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IREU Top500 The Customer Report: 2018

IREU Top500 The Customer Report: 2018

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What are the advantages of operating retail brands within a wider group?

WHEN ANNE-MARIE BLAIRE took over as chief digital officer of Spanish clothing retail group Grupo Cortefiel, one of the first strategic tasks she identified was to select a new ecommerce platform to help drive the company’s digital sales. She had to implement this across five brands and started with Springfield, the company’s urban brand for young shoppers. Her team then took the learning from this initial project to its other brands.

It’s a story that demonstrates one of the clearest advantages of being part of a retail group. With the provisos that silos don’t intrude and that retailers don’t try to impose the values of one brand on another in ways customers won’t like, there’s strength in numbers.

But which retail groups provide the largest number of Top500 retailers and what does this tell us? Among those that have the largest numbers of retail brands that make the Top500 are the Arcadia Group, the Otto Group, the Darty Group and the H&M Group. Each has its own distinctive strengths, which we analyse briefly below.

The Arcadia Group: Despite the recent travails of Sir Philip Green over the sale of BHS, the Arcadia Group has consistently demonstrated an ability to sell fashion at volume while still maintaining and building a certain cache around its retail brands, such as Topshop and Miss Selfridge.

All seven of its major brands (Topshop, Topman, Miss Selfridge, Burton, Evans, Dorothy Perkins and Wallis) make the IREU Top500. In terms of patterns that reflect the group’s strengths, four of its retailers, Topshop, Topman, Evans and Miss Selfridge, also make the Top100 in the Mobile and Cross-channel Dimension.

In February 2015, InternetRetailing analysed Topshop’s strategy, which we noted revolved “around winning in fashion, expanding internationally and driving digital”. We concluded that, while the company’s strategic approach was exemplary, it had ground to make up in mobile. Our research suggests this work is starting to pay off. It will be intriguing to see if it continues to make gains here, and also whether this learning is shared across the group.

The Otto Group: This German group has its roots in catalogue retail and it was early online. It’s continued to innovate and, in the summer of 2015, opened its own mobile lab, a reflection of the fact that around 50% of all visits to its websites are via mobile devices. According to the Otto Group, the lab “supports group companies strategically as well as operatively in m-commerce projects”.

This forward-looking outlook has paid particular dividends at clothes retailer BonPrix, which we’ve classed as an Elite retailer within the IREU Top500. Its retail brands Otto (a Leading retailer), Hagebaumarkt, Baur, Alba Moda and WITT Weiden also performed strongly.

The Darty Group: Darty specialises in the electrical sector and has four brands, including Leading retailer Darty, in the IREU Top500. In the sector within which it operates, margins are often low, and it’s therefore no surprise that Darty makes the Top50 in the Operations and Logistics Performance Dimension.

The H&M Group: The Swedish H&M Group’s main brand is an Elite retailer, achieving outstanding results across all dimensions. The higher-end COS and rather more playful Monki also make the Top500, and each is nimble and innovative without challenging the main brand for sheer heft. We suspect each may move up the rankings, as the H&M Group seems strongly committed to its subsidiary brands.

Looking at these four groups, it’s perhaps revealing that two are privately owned. Where a public company might sell non-core retails brands to focus on its main companies and therefore be seen as driving short-term shareholder returns, these are companies that are arguably freer to focus on the longer term.

It’s perhaps revealing too that we might regard the Darty and H&M Groups as operating brands that are in many respects similar to each, albeit operating in different niches and territories.

We plan to look at the performance of group-supported retailers in more detail next year, assessing the impact group membership has on performance. We don’t rank groups within the IREU Top500 since an overarching group identity is not a trading fascia and therefore not visible to consumers.
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