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EDITORIAL How the move towards discounting is hitting retailers hard

The discounting climate exemplified by the peak trading run up to Christmas is hitting retailers hard. In today’s InternetRetailing we report as Mothercare sets out how the willingness to discount in the wider market ate away at the margins it needed for its UK business to stay profitable. Once profits became too slender, its store estate was no longer viable, says its chief executive Mark Newton-Jones today. Ted Baker, too, says that discounting has hit its margins and will affect its full-year profits – and its chief executive and chairman have stood down. 

Rather than wrestle with the vagaries of the UK market, Mothercare has taken the decision to focus instead on its global business. But the challenges for retailers selling in the UK market remain. Mothercare estimates that its UK business’s administration will remove 70% of the store space available to brands to show products from buggies to nursery furniture to customers in the UK market. Since customers do often want to check out products they haven’t bought before in person – and that applies to many first-time parents – those customers will now miss out on the chance to touch and feel for themselves. The convenience of buying online has meant that shoppers will today more often stay at home than they used to, rather than venturing to a store. That’s shown in the Springboard footfall figures that we cover this week. 

So what can retailers do? Perhaps some answers may come from Watches of Switzerland, which today reported rising sales both across sales channels and online. It says it has invested in its stores and in the customer experience. Sales staff are trained to focus on delivering the best experience they can that matches the experience of the brand. At the same time, the retailer is using technology to join up its digital experience with the in-store one. All this may be easier to deliver for retailers selling Rolexes rather than buggies, but the underlying message is that the customer experience really does matter. Investing in making that a good one – both in store and online – will mean shoppers are more likely to want to come back. 

Today we also report as Debenhams strengthens its board by adding digital expertise, and on the shape of peak trading this week.

Today’s guest comment comes from Vladimir Kuchkanov of Competera, who argues that gift retailers are experimenting with how technology can improve their businesses in areas including pricing.

Image: Fotolia

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