Webloyalty Retail Research - Winning Brands & How To Strengthen Yours

3. Winning brands

15 The future of retail: the supply picture Prepared for Webloyalty by Conlumino August 2013

The future of retail

The supply picture

Winning brands Introduction

•  With growth in retail expenditure having slowed considerably and the internet continuing to take spend from physical stores, it is more important than ever for retail brands to identify and execute a clear compelling offer for their bricks and mortar outlets.

•  There are a number of characteristics widely shared by the most successful physical formats, such as the usage of particularly exciting or interesting store environments, or locations which are particularly convenient. Similarly, those stores and brands which are consistently struggling also generally have a similar failings, such as the lack of a clear offer or reason to visit.

•  With these trends in mind it is no surprise that John Lewis is the brand that people would most like to see open in their most used shopping location. Indeed, the five most popular choices (John Lewis, Primark, Debenhams, H&M, Waitrose) serve to illustrate how retailers operating at quite different price points remain in demand, instead judged by common shared strengths in their propositions - such as value credentials, popular products ranges and stores which provide a special experience.

•  These views towards issues of quality and value are playing a key role in determining where consumers shop. Retailers with a clear focus on prices which seemingly belie the quality of the item, allowing consumers to purchase more for their money – such as Primark, Uniqlo and H&M – remain in demand, as do more aspirational, luxury players. It is those that sit in the middle, such as M&S, which are struggling for relevance.

THINGS TO CONSIDER

•  Be brave. In today’s fragmented consumer society, retailers cannot be all things to all men. To be successful, specific, discrete groups of consumers need to be targeted, through carefully selected and edited product lines, which deliver a clear, consistent message to the consumer – Apple provides the extreme example of this.

•  Create a point of difference. If you can’t identify why consumers should visit your stores, then they probably won’t. Whether you are offering a great experience, superior service or, like Primark, value that simply can’t be found online, you need to pull shoppers in.

•  Understand your customers and their requirements. A good brand should be customer centric and built around consumer needs and should know what it stands for.

•  Focus. Good brands have a relatively narrow focus, and this focus helps increase brand equity and consumer understanding; don’t try to be all things to all men.

•  Be consistent. Good brands are consistent across all aspects of the retail proposition from product to marketing to store environment. Make sure everything pulls together and that your branding message is not compromised or diluted. A good brand evolves over time and in response to changing conditions, but the core essence of the brand should not change often, if at all.

•  Communicate actively. A solid brand has something to shout about and in today’s pressured retail environment, getting heard is critical.

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Winning brands



The supply picture

Formats Winners and losers

Winners Losers

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Winning brands

Convenience

Experiential Neither-nors Under reachers

Variety stores

High speciality



The supply picture

With growth in spending sluggish and online taking share, stores need to establish a real point of difference to succeed

•  With growth in spending slowing down and transferring online, stores can no longer depend on passing footfall to generate enough business to keep them profitable. Instead they need to establish clear points of difference, which compel shoppers to visit them.

•  The most successful formats are those which offer something unique and valuable , whether that is the convenience of being able to purchase food within a five minute walk from your house, the specialist experience of a visit to Hotel Chocolat, or the ‘theatre’ created by a visit to Hollister.

•  Perhaps one of most successful brands at creating winning retail formats has been Apple. Its stores act as a showcase for its products and are geared towards exciting and inspiring consumers, rather than directly selling to them. Ranges are also carefully edited to a bare minimum of high quality products, creating consistency in the eyes of the consumer.

•  Stores which have been unable to differentiate or excite shoppers have found the going much tougher. For example, Ethel Austin, which is neither the cheapest nor offering particularly inspiring product, has met with repeated failures. Many variety stores, merely focusing on offering a wide range of products over experience or value, have found their offers superseded by online and competitors with clearer propositions.

Section 3

Winning brands

Formats Winners and losers



The supply picture

Brands Popular brands in demand: overall

21.4%

John Lewis is the retail brand consumers would most like to see

•  When asked about which retailers they would like to see open at their most used non-food shopping location, consumers top five choices were John Lewis (21.4%), Primark (18.3%), Debenhams (13.8%), H&M (9.8%) and Waitrose (9.7%).

•  This spread shows how polarised retail has become, with the most desired brands possessing little overlap in terms of price points, but similar qualities in terms of value for money, popular products ranges and stores which provide a special experience. Consumers will engage with a wide range of offers, as long as they offer something above and beyond, whether that is quality and service (John Lewis, Debenhams, Waitrose) or value and fashionability (Primark, H&M).

•  When looking at demands by region, views are very similar. Although the specific retailers do vary somewhat, they are generally fashion-led operators with a focus on trends, demonstrating the importance of a strong clothing offer in driving footfall to a location.

