the rave culture history of the site, especially when you consider so many of his more casual clothes would have been worn there.
This is for one type of design customer and I don’t think that’s as aspirational as they think. It’s also needs a destination store. There was lots of talk from the lease manager about going to Paris for inspiration. When didn’t they resurrect Colette here or try a Dover Street Market type concept. It needs a pilgrimage store, or whatever that is in 2018, to get people up from the stations.
I really think Coal Drops Yard has missed a trick by not tapping into the nostalgia for the area. Those clubbers are now in their 40s with money to spend and families to bring. There are exhibitions regarding the history in the Visitors Centre, back in Granary Square, but I would have done more on site to remind people of their happy times spent at The Cross or Bagley’s nightclubs.
As I said, it’s not fully finished and all these things will evolve. When listening to Thomas Heatherwick give his welcoming talk I thought about the reinvention of Covent Garden, which he then mentioned, and was a huge success, and then I thought about the early 90s, when they tried to turn a similar concept, Tobacco Dock, into a similar retail destination. It was the wrong location at the wrong time. This is in a better position, but like I said, they need enough people to know about it to want to walk up from the stations.
I think we’ll see more food outlets eventually and also they need something like a vintage market, similar to Spitalfields, to raise the element of discovery and keep you coming back.
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They say the Chinese only buy the cheapest or the best. It’s simplistic, but it is the direction all retail markets seem to be headed in. The British market has been evolving into this for a while, now, and those stuck or stranded in the middle are suffering or dying.
The middle has been squeezed or forced to choose their direction of travel as we all race to the bottom or top.
The cheapest often requires huge volumes and multinationals and the best requires a perception of quality, luxury and good service.
As a brand or retailer, you have two questions to ask yourself, today: are we the cheapest? This can be split into different categories depending on where the brand sits and, are we the best? This is more complex and can mean many different things and is subjective. If you can’t say yes to both or either, they you need to start making some serious changes.
Imagine a Venn diagram: two circles, one the cheapest, one the best and price running up and the down the side axis. Any brand coming into the area where the two circles overlap is in a safer and strong position. Those within one of the circles has a focus, while those floating somewhere out of either need to work out which one they want to be in, and fast.
Let’s look at the cheapest option. This is why Sainsbury’s is getting into bed with Asda. The larger scale promises savings of around 10% to the consumer, and will help them compete with Booker/Tesco and the German food retailers, Aldi and Lidl. It’s an example of mid-market retailers needing to pair up or die.
In fashion, New Look revenue to the year 24th March 2018 was down -7.3% to £1,347.8m. New Look has not only announced store closures, but it’s also just said in its recent financial report and turnaround plan, that ‘Pricing (will be) lowered to offer significantly better value with 80% of product to retail under £20’.
Eighty percent of product under £20 will really put the brand toe-to-toe with Primark and, I think, it’s the right move for them. You have to go down fighting, but they’ll going to have to shift more product at these cheaper prices. Before, New Look wasn’t the cheapest, and it wasn’t the best in terms of being the most fashionable or desirable fast-fashion retailer. It used to be one of the cheapest, but then Primark came along.
It tried to be more fashionable, but at a time Boohoo, ASOS were growing and offering high fashionability at ridiculously low prices.
New Look says it wants to 'return to (a) value-led fast fashion and wardrobe basics offer with full price focus’. The margins will be so small they’ll need all the full price they can get.
H&M, long one of the darlings of fast retail, has seen its shares down nearly 20% this year and the company has said it will need to slash prices to reduce inventories, damaging profit margins. It has an $4.3 Billion in unsold stock and needs to be careful that its size won’t be its downfall.
It also explains its focus on different, ‘best’ sister brands like Arket and COS. H&M isn’t in the same position as New Look, yet, but they need to make sure it’s still seen as one of the best in terms of affordable fashionability and also offering value.
Marks & Spencer is another one trying this new best and cheapest approach. The clothes have arguably got much cheaper and the food is still perceived as the best, but it’s this balance that is hard to achieve within the same brand, especially knowing what consumers come to you for.
House of Fraser’s recent announcement to close 31 stores is a reflection of the growth of John Lewis both offline and online. John Lewis has continued to open in towns, in or near those House of Frasers, and House of Fraser isn’t cheaper or better. It probably explains the closure of the huge Birmingham store as John Lewis opened a shiny new shop at the railway station just a couple of years ago.
House of Fraser will need to pair up with somebody (maybe Debenhams?) or disappear altogether. Sports Direct, Mike Ashley, has shares in both and will no doubt be pushing for it and then they really can compete on price and dominate their local markets.
So, who is getting it right? Zara, for the best in fashionability and speed and John Lewis in customer service and being ‘Never Knowingly Undersold’. But, like a game of musical chairs, it’s changing all the time.
As for the ‘best’, this is what many luxury brands rely upon. This could be quality, use of materials, origin etc. Many ‘luxury’ brands have lost control of these in the race for large quantities and bigger margins. They have to be careful because a few poorly made, overpriced products will ruin the perception of any brand.
But, you can also find the cheapest within this market. For example, Johnstons of Elgin, one of the best Scottish producers of scarves and blankets. It makes for everybody from Hermès to Burberry. While a scarf from them is not cheap, say £100, it’s far cheaper than one with a designer name on. They are also the best at what they do and the reason why these brands use them.
Or, a brand like Paul Smith. When looking at a multi brand website like Mr Porter, it feels like one of the most affordable brands on there. I think its recent troubles has seen it get more competitive and tread that fine line between affordable and exclusivity. They are also the best at colour.
Or, you could can look at the total top, at the most expensive and exclusive. This is the pinnacle of the market and to be true to both would only be made in very limited numbers. This is chasing a very small number of big-fish consumers and, as such, it limits the size of the business. But, this can also to used to sell ranges of cheaper products, such as perfume or sunglasses, but even these categories are harder, now that people aren’t so hung up on brands.
This simplistic approach to the market cuts through some of the wood to see the trees in a highly competitive and changing retail landscape. So, the next time you look at your own brand or somebody else’s, you know which two questions to ask.