Green gathering pace
Although environmental awareness and the shift towards Green initiatives now appear high on the agenda of the UK Government, the Green retail market remains relatively small. It was only worth an estimated £8bn last year, and accounted for just 2.3% of total UK retail sales in 2009. The figures are not surprising in light of the fact that UK consumers are currently paying on average 44.2% more for Green non-food items than the standard alternative, with Green food items costing on average 21% more. However, in spite of significant price differences, Green product sales will continue to gather pace, doubling from £8bn to £17bn by 2015 and taking a 4.3% share of the UK retail market, according to a Kelkoo commissioned report produced by the Centre for Retail Research.
The price of Green products in the UK is considerably more than that of ordinary goods and remains the main barrier to mass consumer uptake. However, by 2012 the Green premium paid by consumers will have dropped by 21% since 2006, shrinking the average premium from 45% to 36%. The price of green household and cleaning goods is set to reduce the most over the next two years, dropping by 40.5% – from 77% today to 46% by 2012 – while food and drink will see one of the smallest reductions (10.3%).
According to a survey of major European retailers conducted for the report, the steady reduction in the Green premium since 2006 reflects a combination of consumers seeking lower prices, the greater availability of Green products, and the attempt by retailers to use their buying power to make a wider proportion of the merchandise they sell environmentally friendly in an effort to support Green manufacturers.
Mothercare blooming online
Nursery equipment-to-clothing retailer Mothercare has announced that online accounts for more than 20% of its UK business. Sales in its Direct division – which consists of orders placed online, at home and those placed online in the store – totalled £126.8m in the retailer’s latest financial year. Of that figure, £72.4m were Direct in Home sales, up by 16.3% on the previous year, while Direct in Store sales totalled £54.4m, a rise of 20.6%. Mothercare also owns the Early Learning Centre .
The online figures come against a 3% like-for-like rise in UK sales in the year to 27 March 2010. UK sales totalled £590.3m, while total group sales came in at £766.4m, up from £723.6m in the previous year. Underlying pre-tax profits were £37.2m, up from £36.9m at the same time last year.
Chief executive Ben Gordon said: “The growth of Direct reflects the transformation of retailing with stores increasingly acting more as showrooms. This is particularly true for our extensive range of nursery furniture, pushchairs and car seats.”
Mothercare said it was expanding its product ranges online. It said a much wider choice of goods was now available online at the Early Learning Centre, where the company is rolling out a Widest Choice programme. And the company said its social networking site Gurgle.com, fully owned by Mothercare since September, was growing rapidly.
The Direct channel is now one of Mothercare’s key growth channels, alongside UK retailing, wholesale and international franchises. Internationally the retailer now operates in India, China, the Middle East, Africa and Asia Pacific as well as Europe. Gordon said: “International had a record year and we ended the year with a total of 1,115 stores worldwide in 52 countries.”
Augmented reality in practice
Consumers can now see how a new touchscreen Tissot watch would look on them from their own computer. They can see themselves wearing their chosen watch, in a variety of different colours, styles and sizes, in a novel Tissot marketing campaign that harnesses augmented reality technology. And they can also experiment with the Tissot Touch’s touchscreen features including a compass, altimeter and thermometer. The technology comes courtesy of real-time light reflecting technology from Holition.
To test it out, consumers can download and print a paper wristband from www.tissot.ch/reality. They can then show the wristband to their computer’s webcam, which connects to the Holition system and shows them wearing a virtual watch on their computer’s LCD screen. The augmented reality feature also connects to Tissot’s inventory to show store availability.
Jonathan Chippindale, Holition Marketing Director, said: “Augmented reality is providing brands with exciting new marketing tools with which to target their consumers. Tissot is a genuine early adopter of this technology and has cleverly integrated it throughout their marketing plans to create awareness, drive traffic online and enable footfall for its retail partners.”
ASOS continues to lead
ASOS has reported an increase in group revenues for its year ended 31 March 2010 up 35% on last year. The £223m turnover, which includes retail sales, postage and packing and 3rd party revenues, reflects the growth of the retailer’s international business, which is up 95% on last year’s figures. UK sales amounted to £160m (up 20%) with international sales reported as £63m, an increase since last year of 95%. Profit before tax is £20.3m, up 44% on 2009’s £14m.
The company has increased its product offering over the year with 36,000 products available at the end of April 2010, up from 22,000. Active customers are up 25% year on year to 1.6m. And things are looking good for the next financial year with group retail sales for the 9 weeks to 6 June 2010 up 58% (UK 36%, international 118%) and £20m invested in a new warehouse with initial capacity of £600m annual sales.
Nick Robertson, CEO, commented: “These are a strong set of results and the team have again delivered record sales and profits…We are keeping a very close eye on controlling our costs whilst at the same time encouraging the entrepreneurial and innovative spirit that drives all that we do. We are excited about the future and believe that online fashion will continue to outperform traditional retail channels. We are at the leading edge of our sector and see enormous potential to drive our business forward, both in the UK and internationally.”
The retailer has been talking informally to high street retailer Boots about a click and collect service which will enable ASOS customers to collect their order from the high street rather than having to wait for a home delivery. Other potential candidates mooted include Argos and WH Smith.
Laura Ashley up 74%
Laura Ashley’s online sales have taken off so far this financial year, rising by an impressive 74% over the first 17 weeks of its financial year to 29 May. That contrasts with a healthy 6.2% rise in total retail sales over the period, with like-for-like sales, stripping out the effect of store openings and closures, up by 5.3%.
The retailer’s mail order sales were down by 26%, but the success of online meant that the combined direct sales channel saw an overall 42% jump in sales.
The company said full-year trading would be in line with expectations. The update to investors said: “Despite the current economic uncertainties, we remain confident of continued growth in 2010 built on the platform of a strong balance sheet with no bank borrowing, a strong brand and a distinctive product offering. Maximising operational efficiency will continue to be a key focus for the management team.”
Search loses out in popularity stakes
Social networks received more UK internet visits than search engines for the first time in May, according to Experian Hitwise, but while Facebook accounts for 55% of all social networking traffic in the UK, Google UK still remains the most popular website overall.
During May, social networks accounted for 11.88% of UK internet visits and search engines accounted for 11.33%.
Robin Goad, Research Director for Experian Hitwise comments: “The majority of online marketing spend is currently diverted towards search, and this is likely to remain the case in the short to medium term. Search remains the primary source of traffic for most websites, particularly in sectors that account for the majority of online transactions, such as retail, finance and travel.”
Facebook accounts for 55% of all UK social networking visits, almost three times as many as the next most popular social network, YouTube. Twitter is now the third most popular social network in the UK.
However, despite its popularity Facebook doesn’t yet dominate the UK social networking market to the extent that Google dominates the search market. Together google.co.uk and google.com accounted for nine in every ten web searches carried out in the UK during May, making Google UK the most visited website in the UK. Facebook, in second place, accounted for 7.04% of all UK internet visits during the same month.
Spending on search is on the increase according to research from Econsultancy. Its fourth annual UK Search Engine Marketing Benchmark Report reveals that the proportion of companies who said they would raise their budgets for this spending over the next year has risen to 60% from 55% at the same time last year. Forecast spending is also up for PPC search advertising. Some 52% plan to increase budgets here, compared to 45% last year. But 14% said they are planning to decrease their paid search spending and only 4% plan to spend less on SEO.
