Capturing market share is not enough in today’s faltering retail climate. There’s evidence that retail continues to struggle in the form of figures out today from the CBI showing a picture that the employers’ organisation says is the worst for 10 years. Other sets of figures, such as from the ONS last week, show less dramatic figures based on larger sample groups, but there’s little doubt that retailers are having to think again about how they sell at a time when customers have shown themselves very willing to make more of their retail transactions online.
Today we report as New Look and Gear4Music both set out how they are now rethinking their businesses in a way that puts profitability ahead of turnover and market share. Both have found that making the sale despite the cost has hit their bottom line in a more competitive retail climate. Now they’re taking a more forensic approach to what works for their businesses, especially their online transactions. One way that New Look could find to cut its costs was through a CVA (company voluntary arrangement) scheme that enabled it to cut both rents and, where it closed stores, business rates. Today both New Look and Carpetright report on how they are moving on from CVAs – cutting the amount they spend on store rent in order to build multichannel businesses that work more effectively. Despite store closures, both are clear that the store is at the heart of their businesses – for New Look, it’s the first port of call for customers.
But other retailers thrive on very different models. Amazon is deploying discounting at scale in order to build the membership of its Amazon Prime scheme: perhaps the key difference between Amazon, Carpetright and New Look is that Amazon is not only a retailer but a platform owner – earning money on transactions that smaller retailers make via the Amazon platform with customers.
Today’s guest comment comes from Ronnie D’Arienzo of PPRO, who considers how retailers can best balance customer security with customer experience when it comes to payment.