It is the best of times, it is the worst of times for retailers. The topsy turvy world of retail is hard to predict and, as another set of results are released – this week by Primark and Boohoo – what is happening in retail is even less clear. It is the season of light, it is the season of darkness.
Why Dickens would have found Boohoo and Primark interesting is that they are apples and pears: boohoo is an online-only pure play, while Primark is rare in that it has no online retail arm at all – it doesn’t even yet offer click and collect.
Both, however, shows us that both are doing rather well. Profits at Boohoo are up 49%, while Primark has seen growth of 25%. Both have achieved pretty amazing growth in a tough and ultra-competitive market through two entirely different strategies.
While you could argue that Boohoo is doing ‘better’ because it has seen more growth, it has started from a lower base and its success is largely down to its Gen Z imprint, PrettyLittleThing, which has increased its turnover by 107% in a year.
Primark, meanwhile, is not to be sniffed at. It may have seen growth slow in Germany, but its strategy of continuing to invest is stores as destinations seems to be paying off in the UK and elsewhere. So much so, in fact, that it is looking to expand the idea into Eastern Europe.
More fascinatingly, its board still resolutely pooh-poohs the idea of going online – even failing to commit to click and collect, something that could combine the convenience of the web with the maintaining its reliance on ‘destination’ stores.
What the results show, I believe, is that shoppers do still want to go to stores. If they can ‘make a day of it’ then all the better – and this is what Primark’s strategy with the megastore it opened last week in Birmingham is aimed at achieving. The retailer’s proposition – pile them high, sell them cheap and rapidly turnover the ‘looks’ – is enough of a draw on a Saturday afternoon to bring the punters in.
But Boohoo – and PrettyLittleThing too – also works. What gives?
The key to explaining why two very different retailers have managed to achieve the same thing – growth – through completely opposite strategies lies in the real conundrum of modern retail: shoppers are fickle and want to do things their own way.
Want that top from Boohoo? The find it on their app and, click, it’s yours. Need a new Summer wardrobe? Head to Primark and see what’s in store, have a coffee – and even a haircut – and fill your basket with goodies.
What both these retailers do have is a strong proposition that keeps customers coming back for more. Both are well targeted and ‘price efficient’, as well as having a rapid turnover of stock and being bang up to date with the latest trends. It is this more than channel that attracts the customers. Getting the offer right is the key to retail – always has been, always will be.
While Primark may yet open up to click and collect – giving itself the best chance of opening up to online shoppers, while maintaining its strong store presence (and cutting out those awkward returns costs) – and Boohoo may yet open stores (who knows in this topsy turvey world of retail?) it will be the offer that is key.
Other retailers may well take heed. It is easy to blame the death of the High Street on online, however, this tale of two retailers proves that it isn’t the internet necessarily, that is killing it. In fact, where the offer is right, offline is doing alright.
What has done for many High Street retailers is that they are just tired and outdated offerings that people have tired of. Online has some elements of convenience on its side, but really what it offers is access to the right goods and the right prices. The High Street – especially the old style department stores – were already fading. The kids were never going to want to shop in Debenhams.
So, with summer coming, here’s to hoping that going out to the shops is going to be the new staying in surfing the information super highway – in the epoch of incredulity.