NIKE JOINS SUBSCRIPTION ECONOMY
Nike has launched an online subscription service for children’s shoes, joining the growing number of retailers using the model as a new way of selling to customers. Nike Adventure Club will allow children aged roughly between two and ten to select new shoes when their feet grow or according to their changing tastes.
Customers sign up to one of three tiers of the service online, each of which has a different monthly fee and allows them to rent a certain number of shoes per year. Customers who like the shoes can keep them.
The plan includes free shipping and returns, with a twice-yearly shoe drive allowing customers to hand back worn-out shoes.
Dominique Shortell, director of product experience and retention for Nike Adventure Club, said: “In providing footwear, we’re always trying to answer, ‘What do kids want? But an equally important question is, ‘What kind of experience are we providing for their parents?’ We want to make shopping for footwear as convenient as possible for them.”
Dave Cobban, GM of Nike Adventure Club, said: “We see Nike Adventure Club as having a unique place within Nike, and not just for it being the first sneaker club for kids. It provides a wide range of options for kids, while at the same time, it removes a friction point for parents who are shopping on their behalf.”
Tchibo announced in May it was extending its clothing rental programme to new products after a successful year-long trial. The German clothing retailer said that the first year of Tchibo Share had shown the size of shopping carts and conversion rates “rising steadily”.
The retailer now plans to expand the range every six weeks, with new categories of children’s sporting wear set to launch on 21 May. The company will extend the range of women’s clothes on offer as well as offer holiday products.
IKEA announced plans back in February to trial leasing furniture to customers.
PROFITS UP AT DUNELM
Dunelm has reported that its focus on customer experience, both in store and online helped it to grow sales and profits over its latest financial year. The homewares retailer, a Top50 trader in IRUK Top500 research, reported revenue of £1.1bn in the year to June 29, up by 4.8% on the previous year. Pre-tax profits of £125.9m were 35.2% ahead of last time. Online sales grew by 35.1% while store sales were up by 7.7%. In the fourth quarter of the year alone, store sales were up by 12.1% while online was 37% ahead.
Over the past year Dunelm says it has focused sharply on its core Dunelm business, closing the Kiddicare and Worldstores websites – which it bought in 2016 for its commerce platform – and transferring product lines to its Dunelm.com website, while also investing in digital marketing to attract Worldstore shoppers there too. The focused approach, said Dunelm chief executive Nick Wilkinson in his review, “enabled us to invest all of our energy back into the Dunelm brand, concentrating on one supply chain and one website. In so doing, we significantly tightened our operational and commercial grip on the business.”
Dunelm multichannel sales include revenues from online home delivery, in-store reserve and collect revenue and from sales made in-store via tablets, and accounted for 17.4% of total sales during the year. That’s up from 13.5% a year earlier.
During the last year, Dunelm promoted its online services in-store by increasing its “customer hosts” to 1,200, training them to help shoppers buy from its extended range – 55,000 lines compared to the 30,000 stocked in store – via in-store tablets.
The retailer is to launch a new digital commercial platform during its current financial year that it says will enable it to “catch up” on convenience, not only offering click and collect but also adding more complex services such as paying for items stocked in store online ahead of collection, or buying a basket of items online with a range of different fulfilment options. Future development will focus on customer-focused improvements that drive conversion, frequency and basket size. “We view digital development as driving store sales as much as our online sales and will continue to invest in developing our offer across all channels,” said Wilkinson.
AO MOBILE LAUNCHES
AO launched its own mobile phones business, AO Mobile, which it says will be a “gamechanger” for customers.
The new company is built on the foundations of Mobile Phones Direct, which AO bought at the end of last year. AO says that customers are turning online to buy their mobile phones, and its service is intended to cut through confusion that it believes customers can experience in the process, while promising lower prices than multichannel retailers who have the costs of operating on the high street.
AO founder and chief executive John Roberts said: “This is a game changer for customers because we’ve built AO Mobile for today’s world. Customers tell us they find buying mobile and connectivity complicated. We’re making it easy to choose what’s best for them with easy-to-understand pricing and fantastic service.
