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Retail FreeView - Dwell: not resting on its laurels
Retail FreeView - Dwell: not resting on its laurels
Retail FreeView - Dwell: not resting on its laurels
Retail FreeView - Dwell: not resting on its laurels
Retail FreeView - Dwell: not resting on its laurels
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Retail FreeView - Dwell: not resting on its laurels

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With the afterglow of the Olympics fading and the summer holidays coming to a close, retailers will be hoping that the boost identified by the latest ONS survey is the start of a sustained recovery. …

With the afterglow of the Olympics fading and the summer holidays coming to a close, retailers will be hoping that the boost identified by the latest ONS survey is the start of a sustained recovery. Some retailers are bold enough to expand – in this issue we look at
Dwell and how it has bucked the market, value menswear retailer Blue Inc’s plans to grow its overseas business and Netflix gaining 1 million subscribers since its UK launch in January. While Netflix shows the rise in popularity of streaming video content, this week also saw the failure of online gaming platform OnLive, indicating the perils of even the most high growth markets. The aspirational furniture retailer Dwell is set to open its 23rd outlet at the Lakeside Retail Park. This opening will continue its recent expansion program, which has led to seven new stores opening since January 2011. With this expansion and its affordable, contemporary offer, Dwell has been one of the better performing retailers in a challenging market.

