Close this search box.

IRUK Top500 12 approaches to strategy & innovation

This is an archived article - we have removed images and other assets but have left the text unchanged for your reference

Retail can’t stand still because customers don’t stand still. Where once it was seasonality that dictated most of the timescales for change and new stock on the high street (real or virtual), fast fashion now sets the pace. Retailers need to be fast to keep up with customers’ ever-changing moods, says Sean Fleming.

1. Visual search looking good for Asos

Asos has enhanced its mobile app to let UK shoppers pinpoint items they’re looking for using visual search functionality. It’s a move that ties in nicely with social shopping, which is another trend likely to find its way into many retail strategies over the course of the next two or so years. Shoppers can search Asos’s range of more than 85,000 items for things that are similar to those shared by friends via Instagram, or even pictured in a magazine. The visual search tool is currently shown as a camera icon that appears in the Asos app search bar. With a single tap, customers will be able to take a quick photograph of something they see someone wearing – and task the search tool to find similar products. Users can also upload photographs from a camera roll, such as a photograph taken previously or a screenshot from social media, and search for products that look the same. Asos is also using artificial intelligence as part of its recommendation engine, which now learns customers’ preferences over time.

2. Payment as a tool to build loyalty

Ocado is using payment, or pre-payment to be precise, to help engender greater customer loyalty. Its Smart Pass subscription scheme entitles members to free delivery and 10% savings on selected brands, and is having an effect on both the frequency and value of orders. Smart Pass members place more orders, yet they are spending less each time. While order volumes rose by 15.6% during the first half of the year to an average 260,000 a week, basket sizes fell at the same time to £108.45, which is a drop of 1.4%. The challenge facing Ocado here is to manage the increased costs that an increase in the number of orders brings, when the average basket size is declining. Ocado said recently that more than 50% of its first-half sales were from Smart Pass customers, and explained the decline in basket value as a case of shoppers taking advantage of the available discounts and promotional offers. It also said the number of active customers grew to more than 600,000 by the end of the first half of the year, 11.3% up on last year.

3. Staying firm on pricing strategy pays off

It seemed like a bold decision at the time, but Marks & Spencer is seeing growth in full-price sales in clothing and homewares, as it sticks to its guns about avoiding heavy discounting. It also opted not to run a clearance sale in the first trading quarter of its current financial year. Food sales grew by 4.5%, in line with the M&S strategy of increasing the number of Simply Food stores over the course of the next two years. The retailer is prioritising better ranging and stronger promotions, which, it says, is assisting its move toward reduced discounting. It also says full-price clothing and home sales rose by 7% as the number of promotions fell. Its international sales were up by 3.8% thanks to the fall in sterling – but down by 4% when currency fluctuations are taken into account.

4. Multichannel focus for Sports Direct

Sports Direct has put multichannel development at the heart of its innovation and strategy activities. With a single web platform underpinning all its websites and ecommerce sites, investment in ecommerce and in managing the customer experience online is made more efficient, the retailer says. Intertwined with online development work, it is also closing some smaller stores and opening a new flagship store on London’s Oxford Street for its Flannels brand. Group revenue of £3.2bn in the year to April 30, was up by 11.7% on the same time last year. Pre-tax profits of £281.6m were, however, down by 22.2% on last time. At home, the retailer has attempted to quieten some of the concerns regarding employment practices, with a staff feedback initiative for directly employed and agency employees in its warehouses. With international expansion in mind, Sports Direct says it is developing a more tailored approach to key local markets. Since year end, it has bought 50 stores trading as Bob’s Stores and Eastern Mountain Sports in the US, which it will use as a way into the US market.

This feature first appeared in the IRUK Top500 Strategy & Innovation Performance Dimension Report. To read it in full, including the remaining eight points, click here. To explore the report further, click here, and to find out more about the Top500 series of reports, click here.

Read More

Register for Newsletter

Group 4 Copy 3Created with Sketch.

Receive 3 newsletters per week

Group 3Created with Sketch.

Gain access to all Top500 research

Group 4Created with Sketch.

Personalise your experience on