IT IS WITH pleasure that we release our first InternetRetailing Top500 UK report, an in-depth, commercial and comparative view of the UK’s multichannel retailers and ecommerce players. Our guiding principle in undertaking this work has been to refl ect the capabilities necessary to run complex retail operations at scale – a focus upon ‘RetailCraft’.
We offer our results in the full knowledge that we are not the professionals running multichannel businesses – millions in turnover, of customers, of SKUs, key words, merchandising algorithms and interactions across all channels. It is in tribute to these efforts that we have assessed across seven Performance Dimensions rather than taking a single measure (be it revenues or web traffic). Our report is dedicated to those professionals who make the UK’s retail market the most competitive and capable in the world.
THE DIMENSIONS OF ASSESSMENT
Our research covered seven Performance Dimensions:
0 Footprint – Released in March 2014 this considers the ‘heft’ of a retailer – turnover, ecommerce penetration, web reach and store estate (all measures for the UK only)
1 Strategy and Innovation – for the 2015 research we’ve focused on how retailers extend their channel reach
2 Customer – the experience provided to the customer
3 Operations and Logistics – delivery, returns, click and collect
4 Merchandising – the approaches to selling online
5 Brand and Engagement – the interaction with the customer
6 Mobile and Cross-channel – moving beyond single channels (whether bricks or clicks)
With hundreds of data points over the seven Performance Dimensions and 19 subdimensions, we’ve normalised and assessed the distribution of
the results, applying statistical clustering methods to determine performance groups. These are the basis of our ranking.
CLUSTERS OF PERFORMANCE
We eschewed a straight ‘first, second, third’ sequential ranking approach since – in a seven-dimension scoring system – it’s possible to have a number of retailers scoring at a similar level, yet in different ways. Our index rewards balanced capability and so we’ve elected to cluster the results.
The IRUK Top500 2015 is awarded as below:
Elite – these retailers have performed exceptionally in all dimensions, statistically separate from the following groups. We have five in this group: Amazon, Argos, House of Fraser, John Lewis, Marks & Spencer. These are the companies we’re happy to call the best of the best – our Top Retailers for 2015.
Leading – 13 companies who are by most measures out in front, and in this group we have a combination of size and capability.
Model – this group is what we would call ‘state of RetailCraft’ in the UK. These three clusters number around 50 and so may be termed the UK Top50 for 2015.
We have set out the top performers in each Dimension along similar lines, then clustered the remaining Top500.
No system is perfect or meets every perspective and we are conscious that some of our decisions affect the outcome.
DATA – while we have a great deal of data, we would have liked more! Product ranges and depth, on merchandising algorithms, on margin… We will work to include more each year to create an ever more rounded assessment.
VALUATION – some of our highly-ranked retailers are not in favour at present. M&S, Debenhams, Tesco, ASOS… We’re ignoring the view of financial markets at present on the basis that our focus is the ‘RetailCraft’ displayed. Our question is how well a retailer has marshalled the tools and techniques for multichannel. In future years we’ll incorporate an assessment of shareholder returns via turnover and capital effectiveness measures, using 2015 as our baseline.
SIZE BIAS – In combining the Performance Dimension results we have weighted the Footprint as 30 per cent, and 10 or 15 per cent for the remaining six dimensions. The effect is that the biggest companies in our Footprint will tend towards the higher places in the final list. Thereafter, performance within dimensions adjusts their position. Smaller companies rise on the basis of competence whereas larger companies can lose out. Our view is that the Footprint represents a combination of market impact and cumulative successes to date, however we will amend this in future years – 2015 is our baseline and we’ll assess from now on the changes in Footprint, rewarding growth and dynamism as much as size.
Our ambition is that by IRUK2017 we’ll have sufficient data from growth and movement to risk making some predictions and identifying lead indicators.
We have highlighted the results overall and in each Performance Dimension in this brief report, and over the coming year we will have six Dimension Reports that delve into the data, extracting learnings, trends and opportunities.
At InternetRetailing Expo in March 2015, we will unveil the IREU Top500 Footprint, our list of the most substantial multichannel retailers in Europe. Our European Top500 will follow in the autumn.
Summer 2015 will see the release of our Top Suppliers to the Top500, a capability and roadmap review of those leading suppliers that
support our best retailers.
THANKS AND CONGRATULATIONS
My thanks go to our research team, led by Martin Shaw, and our co-editors Chloe and Jonathan, who’ve compiled this report and will be leading throughout the year our interpretation and assessment work.
Congratulations go to all those listed in our Top500. Together you make British multichannel retail globally renowned and admired. While attention focuses on the largest, we will continue to review and celebrate those excellent, exciting and inspiring businesses whose performance often shows the larger companies what can be done!
DISCUSSION AND IDEAS
I’m sure that very few people will agree with the whole of our list. Admired companies will be higher or lower than each reader’s assessment. We welcome your thoughts, critique and debate on how to measure RetailCraft. If we’ve omitted you in our research please let us know – we’ve already started work on the IRUK 2016 Footprint!
Over the coming months we’ll be presenting to retail Boards their individual and group performance and justifying our assessments – please give us your thoughts either directly to me (email@example.com), or via firstname.lastname@example.org, our LinkedinGroup or via @etail. Furthermore the online report, webinars and events will all be open to comments. We look forward to reading them.
The final words must of course be to commend our Elite group as worthy winners: you are the InternetRetailing Top Retailers of 2015. Well done Amazon, Argos, House of Fraser, John Lewis and Marks & Spencer.