After a turbulent 2016 with overall clothing and footwear growth of just one percent, the lowest since recession-hit 2009, retailers will be hard pressed to find much respite this year.
With price hikes now on the horizon, due to the weak pound and unwinding currency hedging, volume growth will be muted, so retailers need to take action if they are to remain competitive and stand a chance of surviving 2017 unscathed.
1. Focus on full price
Despite shoppers tightening their belts and becoming more considered with their spending, retailers should not use this as an excuse to implement heavy discounting to drive sales.
Retailers need to be more strategic by tailoring promotions to different customer groups, and ensuring discounts are used to reward shoppers rather than handed out to one and all.
Justifying price points will be key this year, so investment in quality, design, store environment, and shopper experience will be much needed to convince shoppers not to delay purchases until discounts are offered.
2. Showcase quality credentials
Shoppers’ expectations and demand for quality will remain unchanged, despite their squeezed disposable incomes.
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Retailers that opt to minimise costs by downgrading the quality of fabrics and fit to protect margins will lose favour with customers. Instead, investment in retaining and building quality standards is crucial as shoppers become more discerning when making purchasing decisions.
Showcasing quality credentials via targeted marketing and customer service will help to validate price points and encourage purchases.
3. Don’t blame it on the weatherman
Unseasonal weather has plagued the fashion sector for the past three years, with mild weather in winter months proving detrimental to sales of outerwear, knitwear and boots – while a lack of sustained warmer weather in June and July has led to difficulty in shifting high summer stock.
The sector should now be well used to such volatility in trading and there is no reason to believe 2017 will be any different. Retailers should have strategies in place to minimise disruption, such as shorter lead times for fast reaction to trends and bestsellers, regular product drops, transitional ranges, and visual merchandising showcasing weather appropriate outfits.
Those that continue to lay blame for poor trading on the weather are simply highlighting how their propositions are not compelling, flexible or responsive enough to garner wants-driven purchases.
4. Don’t be afraid to wield the axe
Extensive store portfolios are now wholly unnecessary given the ongoing shift to online, and while it can take time to close locations due to lengthy leases, players such as Shoe Zone, Debenhams, New Look and Peacocks would be wise to do so or risk being left with oversized and unprofitable store networks.
When it comes to sub-brands, department stores in particular need to streamline their clothing offers rather than try to be all things to all people. While M&S is already axing a handful of sub-brands, Twiggy and Best of British should be added to the list to simplify its offer, reduce confusion, increase relevance and focus on winning back lapsed customers.
For some, stores are not the problem, but entire fascias which have lost their relevance or never had it in the first place. Inditex brand Bershka remains unprofitable in the UK, impaired by its similarity with sister brand Pull & Bear and its lack of destination appeal.
Arcadia brands also suffer from significant overlap — especially between Topshop and Miss Selfridge, while Wallis has lost its point of difference and failed to keep up with both its target market and rivals. While culling a sub-brand or fascia is a bold move and impacts short-term market share, taking action swiftly is imperative as the retail market remains as unforgiving as ever and consolidation is inevitable.