Struggling retailers can’t just blame the downturn
The threat of recession is an excellent excuse for retailers to blame someone else for their poor performance.
Things are certainly getting tougher out there, but retailers whose sales are falling faster than average are losing market share. Simple as that.
Monthly retail sales are wildly volatile, but look at it this way – in the second quarter, UK sales were still 2.2 per cent higher than the previous year.
Marks & Sparks became the poster child for the struggling retailers with last month’s profit warning and a 5.3 per cent drop in UK same store sales for the quarter.
Chief executive Sir Stuart Rose shrugged off the declines as a symptom of the fact that M&S is a “smoke detector” for the rest of the sector.
It gets worse. Woolworths reported sales down 6.7 per cent in the six weeks through July and pointed toward “worsening of conditions” and an “increasingly competitive market.”
It is all becoming a tad repetitive. What about the fact that they don’t have a chief executive? What about the fact that they’ve hired “a leading firm of strategy consultants” to tell them they’re not very good at ordering stock?
Mid-range stores are hardest hit in tough times. Consumers go low-price for bargains and high-price for treats, but even the retailers at each end of the spectrum still have to get it right to win business.
Primark’s ever changing, super cheap fashions appear in women’s magazines every week and fit the lust for fast-fashion. The chain has maintained like-for-like sales.
Burberry has spent the past three years overhauling its supply chain, so while it may still have to work hard to maintain its premium brand, operations are fighting fit for the downturn.
Sell the right stuff
HMV found a new lease of life when it started pushing into the burgeoning video games business. Lesson: sell stuff people want.
Being able to react to changing shopping habits is key. Internet-based fashion retailer ASOS almost doubled its quarterly sales this time around. Yes, it’s growing from a small base, but it’s still snatching sales that others are missing.
However bad the economy gets, retailers mustn’t shirk responsibility for their own market share.
Rebecca Meehan is a Market Reporter for CNBC Europe