Retail News: Digital & International Expansion Drives Growth
UK Retail Doom Balanced by Strong Growth for Some
Itâ€™s no doubt that the economic climate is having a painfully severe effect on the retail sector. With the recent news of the high street losing household brand names including Blockbuster, HMV, Jessops and Comet in a matter of weeks, the UK retail sector is looking markedly gloomy.
Much as weâ€™d all like to hope the high street is holding up in places, there is no denying the digital world is making retailing successfully through bricks and mortar stores alone increasingly hard. The Global Powers of Retailing report from Deloitte reported: â€œThe retail industry is in the midst of a customer revolution. The collision of the virtual and physical worlds is fundamentally changing consumersâ€™ purchasing behaviours. Consumers are seeking an integrated shopping experience across all channels, and expect retailers to deliver this experience. Failure to deliver puts retailers at risk of becoming irrelevantâ€.
A rise in so called â€˜showroomingâ€™, (where a customer visits a store in person to try a product before returning home and purchasing it online at a discount price) may be at the heart of the high streetâ€™s decline, but that begs the question â€“ why are some companies still ignoring their digital presence? One would imagine the evidence was more than convincingâ€¦
There are good news stories emerging but they seem to be coming from retailers in two distinct categories; those investing heavily in developing their online strategy and those investing in new international markets.
Investing in Developing Online Channels – The Winners
Many etailers are managing to buck the trend. Those who have had the foresight to develop their online channels, even in a tough economic climate, are leading the way and reaping the profits in these times of austerity.
“Online really had a stonking Christmas, particularly when you have a look at the likes of John Lewis and that bodes well for others,” said Kate Calvert of Seymour Pierce in The Guardianâ€™s report on Christmas sales.
Looking at specific examples House of Fraser saw UK online sales rise by nearly 50% over the hugely important Christmas period after it invested heavily in its website and online content offering in 2012 and they werenâ€™t the only ones:
- Fat Face store sales increased by 11%, while their online sales soared 65%.
- SimplyBe and Jacamo (owned by home shopping group N Brown Group) witnessed online sales up by 17% with ecommerce now accounting for 54% of their total revenues. â€œIt has been pleasing to see our investments in improved online systems, and more customer recruitment continuing to drive a strong sales momentum, despite the lacklustre retail environment,â€ said chief executive Alan White.
- Halfords saw more of its sales over the Christmas period made online than ever before, with 10% of its retail revenues taken online as customers â€œopted for more convenient ways of taking delivery of their ordersâ€.
- Shop Direct GroupÂ recently pledged to continue investing in digital shopping as it battles to win market share in an increasingly difficult retail environment. It witnessed 80% of its Christmas sales carried out online.
- Supermarket Sainsburyâ€™s processed more than 27 million transactions in the week leading up to Christmas, delivered a record 200,000 online food orders during its busiest week and saw 60% of general merchandise orders placed for collection with â€˜click and collectâ€™. TescoÂ also announced online sales up by 18%. â€œThis performance,â€ said Tesco Chief Executive Philip Clarke, â€œwas driven by a strong contribution from online, which included our biggest ever week for internet sales, a successful first Christmas for Grocery Click & Collect and a better performance for Tesco Direct, our online general merchandise business.â€
- Burberry saw digital commerce lift sales by 9% with â€œrecord social media engagement,â€ generated by its Spring 2013 advertising campaign helping it develop its digital channel.
- Upmarket LK Bennettâ€™s website is now reported to generate three times the sales of its flagship London store.
Despite many luxury retailers preferring the personal touch they can offer in their stores, the consumer shift to online is increasingly hard to ignore. Mark Haviland, managing director of CPA network Raktuen LinkShare, said: â€œItâ€™s clear that online is becoming an increasingly integral part of the purchase journey for shoppers. Shopping online is not just for bargain hunters; the channel has the power to drive serious sales for luxury retailers.â€
A Robust Mobile Strategy is Essential
Even those with an enviable online position have to remain adaptable. There has been a rapid shift toward shopping on mobile devices. House of Fraser reported a huge increase in the number of people shopping on mobile devices (particularly iPhones and iPads) as did the Shop Direct Group (who own Very.co.uk, Littlewoods and Isme). Shop Direct saw record levels of mobile shopping over Christmas with devices accounting for 28% of its online sales and tablets responsible for a whopping 2 out of 3 mobile device sales.
