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Bonmarché reports growing online but falling offline sales

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Bonmarché this week reported growing online sales but falling store sales.

The retailer, which sells value clothing to a target audience of women aged 50 and over, reported total revenues of £190.1m in the 53 weeks to April 1. That's up by 1.1% from £188m in the 52 weeks of the 2016 full year, but down by 0.5% on figures for the equivalent 53 weeks a year earlier. Pre-tax profits of £5.8m were 39.4% down from £9.6m last time.

Online sales grew by 2.2%, but store sales were down by 4.3% on a like-for-like basis, which strips out the effect of shop openings and closures. That fall in store sales, said Bonmarché, was the "principal driver" of the fall in pre-tax profits. While it said those falling sales resulted partly from a 4.1% decline in the 50+ women's outer and sportswear market, as measured by Kantar, it said it now plans to "improve the customer proposition to ensure that, in future, the group is better positioned to increase its market share profitably."

Here, we take a look at what Bonmarché, a Top100 retailer in IRUK Top500 research, says about its multichannel strategy in these figures.

Online focus



Bonmarché said it had stepped back from selling on channels including the Ideal World TV shopping channel and stores on eBay and Amazon after a year in which sales fell across channels that it described as "peripheral" and generating "insignificant profits".

Instead, it has taken the decision to focus on selling via its own website, where revenues grew by 2.2% to £16.1m during the year to account for 7.1% of total sales. "Although sales grew, we consider this a poor performance, given the trend of consumers increasingly switching channels to embrace a multichannel approach," it said in its results statement. But it said that online performance had improved during the year, from a first quarter decline of 4.1% to fourth quarter growth of 15.2%, and that this reflected steady progress in improving the online offering over the year - including moving its platform to Demandware . "Having introduced the new platform during the second half of the year we began to unlock the benefits of its new features, and believe that the improved performance since Christmas is partly as a result of this," it said.

The Customer

Bonmarché says it is recalibrating its stock to reflect growing consumer demand for clothes they will "buy now, wear now".

"Customers are increasingly buying for immediate wear, instead of purchasing in anticipation of wearing later in the season when, for example, the weather gets colder," said the retailer. "We are changing our buying approach to reflect this alteration in consumer behaviour. Where practicable, we are also increasing the emphasis on categories that are less likely to be affected by weather."

It is also developing an agile trading model that will better enable it to adapt to emerging style trends more quickly. That involves introducing some new suppliers and changing the way it works with some existing suppliers: its previous reliance on Chinese suppliers coupled with long lead times for products "restricted our ability to react to changes in seasonal demand and offer diversity of product handwriting." It added: "Our management of the supply chain is also developing; for example we have an opportunity to make better use of market intelligence to anticipate trends and inform our buying decisions."

Taking loyalty multichannel



Bonmarché plans to improve its Bonus Club loyalty scheme, which has about 1.6m active customers. Although internal research has shown the scheme is popular, it did not contribute to sales growth in the last year. The retailer now plans to focus on rewarding its most loyal customers, and to use the data it has on customers in order to do that. It also aims to create a seamless loyalty experience that functions both online and in-store.

Merchandising



By improving the way products are presented online and removing friction points from the customer journey, the retailer aims to make it easier for customers to shop online for clothes. Upcoming changes are set to include reductions to the number of pages in the checkout process and the introduction of an online catalogue that will both inspire visitors and make it easier for them to buy.

Stores



Bonmarché says it was close to having its optimal number of stores by year end, at 327 branches, and will increase them by 10% a year over coming years.

It has trialled online ordering in 70 stores, enabling staff to order an item for a customer if it is not available in the store, and now plans to introduce that to all stores during the current financial year. It is also using footfall cameras to understand customer behaviour in store, and has restructured the retail field team to ensure managers are able to spend more time in stores. Improvements to window displays are also an area of focus. Last year saw the EPOS system replaced in stores, and a new ERP (enterprise resource planning) system is now being installed in order to better manage stock control and financial ledgers.

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