In today’s InternetRetailing newsletter we’re reporting as the latest official figures show retail sales falling both both online and across sales channels in August. Shoppers, it seems, are cutting back in all areas – from food to household goods, the latter most notably online. These cutbacks, says the ONS, appear to be in response to price rises. Inflation, as measured by the Retail Prices Index, is currently running 12.3% ahead of last year. Its figures suggest that shoppers are now spending more to buy fewer goods than they did a year ago – reflecting the effect of inflation and also suggesting a move towards cutting back.
It’s against that background that we report on what multichannel and ecommerce retailers are seeing from their customers – and the strategies they are taking in response.
THG (The Hut Group), which reports half-year sales of £1.1bn, is taking steps to keep its price rises below inflation, while it prioritises customer acquisition and retention for its beauty, health and wellness brands. This will come at a hit to profitability – and pre-tax losses have already widened over the last six months. The business has also seen the number of ecommerce websites it operates for third-party brands grow.
DFS says it will continue to invest in digital and in stores, despite a hit to full-year profits caused by “unprecedented” supply chain disruption and a continuing decline in new orders in an uncertain economy.
Wickes says that a reputation for value, alongside an increasingly convenient digital experience, is helping to attract shoppers, especially from the trade sector, where its research suggests that significant numbers of businesses have good pipelines of work. It’s continuing to invest in using digital to attract and serve customers – and says the home improvement market remains an attractive one at a time when more people are still working from home than before the pandemic.
John Lewis and Waitrose also aim to keep price rises low and its products affordable. Waitrose in particular is seeing shoppers move between ranges as they look to make the money go further. The company has more shoppers – but those shoppers are spending less. Parent company the John Lewis Partnership shares insights in half-year figures on how shoppers are now buying in the wake of the pandemic and has the cost-of-living effect is felt – and shows an interesting reversal in the proportion of sales that took place online and in-store in the first half of the year.
Elsewhere, Amazon is running a pilot enabling direct-to-consumer sellers to use Amazon Prime to bring shoppers straight to their own ecommerce websites. The Buy with Prime pilot was announced at Amazon’s annual seller conference this week as a way for sellers to offer Prime shopping benefits to customers who buy on their own websites. It may also be useful as a way to boost Prime membership still further beyond current levels at a time when the retail and technology business is raising the price of that service.
Some retail brands, however, are thinking about profits in a whole different way – as a way of making progress on environmental issues. We reported this week that Patagonia’s Yvon Chouinard has transferred the multichannel retail brand that he founded to a ‘for purpose’ status in order to dedicate its profits to fighting climate change.
The move comes almost 50 years after Chouinard founded Patagonia as a climbing gear business that has since grown into a multichannel activewear brand that sells around the world. It became a certified B Corp and a California benefit corporation in efforts to change the way business is done, before in 2018 changing its company purpose to: ‘we’re in business to save our home planet’. All that, says Chouinard, was not enough – and that’s why he’s now taken this new action.
In today’s guest comment, Sue Azari of AppsFlyer has examples of how retailers are using mobile in-store
