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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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Industry Changes

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MULTICHANNEL FOCUS FOR HAMMERSON & INTU MERGER



HAMMERSON IS TO BUY INTU in a £3.4bn deal which looks set to boost the retail property operator’s multichannel capabilities. Currently Hammerson , which develops and operates office and retail properties, has focused its retail strategy on premium shopping centres and retail parks in its UK operations. Earlier this year it described the role that such centres play in the UK retail industry, at a time when shopper visitor numbers are falling, and online sales are taking a bigger slice of business. It said that prime centres give retailers the customer presence they demand, in the form of footfall, sales and dwell time. Meanwhile, it said, out-of-town retail parks fill a gap between large shopping centres and town centres, supporting click and collect sales, while offering a new look and more space than high street stores. Hammerson’s portfolio includes 23 shopping centres, including Bristol’s Cabot Circus, 17 retail parks and investments in 20 premium outlet villages and 18 retail parks.

The deal with Intu, owner of shopping centres including Intu Trafford Centre and Lakeside, expands the portfolio but also brings with it multichannel advantages. Intu, for example, stands out in its use of digital for its affiliate website, which Hammerson describes as typifying its “innovative approach to connecting retailer requirements with customer demands”. Hammerson, which has its own shopping centre apps, says that the enlarged group will “drawn on its complementary digital strategies… to deliver highly productive space that enables retailers to succeed in its centres in a multichannel landscape.” The deal comes recommended by the directors, but is still subject to shareholder approval.

RETAIL ROUNDUP



SPORTS DIRECT SAID its focus on the high street had paid off with a “spectacular trading performance” in the first half of its financial year. The multichannel retailer , a Top50 trader in IRUK Top500 research, reported group revenue of £1.7bn in the six months to October 29, up by 4.7% on the same time the previous year. Within that, UK sports retail sales of £1.14bn were 1% down on last time. Sports Direct said this reflected a strategy of reducing online discounting and of closing stores as part of its focus on flagship high street stores. Up to 20 new flagship stores are set to open in 2018.

Joules said sales growth both online and offline helped to lift retail sales in the first half of its financial year. In a pre-close trading update, the British lifestyle brand, a Top150 retailer in IRUK Top500 research, reported group revenue of £96.2m in the six months to November 26, 18.2% up on the same time last year. Retail revenue of £65.9m was up by 16.2% on last time. This was driven, said the company, by “good growth across stores and ecommerce”.

Pets at Home reported income from omnichannel was up by 81% to £24m during its latest half-year, thanks to order in-store and subscription services, while Majestic Wine reported growing sales and profits despite a challenging environment. The retailers suggested future investment might be focused online and in the US as it looks to grow customer numbers.

17% GROWTH FOR FORTNUM & MASON



FORTNUM & MASON REPORTED a 17% boost to online sales in its latest financial year, with deliveries sent to more than 120 countries. The online growth came as sales reached a record £113m in the year to July 2017, 14% up on the same time the previous year. That represents the fifth year in a row of double digit sales rises at the luxury food and drink retailer, a Top350 retailer in IRUK Top500 research. Profits of £7.6m were 23% up on last time. Sales rose both at home and abroad, online and in its London stores. A new store opened in South Korea, where it plans to open three more in the coming year. “I am particularly thrilled by the rise in domestic consumers over the past year,” said Ewan Venters, Chief Executive of Fortnum’s . “Customers who care about the taste, quality and sustainability of their food are coming to Fortnum’s in increasing numbers, be it in our stores or online.”

Sales of Fortnum’s hampers were up by 15% on the previous year, while its tea sales rose by 18%, and fragrance and beauty products by 21%. Some 82% of turnover came from products made in the UK. Fortnum’s Chairman Kate Hobhouse said: “We are particularly proud of our British heritage and I am delighted we are helping many artisanal businesses in all corners of the nation.”

DIGITAL BECOMES CARPETRIGHT’S LARGEST STORE



CARPETRIGHT HAS ANNOUNCED that sales from digital have outperformed any single store in its estate for the first time. The flooring-to-beds retailer, a Top250 trader in IRUK Top500 research, said sales from digital channels had recently become its “largest single trading store” after year-on-year growth of 49%.

The update came as Carpetright reported growing sales in the half-year to October 28. Revenue of £228.1m was 2.6% ahead of the £222.3m reported a year earlier, but pre-tax profits of £0.3m were behind the £4.1m reported last time. That, said Carpetright, reflected continued investment in its store refurbishment programme as well as discounting.

In recent years Carpetright has been working to rightsize and refurbish its store estate in the light of online retailing. Today it said its new brand identity was now trading in more than half (52%) of the UK store estate, which stands at 418 stores following ten closures. The company said: “While we have made substantial progress reducing the size and improving the quality of our store estate we are also future-proofing our business by investing in the online experience.” It said that a focus on improving customer service had paid off, with its Trustpilot score rising to 8.9. In addition, it said, 52 stores had now traded against a new direct local competitor for more than 12 months, a period in which they delivered like-for-like growth of an average 5%.

NEW CUSTOMER FOR OCADO



OCADO ANNOUNCED Groupe Casino in France as a customer for its ecommerce platform at the end of November and at the same time unveiled new robotic technology for pick and packing.

The online grocer and technology company says Monoprix.fr will be the first of the Groupe Casino businesses to use the Ocado Smart Platform, supported by a customer fulfilment centre to serve the Greater Paris area, as well as the Normandy and Hauts de France regions. The centre is expected to take two years to build and fit out with Ocado’s own technology.

The announcement came as Ocado Technology revealed its latest pick and pack robots of a type that could be installed in the automated Groupe Casino warehouse. Jean-Charles Naouri, Chief Executive of Groupe Casino, said: “Groupe Casino is pleased to announce the agreement with Ocado Group which will allow it to develop an integrated customer and logistics platform, considered the best in the market.

“This agreement is a major leap in terms of quality: 50,000 food items will be offered in the first stage to customers in the Greater Paris area with precise and speedy delivery at home and through a platform which makes it achievable to do this profitably.”

Meanwhile, Ocado’s revenue from retail sales reached £373.8m in the 14 weeks to December 3, up by 11.6%. Average order sizes remained stable at £106.11, 0.3% up from £105.83 last time, as inflation rose. Orders were placed more frequently by a growing number of Ocado Smart Pass – charging a flat monthly fee for deliveries – holders, with average weekly orders rising 11.1% to 280,000.

MOTHERCARE LOOKS TO DIGITAL



MOTHERCARE REPORTED FALLING online and store sales over the Christmas period in what it said was a reflection of ongoing changes in consumer behaviour. It warned that full-year profits would be down.

The nursery and baby equipment retailer reported online sales down by 6.9% in the 12 weeks to December 30, while like-for-like sales were down by 7.2%. Some 42% of sales took place online during the period. The figures continue trends seen in first-half results at the retailer, a Leading trader in IRUK Top500 research and, Mothercare said, reflects continuing consumer trends that it flagged up in half-year results. At the time it said lower footfall and spending were hitting its core UK market. International trade fell by 6.8% but, said Mothercare, showed signs of improvement at the end of the period, with online sales growing by 8.5% in constant currency and 7.4% in actual currency.

Chief Executive Mark Newton-Jones said: “In our UK business, we took a conscious decision to remain at full price to protect our brand positioning prior to Christmas but to then discount more heavily in the end-of-season sale. We have subsequently seen good progress with strong sell-through rates on Autumn/Winter clearance lines albeit these carry lower margins and will lead to a further reduction in full year margin as a result.” He said the focus would be on controlling both stock and capital expenditure.

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