It’s life Jim, but not as we knew it

Being away for a few weeks has  advantages and disadvantages.  It does mean that I get to catch-up on trade press and newspaper reading in one batch when I return.  Reading a few weeks worth of these at one time can help pick out patterns – even over a short period.

And so it is this time. What really caught my eye (again) was the continuing impact of electronic (internet/mobile) retailing and shopping.

If we look at recent failures – Blockbuster, HMV, Jessops – then there is a structural imperative at play here.  But interestingly – and added to by Republic – the news was about what stores were being rescued and the rental/property deals being put in place to keep some stores trading.  Will it work?  Who knows.  But if it is symptomatic of new realisms beginning to work through, then yes. And maybe the new realism will also extend to what stores need to offer customers, including digital inclusion, to remain trading physically.

In operational terms the tie-up mooted between Morrisons and Ocado closes the loop for the last big grocer.  Has it missed the boat or has it simply learned from other’s mistakes?  Given the impact (we’ll see about profitability in this sector in the long run) of the internet, it is hard not to feel they missed a trick.

House of Fraser announced a potential roll-out of their click and collect stores and said that Aberdeen was trading ‘fantastically’.  An app that gives store specific real-time stock levels was also announced, again pointing to real consumer behaviour change and the need for retailers to embrace this change and the technology.

In a broader context Next are seeing the same things, but are  convinced it is the blend of store and virtual that matters.  A fifth of all Next Directory orders are delivered through stores and more than half of returns are made through them.  Next day collection is enhanced and charges reduced by having the store network (and Next say they want more space but are finding it tough to open – seems odd that given the current climate).

But this blend doesn’t work everywhere.  Next also announced a big online international expansion saying that their own international stores don’t make money, but international internet with its reach does.  The international online business makes ‘healthy profits’ but their stores do not, leading to some interesting decisions over entry and brand presence/awareness.  Franchise stores are said to be in profit ‘because product is sold at higher price points’ but how long can that be sustained in a transparent internet era? What do we mean by retail internationalisation these days?

And finally …..

  • Ann Summers is to put its products into Superdrug
  • in the budget the government cut corporation tax, to the delight of Amazon, Starbucks et al ….oh, hold on
  • Stephanie Huish won the NCR Store Manager of the Year at the Retail Week Awards 2013 – Stephanie is the store manager at the relatively recently opened Hobbycraft in Dundee.  Her citation points to a broad community engagement strategy, lively demonstration events in store and motivation and incentivisation for staff.  Stores can co-exist and compete in an e-world, but they have to get the responsibility, approach and embeddness in the locality right, which requires great people.
  • Tesco bought a Giraffe

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues. I am Chair of Scotland's Towns Partnership. I am also a Deputy Principal of the University, with responsibility for Education and Students and a Fellow of the Royal Society of Edinburgh
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2 Responses to It’s life Jim, but not as we knew it

  1. Steve Wood says:

    The Tesco purchase of Giraffe is strange. In part it has been framed by management as a response to decreasing non food returns in Extra stores (something partly driven by online competition) and therefore as a solution to the excess space. However, the strategic fit of the very middle class restaurants seems inconsistent with a hypermarket??

    • Leigh Sparks says:

      I’ve only seen the Giraffe operation from the outside and have no real sense of how, if at all, they would fit with Tesco stores. I do find it interesting though that our big food retailers (and you can see it in the US as well) are expanding well away from their core business into a range of broadly “leisure/retail environment” investments. For me it signifies a change in belief about the shopper and what they will need, though I am not sure it is fully formed yet in anyone’s minds (or stores). I also, and aligned with your comment, note that Asda are renting out excess space in some hypermarkets to other retailers – it really is back to the future.

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