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EDITORIAL Aldi, Card Factory, Matalan and more on retail strategies in a cost-of-living crisis

Image courtesy of Aldi

In today’s InternetRetailing we’re reporting as retailers show how they are responding to a cost-of-living crisis that is partly fuelled by retail supply chain inflation and which is likely to affect customers’ willingness and ability to spend. Insights into their strategies comes as pound continues to be buffeted in the foreign exchange markets in the wake of Friday’s mini-budget. 

This comes as a new forecast from Springboard suggests that fewer shoppers will head to the high streets in the run up to this Christmas, as the cost-of-living crisis wipes out footfall gains made in 2022. Shoppers will be looking for discounts, says Springboard – but Fruugo’s Tony Preedy questions whether retailers will be able to afford them.

In its response, Aldi this week says that it’s putting its low prices promise ahead of profits, as it reports 2021 figures showing an 86.5% fall in pre-tax profits. The retailer is continuing to invest in the customer experience across channels through a £1.3m programme that includes stores openings and the expansion of its click and collect service. It says it must continue to deliver for its customers at a time when they need help. 

Card Factory believes that its customers will continue to buy in a cost-of-living crisis because they’ll still appreciate its value and will still want to mark life events. It says it is seeing customers return to the high street in the wake of the Covid-19 pandemic – giving it reasons to focus on the role of the store within an omnichannel business.  The retailer is preparing to trial a click and collect service at 84 shops as part of its strategy to move from being a store-based cards retailer to an omnichannel cards and gifts business by 2024.

It also sought to reassure investors that it is fully hedged into next year against the value of the dollar. It buys about half of the goods that it sells every year in the currency, against which the British pound is losing ground following Friday’s mini-budget. 

Matalan’s incoming interim chief executive Nigel Oddy says he’ll be focusing on value as well as growth when he joins in October. He’s being brought in with a brief to grow the business online and in-store, at a time when profitability is being threatened by supply chain inflation. But he says that value is critical to shoppers at the moment. At the same time, Matalan founder John Hargreaves is stepping down as chairman, freeing him to be a bidder in the strategic sale of the company.

Brands are now finding new ways of selling their products and reaching new customers as the the digital marketplace continues to mature and grow. Today we report on new solutions that two brands have found. Puma is offering value to customers in an agreement to sell discounted tock via the Secret Sales marketplace – enabling it to focus on selling its full-price products elsewhere. And Lovehoney is selling lingerie on Very in its first partnership with a third-party retailer.

In today’s guest comment Aidan Mark of CvE says that a knee-jerk cut to advertising rates is the wrong way to respond as retail feels the effects of the cost of living crisis. Rather, he says the answer is to be sure that advertising is effective. 

Elsewhere, JD Sports has paid a fine of £1.4m after it was found to have colluded with Elite Sports and Rangers FC to fix the price of the football club’s merchandise in an investigation by the UK’s Competition and Markets Authority. The three were fined a collective total of £2m. The CMA says that at a time when shoppers are worried about the cost of living it’s important that merchandise should be competitively priced. 

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