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Defying the downturn: what Boohoo, Primark and JD Sports teach us about the brave new world of retail

image with JD Sports, Boohoo and Primark logos
JD Sports, Boohoo and Primark are among the retailers defying gloom in the sector. 

Barely a week goes by without news of another retailer culling stores, cutting jobs or demanding that landlords renegotiate rents. Arcadia, Debenhams, Marks & Spencer, Monsoon, Boots, Mothercare - the list goes on.

Footfall in May suffered its biggest collapse in six years as shoppers abandoned high streets, shopping centres and retail parks. But as the high street faces a perfect storm of Brexit uncertainty, sterling weakness and an online revolution, the likes of JD Sports, Joules and Boohoo have become poster children for a new era of retail.

There is no one-size-fits-all strategy for retail success but the recent winners in British retail are getting a few key things right. Their ailing competitors would do well to take notice.

Avoiding the squeezed middle

Where shoppers once flocked to mid-market retailers such as Marks & Spencer and Debenhams, buying everything from underwear to handbags under one roof, the modern consumer wants to mix and match across stores and brands.

Consumers no longer purchase an “entire wardrobe” from one retailer, says Jonathan De Mello, retail consultant at Harper Dennis Hobbs. “It's now a mix and it tends to be value or high end. And so the mass market [retailers have] been squeezed hugely.”

JD Sports, Joules and Boohoo have become poster children for a new era of retail. Credit:  SOPA Images/LightRocket

To succeed, stores must find a place in a polarised new world where £15 trousers may be combined with luxury accessories. Consumers “don't want to spend huge amounts of money on basics”, says De Mello. Instead, they happily combine cheap essential items with upmarket “statement pieces” such as handbags or shoes.

“You can get the same individual shopping at Primark and then buying a Louis Vuitton bag,” he says. Mid-market sellers like Topshop and Monsoon have struggled to convince shoppers they have something worthwhile to offer in this new environment.

Knowing your customer

The oldest adage in retail is that the customer is always right. The common thread across retailers who are succeeding is “absolute clarity about who their customer is and what they want”, says Clare Bailey, retail expert at The Retail Champion.

Lush cosmetics and athleisure specialist JD Sports, which recently joined the FTSE 100, “just do one thing really well” rather than trying to be “all things to all people”, she says. Legacy retailers have contributed to their own demise by simply “adding more and adding more” to their product lines instead of giving customers a specific reason to visit their stores.

The success stories also offer an experience and not just a product. JD Sports’ boss Peter Cowgill refers to the “attention-grabbing theatre” of its stores. Bailey points to specialist sellers like Disney that offer a “magical” experience that consumers cannot get anywhere else.

Even Primark is getting in on experience-led shopping. Its mammoth 160,000 sq ft Birmingham store includes a beauty clinic, three dining venues, mobile charging points and a barbershop in addition to its rails of cheap fashion. For younger shoppers in particular, it offers a full day out.

Rapid response to new trends

An enjoyable shopping experience counts for little without up-to-the-minute products though. No longer content to wait for next season’s range, customers now demand new trends as soon as they hit the catwalk.

Primark's 160,000 sq ft Birmingham store includes a beauty clinic, three dining venues, mobile charging points and a barbershop Credit:  PA

This poses a challenge for bricks and mortar retailers whose supply chains are cumbersome compared to those of new age sellers such as Amazon and Boohoo, which also owns the PrettyLittleThing and Nasty Gal brands.

Online players “can respond more quickly to trends and from the catwalk [and move from] design to production and then deliver”, says De Mello. Their lead times are much shorter as new products do not need to “get through warehouses and into a shop environment” before customers can see them, he adds. Zara and H&M are among the few high street retailers that have made strides in matching the online players’ ability to quench buyers’ thirst for fast fashion.

Getting online right

With the notable exception of Primark, high street and fast fashion retailers are also competing directly with Amazon by selling not only in-store but also online and through social media.

Online shopping now accounts for 18.7pc of UK retail sales, official figures show. Meanwhile, more than a third of shoppers aged under 35 have made a purchase through Instagram, according to research from GlobalData.

While this plays into the hands of online specialists, bricks and mortar stores are a good tool for raising brand awareness.

“Without a store presence you’ve got to spend quite a lot of money... to get known,” says Patrick O’Brien of GlobalData. Boohoo, which continued to enjoy strong growth at the start of the year, spent £80m on marketing and celebrity endorsements last year. Smaller online specialists may struggle to match such a hefty outlay.

The other advantage of an extensive store network is being able to offer a click-and-collect service to consumers. Next now makes more from online sales than its 500 stores but the web business is complemented by its shops, where about a fifth of staff are now solely focused on dealing with returns.

New retailers like Boohoo start with a “clean sheet of paper”, giving them an edge over legacy brands with decades of entrenched practices, says Bailey. To survive in the brave new world of retail, established high street names must use their trusted brands to their advantage but learn to match the upstarts in giving customers what they want, when they want it.