Investing in Online and International Expansion
The greatest successes in the retail industry appear to come from retailers combining both international expansion and investment in online. For example premium retailerÂ Hobbs is said to be planning an international expansion, looking abroad for growth and launching local language websites next year. Its online sales grew by more than 60% over Christmas while in-store sales were up just 6.1% in comparison.
Chocolate manufacturer Thorntons saw its online sales hit hard times after its website went live later than planned last year and its store sales were falling with shops being forced to close. However despite the downturn, the company saw overall sales rise over Christmas thanks to a 69% rise in overseas custom.
It is examples like this that have led to a raft of other high street brands announcing plans to tap into new markets â€“ Cath Kidston, Dune, TM Lewin, and Lakeland have all proposed plans for expansion with China, the Middle East, India and Australia top of the list of target markets.
ASOS, while never having had a high street presence is a prime example of how international expansion can make or break your business. Pre-tax profits at ASOS soared 42% last year with the fashion retailer witnessing an increase of 46% in international sales against the same period in 2011. Today the UK based brand has more international users than it does in the UK. Its success no doubt is down to its ability to attract more than 18.8 million unique users a month.
The US was ASOSâ€™ fastest growing market in 2012 and it cited its investment in digital marketing and social media as being responsible for its international (and domestic) growth. By combining this online activity with a strong desire to improve its customer offering ASOS has managed to position itself as the online retailer most others model themselves upon.
It has leveraged the opportunities in Australia, Russia, Singapore and China (which has somewhere over a $2tn retail market and growth rates over 10%) and has seen a 57% increase in sales from these markets over the last year.
A forecast by European trade body Ecommerce Europe reported that total ecommerce turnover in 2012 was set to exceed â‚¬305 billion, compared with â‚¬254 billion in 2011 so itâ€™s no wonder retailers like ASOS and Hobbsâ€™ have been planning their international expansion in advance. Ecommerce Europe noted that sales in the UK, France and Germany represented about 70 percent of total EU online sales with Europe leading the way as the worldâ€™s largest ecommerce market. The US followed with an expected turnover of â‚¬280 billion. The Asia-Pacific region is third, with an expected turnover of â‚¬216 billion in 2012.
Looking at those retailers performing best according to Deloitteâ€™s Top-250 retailers list (from the Global Powers of RetailingÂ report), the top 10 retailers included in the list have almost one-third of their retail revenue coming from international markets meaning that in tough times, retailers simply cannot afford to continue to rely on local markets alone.
“Where Growth Stops, Decay Begins”
In summary, there is no excuse for not keeping up to date with what the consumer demands. Itâ€™s ever changing but keeping one step ahead will keep retailers in business. By investing in improving their siteâ€™s usability, building their presence online through good content marketing, SEO, paid search and creative social media engagement, retailers can grow market share and win new customers both here and abroad.
The web allows retailers to break down the barriers between them and their prospective customers whatever their location. For those who have the capability, international expansion can be both lucrative and help ensure longevity for the brand.
With a correct use of multilingual search engine marketing, website localisation and social media, entering new territories overseas can be easier and more cost effective than it may seem and retailers would be foolish to ignore their options in other territories. The fact is it is definitively not all doom and gloom for those retailers forward thinking enough to embrace the raft of shoppers who are flocking online to get the best deals and most convenient shopping experiences.
Sourceshttp://www.guardian.co.uk/business/2013/jan/07/house-of-fraser-online-sales-christmas http://internetretailing.net/2012/07/international-sales-drive-asos-31-growth/ http://www.telegraph.co.uk/finance/newsbysector/retailandconsumer/9552258/International-sales-spur-ASOS-fashion-site.html http://www.bbc.co.uk/news/business-15572270 http://www.retail-week.com/city-and-finance/asos-profits-soar-as-international-sales-surge/5042178.article http://www.ecmod360.co.uk/News/2013-01-16/By-the-numbers-Festive-financials-roundup/ Image courtesy of:Â https://www.businessinsider.com Â Â