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Industry News - InternetRetailing Magazine May 2019

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BURBERRY’S YEAR OF TRANSFORMATION

Burberry says it has achieved its objectives in the first year of its latest transformation, following the arrival of new creative director Riccardo Tisci.


The retailer has rethought aspects of its business, from creative, to marketing, digital and distribution over the course of the year. Alongside a new creative vision – with new logo and product aesthetic – it has also started to align its distribution and marketing. Digital innovations included the launch of the B-Series – a monthly drop of limited edition products sold on social platforms. It also partnered with Instagram on the launch of its checkout, enabling customers to buy straight from the Burberry Instagram shop. Digital growth was driven by sales in Asia, over mobile and through new third-party relationships.


It has upgraded and rationalised its store network, focusing on its flagship stores. By the end of 2020, it expects to have more than 80 flagship stores in its new style, while it will also close 38 smaller stores in secondary markets. During the past year, a net 18 stores closed, and 14 stores were upgraded to the new look. Stores opened in China, while its Dubai flagship was moved and expanded. That rationalisation has extended to its wholesale network, where it has started “phasing out non-luxury doors”.


In its full-year statement, Burberry said: “All these initiatives helped reignite brand heat and significantly shift consumer perceptions of Burberry. During the year, we added more than 3 million followers on our key social platforms and significantly increased our engagement on Instagram. We have received strong organic endorsement from some of the world’s most followed celebrities and influential fashion icons, and we have seen a step-change in the response from fashion press.”
Burberry reported £2.7bn in revenues in the year to March 30. That’s unchanged flat on the previous year. Pre-tax profits of £441m were 7% up on the same time last year.

 

LANDLORDS BACK CVA FOR DEBENHAMS

Debenhams is set to embark on a store closure and business restructuring programme after it won backing from its landlords for a CVA programme that will see it close 22 stores next year.


The vote to approve the CVA arrangements was passed by more than 75% of creditors, on the same day that Debenhams Group owner Celine (a new company formed by creditors to Debenhams) confirmed its backing for the business. Celine bought Debenhams Group out of administration, in exchange for £200m in new finance and plans for a £100m debt for equity swap.


The approval of the CVA proposals means that Debenhams is now set to close 22 department stores next year out of a total estate of 166 branches.


The CVA announcement is key to the Debenhams Redesigned plan of operating a smaller UK store estate with better quality stores. That transformation plan envisages up to 50 closures overall. Debenhams instead plans to focus on fewer but better quality stores, offering a customer experience redesigned around mobile and social for shoppers who want to make an event of their shopping trips.

 

Its new-look Watford store is part of that transformation plan, with a new style of beauty hall, bringing digital into the store, alongside restaurants and, online, social media initiatives such as its beauty club community.

 

ONLINE SALES REACH 80% AT N BROWN

N Brown says that 80% of its sales, worth around £500m, were made online during a year in which it ended its experimental move from online brand to stores, closing all 20 of the Simply Be and Jacamo shops that were open a year earlier.


The group’s focus is now firmly online and on a customer-centric strategy, while managing the decline of its offline business. Reporting full-year figures, that 93% of sales were made online at its ‘power’ Simply Be and Jacamo brands during the year to March 2, while its largest brand, JD Williams, made 76% of its sales online.


Digital revenues at those brands grew during the year, with JD Williams up by 8.8%, Simply Be up by 8.7%, and Jacamo up by 5.1%. Across N Brown brands, 80% (+7 percentage points (pp)) of sales were made online, with 91% (+1pp) of new customers buying via digital. But conversion rates fell from 5.3% to 4.9%, perhaps as the rate of traffic from mobile devices grew to 78% from 76% a year earlier.


Group revenue of £914.4m in the year to March 2 was down by 0.8% compared to the previous year. At the top line, earnings before interest, tax and asset write-downs grew by 7.9% to £128m, but one-off costs that the retailer said related mostly to legacy issues, meant there was a bottom line pre-tax loss of £57.5m, a fall of 454.3% from a profit of £16.2m in the previous year.