“We can make it cheaper because AO Mobile customers don’t have to pay for hundreds of high street stores with thousands of sales staff.”
Roberts also argues that mobile phone customers will benefit from AO’s customer service levels, as reflected in more than 100,000 Trustpilot reviews rating AO as excellent.
Roberts said: “When it comes to telecoms, buying a mobile is a minefield of confusion and pretty average service. Customers deserve better and that’s where AO Mobile comes in.”
AO bought Mobile Phones Direct (MPD) last year in a £32.5m deal and says that by then it was already the UK’s largest online mobile phone retailer. At the time it had a customer base of 1.25m customers and around 13.6m visits to its two websites, as well as contractual relationships with the four UK mobile network operators as well as handset distributors. MPD started trading 27 years ago and its team is now running AO Mobile.
DEBENHAMS CEO TO BUILD ON CUSTOMER REACH
Debenhams’ new chief executive says its turnaround strategy will focus on brand, differentiated products and “broad customer reach”.
Stefaan Vansteenkiste, who was named as the new leader of the troubled department store, said the business was realistic about the challenges facing it.
“The retail industry faces a challenging environment and everyone at Debenhams acknowledges that,” he said. “But we have a clear plan and Debenhams has a great team of people who are committed to delivering it. I am very excited about Debenhams’ strong prospects and with a restructured balance sheet there is a robust platform from which to build a turnaround, based on Debenhams’ clear brand focus, broad customer reach and differentiated product offer.”
Vansteenkiste joined the company as chief restructuring officer in April, the month that it went into administration and handed control to its lenders. Since then he has been working with the executive team on a new turnaround business plan. His experience includes time as a turnaround expert and managing director at professional services firm Alvarez & Marsal as well as previous experience in the role of both chief executive and adviser at retailers and consumer brands including Bally Shoes, Diam International and Intertoys.
Chairman Terry Duddy will work with Vansteenkiste on the handover before stepping down from the board in September. Duddy, who previously ran Argos owner the Home Retail Group, joined the Debenhams board in 2015 as a non-executive director, before later taking on the role of executive chairman. He took over as interim chief executive when previous chief executive Sergio Bucher left following the group’s move into administration.
The turnaround plan follows a Debenhams Redesigned strategy, unveiled in April 2017, which envisaged Debenhams becoming a social shopping destination, using mobile at the centre of the plan that aimed to give shoppers more reasons to come into stores. At the same time it also aimed to make operations more efficient.
TAKING FASHION OUT OF ADMINISTRATION
Boohoo acquired Karen Millen and Coast out of administration while Sports Direct bought Jack Wills in August. Boohoo said it had paid £18.2m in cash for the online business and association intellectual property rights of Karen Millen Fashions and Karen Millen Retail after they went into administration. They had previously been put up for sale by Icelandic bank Kaupthing.
Boohoo says that the online business of the two brands will complement its existing multi-brand approach while helping it in its ambition to lead the global online fashion market. Boohoo already owns Nasty Gal and PrettyLittleThing.
John Lyttle, group chief executive of the Boohoo Group, said: “The acquisition of the online business of two great and renowned British brands in Karen Millen and Coast represents another milestone in the group’s growth story as it continues to invest in its scalable multi-brand platform and gain further share in the global fashion ecommerce market.”
In the year to February 28 2019, the Karen Millen holding company, Karen Millen Holdco 1, turned over £161.9m and turned in an operating loss of £1.4m, according to figures cited by Boohoo today. Karen Millen and Coast together made revenues of £174.1m, with direct online sales of £28.4m.
Meanwhile, Sports Direct bought Jack Wills out of administration for £12.7m – its fifth major acquisition of the last 12 months.
The latest transaction gives Sports Direct direct ownership of the kind of brand that it would like to feature in its ’multichannel elevation strategy’, a plan which chief executive Mike Ashley says is the retail group’s response to brand insistence some years ago that it should move away from the traditional ‘stack them high, sell them low’ discount model and instead sell through a new generation of stores.
The move to buy Jack Wills gives it a direct route to gain as much branded clothing as it wants. The retailer is likely to sit alongside its other premium lifestyle brands including Flannels, Cruise and Van Mildert.