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EDITORIAL How Kingfisher, Missguided and Armani are building resilience

Giorgio Armani: part of the retail rethink (Image: Armani/Viviane Sassen)

Giorgio Armani: part of the retail rethink (Image: Armani/Viviane Sassen)

A recent assessment by the KPMG/Ipsos Retail Think Tank (RTT), which produces a Retail Health Index (RHI) – a quantitative and qualitative assessment of demand, margin and cost – saw drop of 10 points, bringing the index to a record low of just 61 – down nearly 40% if compared to its initial basing (RHI score of 100) in 2006. On that metric, retail is at a very low ebb.

However, it was never going to look pretty: we have seen perhaps the biggest disruption to retail since the war and the total closure of shops. It doesn’t get much worse than that. Ecommerce has filled some of the gap, but in most sectors it isn’t quite enough.

The RTT does see Q3 offering some glimmers of hope, but it warns that it is hard to know how long lasting that recovery will go on, nor how sizeable it may or may not be.

The big hope is that Christmas is going to be a much needed fillip. According to new research from Rakuten Advertising conducted among 8,673 adults around the world, 87% of people will still be shopping for Christmas and 57% plan to purchase during key shopping peaks like Black Friday – despite 40% citing a decrease in household income due to COVID-19.

A second study of more than 6,200 brands and retailer sites by review site Bazaarvoice, meanwhile, suggests that Prime Day – which will take place sometime in October or November, it believes – will kick things off and generate significant online shopping momentum in the run up the Black Friday and Christmas.

This unprecedented level of consumer confidence in Peak could well save the day, but there are a lot of ifs: if there is a second wave; if the end of furlough dents this confidence; if Prime Day happens; and if retailers can shift how they operate to meet consumer habits.

The move to online is likely to continue, as the Rakuten study shows, is set to be the driver of any pre-peak and peak sales up turn. Only the retailers that can be there to offer what shoppers want will reap the benefits.

And it is starting to happen – driven by new ways to join stores and online, shifting towards new delivery and click and collect models.

Kingfisher Group – owner of B&Q and Screwfix – has rapidly turned to click and collect as its stores have started to open and has seen this side of its business generate massive growth. In fact, its ecommerce sales have risen by some 200% across May and June, as consumers look to do DIY while stuck at home and want to collect rather than go into the store.

Likewise, fashion chain Missguided is looking at how to get the goods to its customers – and how to handle the ever-present fashion issue of returns – in a contact free way. It has partnereed with InPost UK to use the latter’s lockers. This, it says, not only allows for a contact free way to click and collect, it also makes it easier for shoppers to manage returns.

An added bonus is that, by deliveries being made to banks of lockers rather than individual homes, it is also a more environmentally-friendly way of doing deliveries – something ever-closer to the hearts of its core audience.

It is even happening at the other end of the fashion market. Armani is redesigning its entire operation around bringing stores and online together, facilitated by Yoox Net-A-Porter. The two companies have been working together for more than 20 years, but are now looking at how Yoox delivery network can be leveraged to provide a seamless service for Armani customers across its stores and online.

The move, part of Armani’s Next Era initiative has the backing of Georgio Armani himself, who has driven the project himself. He gets it.

And the retailers that get it like Georgio, will be the ones that succeed. These are just three example we see this week, there will be others – and it won’t be just about click and collect and delivery, but the idea that rethinking the whole process is the key is starting to gain traction.

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