 

SAINSBURY’S REPORTS PROFITS SLUMP AS IT OPENS CASHLESS STORE

Following the collapse of its proposed £13bn merger with Asda, Sainsbury’ woes continue as it logged a troubling 41.6% fall in pre-tax profits, dropping to £239m – £46m of which was spent on the failed merger.


The costs of the aborted merger formed part of £396m of one-off charges that dragged down the supermarket chain, which is also seeing declining sales as it gets squeezed between cut-price rivals Aldi and Lidl and high end shops such as Waitrose.


Stripping out these one off costs, the chain logged a year-on-year rise in profit of 7.8%, driven by what it describes as a “solid food performance”, along with a £160m in savings and efficiencies brought about by its continuing integration of Argos.


The retailer says that like-for-like sales fell by 0.9% in the final quarter of the financial year – the second consecutive quarter of decline – with sales slipping by 0.2% for the full year. Grocery sales edged higher overall as prices grew, but the volume of food and drink sold decreased. Meanwhile, general merchandise was flat and clothing sales declined.


On a more positive front, the retailer is investing in accelerating investment in its store estate and technology, while reducing net debt and maintaining its dividend policy. Part of this sees an investment to improve more than 400 supermarkets this year alone.


This is thought to entail rolling out some or all of the developments seen in Sainsbury’s Selly Oak “experimental” superstore concept, which features a food court, an Oasis concession – four more of which have been opened at other stores since – a revamped beauty and fragrance section and Habitat and Argos stores. It could also involve taking forward the cashier-less trial seen at the chain’s Holborn Circus branch in London.


The experiment, which is planned to last for three months, enables shoppers to use the supermarket’s SmartShop, Scan, Pay & Go smartphone app to scan their groceries as they go around the store. They pay in the app and scan a QR code before they leave, reassuring them that they have paid. There’s no need either to queue or to pay at a till.

 

JOHN LEWIS IMPLEMENTS AR IN BEAUTY HALL

Shoppers at John Lewis & Partners can now try on a range of lipsticks with nothing more than their smartphone as part of its latest augmented reality (AR) app feature.


Beauty lovers browsing lipsticks in the John Lewis app will now have access to a ‘Try On’ feature which takes them to a live selfie screen where they can test different colours before buying. The virtual lipstick is applied instantly and stays on the lips, moving in real time with the customer.


The feature enables customers to try on a range of shades from 300 brands giving an accurate representation as well as encouraging customers to experiment with new colours they might not have tried before. Virtual Lipstick is available on the latest iPhones.


The John Lewis app is already a particularly popular channel for beauty customers, with beauty accounting for 17% of all app orders. However research found that when it came to buying new lipsticks, customers were keen to test out different shades before purchasing.


Sienne Veit, Director, Digital for John Lewis & Partners, explains that this is the perfect example of combining the expertise of its Beauty Hall Partners with the very best technology online. “Beauty is the perfect space for us to experiment with this technology and we hope our customers have lots of fun using it,” she says.

 

CROSS-CHANNEL THEATRE WINS FOR JD SPORTS

JD Sports says that bringing theatre into retail, both online and in-stores, lay behind record full-year figures.


The retailer, ranked Leading in IRUK Top500 research, reported revenue of £4.7bn in the year to February 2 2019. That’s a rise of 49.2%, compared to the previous year. Profits before tax and exceptional items grew by 16% to £355.2m, but one-off costs, including £29.4m from the newly combined Finish Line and JD business in the US for the 33 weeks following its acquisition, meant that bottom line pre-tax profits came in at £339.9m – 15.4% up on last time.


Like-for-like sales grew by more than 6% around the word, against “a backdrop of widely reported retail challenges in the group’s core UK market.”


JD Sports executive chairman Peter Cowgill said that the record result had been achieved “with a relentless focus on ensuring that, at all times, we provide a compelling differentiated proposition to the consumer with an attention-grabbing theatre both in stores and online.

 

Consumers expect our product and brand mix to be emotionally engaging, exclusive and continually evolving with high levels of social media penetration and an increasing pace of technology adoption across our core demographic, ensuring that new styles and trends spread rapidly across a wide geography.”

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