18.3% 13.8% 9.8% 9.7%

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Winning brands

And the next five: House of Fraser: 8.3% Zara: 6.4% Apple: 6.1% Harvey Nichols: 5.9% Abercrombie & Fitch: 5.2%



The supply picture

Anglia East Midlands London Northern Ireland North East North West John Lewis (20.4) Primark (20.4) John Lewis (19.4) Debenhams (29.4) Primark (21) Primark (23.7)

Primark (17.4) John Lewis (18.2) Debenhams (18) John Lewis (23.5) John Lewis (17.3) John Lewis (21.9) Debenhams (13.8) H&M (17.5) H&M (16.5) H&M (23.5) Forever 21 (7.4) Debenhams (12.3)

House of Fraser (10.8) Debenhams (13.9) Primark (15.5) Zara (23.5) Debenhams (7.4) Next (10.5) Waitrose (9) Waitrose (10.2) Waitrose (12.1) Waitrose (17.6) Waitrose (6.2) House of Fraser (9.1)

Cath Kidston (7.8) Zara (8.8) Zara (11.2) Primark (17.6) H&M (6.2) Waitrose (8.2) H&M (7.2) Next (7.3) Next (10.7) House of Fraser (11.8) Diesel (6.2) H&M (7.8) Next (7.2) Mango (6.6) House of Fraser (8.7) Top Shop (11.8) French Connection (6.2) Monsoon (7.8) Zara (6.6) Abercrombie & Fitch (5.8) Mango (7.3) Next (11.8) Next (6.2) Apple store (7.3)

Harvey Nichols (6) Harvey Nichols (5.8) Uniqlo (7.3) White Company (11.8) Abercrombie & Fitch (4.9) Abercrombie & Fitch (6.8)

Scotland South East South West Wales West Midlands Yorkshire John Lewis (17.8) John Lewis (22.2) John Lewis (29.4) John Lewis (21.2) John Lewis (23.8) John Lewis (21.6)

Primark (15.9) Primark (18.3) Primark (15.4) Primark (20) Primark (17.7) Primark (16.2) Debenhams (12.7) Debenhams (15.2) Debenhams (11.8) Waitrose (18.8) Debenhams (17.1) H&M (10.8)

House of Fraser (12.1) Waitrose (10.9) Waitrose (11) Debenhams (12.9) House of Fraser (11.6) Harvey Nichols (9.5) Next (8.9) House of Fraser (9.3) H&M (7.4) Next (10.6) H&M (9.8) Debenhams (8.8)

Waitrose (7.6) Next (7.8) Harvey Nichols (5.9) H&M (8.2) Waitrose (7.9) Victoria’s Secret (7.4)

French Connection (7.6) H&M (7) Apple store (5.9) Apple store (8.2) Diesel (7.3) Cath Kidston (7.4)

Abercrombie & Fitch (7) Monsoon (5.8) House of Fraser (5.1) House of Fraser (7.1) French Connection (7.3) Apple store (7.4) H&M (7) Zara (5.8) Burberry (5.1) Monsoon (7.1) Apple store (7.3) Abercrombie & Fitch (6.8)

Victoria’s Secret (6.4) French Connection (5.4) Abercrombie & Fitch

(4.4) Top Shop (5.9) Harvey Nichols (6.7) Ted Baker (6.1)

Section 3

Winning brands

Brands Popular brands in demand: by region



The supply picture

Key attributes Quality and value

Consumer attitudes to quality and value continue to evolve

•  The evolving behaviour of consumers, where they are simultaneously looking to trade down without sacrificing quality, whilst also ‘treating’ themselves to occasional premium purchases, has benefitted some retailers much more than others.

•  It is no surprise to see Waitrose is by far the most desired food & grocery retailer among consumers. This is not just a reflection of its comparative under-representation across the UK, but also its superior stores and service and a wide price architecture that ranges from the price-led quality of the ‘Essentials’ range, all the way up to ultra premium products. These characteristics have enabled it to capitalise on many of the trends fostered by the recession, including the greater consideration given to purchases, the trend for dining at home rather than eating out and the greater value perceived in a strong retailer own brand.

•  This attitude has also spread to non-food. Retailers with a clear focus on value, which allows consumers to purchase more for their money – such as Primark, Uniqlo and H&M – remain in demand, as do more aspirational, luxury players. It is those that sit in the middle, such as M&S, which are struggling for relevance.

I am thinking much more about the food I’m buying

Buying more expensive foods to substitute eating out

Switching to retailer own brands to save money

Buying cheaper brands and foodstuffs

Cutting back on the amount of food I buy to save money

69.3%

54.3%

44.9%

31.1%

17.1%

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Winning brands



The supply picture

Case study John Lewis

John Lewis’ success is built upon exciting and satisfying the consumer, through good quality, a good experience and good value

•  Despite the stagnant retail environment, John Lewis is a retailer which has continued to grow from strength to strength, with the employee owned business growing by 16.1% between January 2008 and January 2012, despite the impact of the recession.

•  The company’s success has been built upon foundations of excellent customer service and a reputation for trustworthiness and quality. However, while positioned at the premium end of the market, John Lewis maintains its price competitiveness through its Never Knowingly Undersold commitment of matching competitors’ prices.

•  This dual strategy has created a powerful appeal to shoppers, supported by clever marketing and large, well designed stores which create a sense of affection and excitement around the brand, particularly over the crucial Christmas period.

•  This popularity means John Lewis stores, and its huge flagship outlets in particular, are able to drive significantly high footfall. This has made them a much in demand anchor tenant for any number of retail schemes and sees them frequently offered incentives ranging from long rent free periods to subsidies towards store fit-outs.

Section 3

Winning brands

Business

Webloyalty Retail Research - Winning Brands & How To Strengthen Yours