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  1. August 23, 2012 Verdict Retail FreeView A synopsis of retail news and opinion About us Verdict is a retail information With the afterglow of the Olympics fading and the summer holidays coming to a close, retailers will specialist within the Informa Group. be hoping that the boost identified by the latest ONS survey is the start of a sustained recovery. With almost 30 years experience, Some retailers are bold enough to expand – in this issue we look at Dwell and how it has bucked Verdict publishes unrivalled the market, value menswear retailer Blue Inc’s plans to grow its overseas business and Netflix independent analysis. We provide a complete picture of the UK and gaining 1 million subscribers since its UK launch in January. While Netflix shows the rise in popularity increasingly the international retail of streaming video content, this week also saw the failure of online gaming platform OnLive, arena, helping retailers, indicating the perils of even the most high growth markets. manufacturers, service suppliers, Patrick O’Brien, Verdict Lead Analyst analysts, and consultants to fully exploit opportunities within the industry. On Tesco’s international F&F expansion plans: “Franchising allows the retailer to expand internationally at a more rapid pace and to where its grocery offer is not yet present, and Latest analysis reduces the risk involved. This will help to transform F&F into a • UK Consumer Satisfaction Index 2012 DIY global brand, and standalone stores also help to justify the & Gardening | Verdict Consumer Report premium positioning that F&F has outside the UK.” • Menswear Retailing in the UK | Verdict Kate Ormrod, Verdict Analyst, Drapers, August 18 Market Report On HMV’s ambition to regain profitability: • Dixons Retail | Verdict Company Briefing “While it has improved its relationships with its music and video suppliers, • Value Clothing Retail in the UK | Verdict at the same time it is increasing its emphasis on its technology and gaming offerings, which could prove a difficult balancing act” Market Report Matthew Rubin, Verdict Analyst, Retail Week, August 9 • Convenience Retailing | Verdict Strategic ReportWeb: www.verdict.co.uk | Tel: +44 (0)20 7551 9664 | Email: enquiries@verdict.co.uk
  2. August 23, 2012 Verdict View Dwell: not resting on its laurels By Matthew Walton, Verdict Analyst The aspirational furniture retailer Dwell is set to website. Its contemporary but affordable period were up 7% in its last accounts. With the open its 23rd outlet at the Lakeside Retail Park. products resonate well with more frugal opening of its Stratford and Bluewater stores in This opening will continue its recent expansion customers who are looking for value for money, the same year, it is very likely that Dwell was able program, which has led to seven new stores while its aspirational appeal helps it attract to build on this momentum for the full year and opening since January 2011. With this expansion affluent customers more able to make larger that its openings throughout 2012-13 have and its affordable, contemporary offer, Dwell has purchases. maintained its strong performance. While the been one of the better performing retailers in a retailer must ensure that it maintains like-for-likes challenging market. Dwell has also worked hard to develop its sales while expanding, Dwell has done very well multichannel proposition to be as seamless as in achieving sales growth in a challenging Dwells new Lakeside store follows its recent trend possible, with the purchasing systems for its stores market. of opening stores in high traffic locations, with and website being connected. This allows other recent openings occurring at the Westfield shoppers to select products via its website, Stratford centre, Cardiffs St Davids Centre, and catalogue, or store and pay for them either Bluewater. Indeed, its Bluewater outlet is due to online or instore. As shoppers are under greater move to a larger, more prominent unit on the time pressures and increasingly expect to be Thames Walk side of the centre, opposite Boots able to shop in a way and at a time that suits and one of the main car park entrances, them, these systems will help Dwell better satisfy indicating that sales in this unit have performed customers. This also illustrates how furniture well. retailers, a sector with a low level of online penetration, can utilize the Internet effectively. A factor behind Dwells recent success has been its largely exclusive offer. The retailer states that While the retailer has not yet released its full more than 90% of its range is exclusive, which accounts for the 2011/12 financial year, it did helps drive footfall into stores and traffic to its state that sales for the first six months of theWeb: www.verdict.co.uk | Tel: +44 (0)20 7551 9664 | Email: enquiries@verdict.co.uk
  3. August 23, 2012 News Review The fast-paced expansion plans provide Blue Inc. with much needed growth Clothing & Accessories opportunities, as UK consumers suffer from shrinking budgets and squeezed By Kate Ormrod incomes. At a time of rumoured plans to publicly list the retailer, this will also portray it as a more viable investment as it actively pursues new market Mothercare launches Little Bird range created by Jools Oliver opportunities. Struggling childrenswear retailer Mothercare has launched a new children’s fashion range called Little Bird – created by Jools Oliver. The new collection created by the wife of chef Jamie Oliver has been produced exclusively for the retailer, featuring newborn and children’s clothes, nursery bedding and Food & Grocery accessories and gifts. Mothercare’s chief executive officer Simon Calver, By Cliona Lynch who joined in April 2012 from LoveFilm, stated: “The new product range offers exceptional quality and style at an affordable price, which reflects Ocado set to join supermarket price wars exactly what our customers tell us they want from Mothercare.” This attempt Tim Steiner, Ocado chief executive, has stated plans to do away with the to rejuvenate Mothercare sales by launching a celebrity range is a step in current Ocado reputation as a premium supermarket, and to lower prices to the right direction, as it brings much needed attention back to its offering take on the established supermarkets. He believes the online grocer’s and away from its poor financial performance. By keeping the range at an growth will reach a “tipping point” whereby consumers will believe Ocado affordable price, it will enable the retailer to promote the products to a represents better value than alternatives. Steiner also quashed rumours wide range of customers, at a time when disposable incomes are being regarding the retailer’s supposed weak financial position, stating he expects squeezed. it to make a profit this year. Blue Inc. to step up international expansion The financial market has shown a mixed reaction to Ocado over the past six Value fashion retailer Blue Inc. is preparing to ramp up its international months as news of strong growth has been countered by fears the grocer expansion strategy, using franchise partners to open up new stores in Europe will break banking covenants due to the large amount of capital and Asia. After opening in Kazakhstan in June 2012, the retailer will be expenditure on a new distribution centre. However, moving to a mass launching in Ukraine in September, and in Latvia and Lithuania later this market pricing strategy will greatly enhance Ocado’s potential revenue, year. Chief executive Steven Cohen believes Eastern Europe will be a key although if it expects to take on Asda and Tesco on pricing in the coming region for the brand, as it already generates nearly a fifth of its online sales years, it may struggle for profitability. Tesco has already found that a price from Russia. The retailer’s plans utilise former Peacocks international boss war can distract attention and resources from offering a complete value for Simon Hutchinson’s expertise in international franchising, and it aims to have money service; moreover, further threats to Ocado’s ability to generate 15 overseas stores by the end of 2013. profits could result in its many investment backers pulling out funds. Before competing on price, Ocado will have to ensure its investment in infrastructure will lower its operating costs below those of physical supermarkets, giving it ample room to challenge while remaining profitable.Web: www.verdict.co.uk | Tel: +44 (0)20 7551 9664 | Email: enquiries@verdict.co.uk
  4. August 23, 2012 News Review Sainsbury’s chief discards plans to relax Sunday trading hours Justin King, chief executive of Sainsbury’s, has attacked plans by the Netflix has reportedly invested heavily in marketing, and in apps on a government to extend Sunday trading hours, stating his belief that this is not number of devices, such as mobile, PC, Mac and tablets. The on-demand the way to solve the UK’s economic problems. Following the extension of retailer announced that the UK and Ireland is its fastest growing market, with Sunday trading hours during the Olympics, the government is currently Netflix chief executive officer Reed Hastings stating the 1 million milestone is consulting with a number of retailers, including Asda, on whether the evidence that Netflix has rapidly gained popularity, pointing to the large permanent re-instatement of longer Sunday trading hours would provide variety of TV shows and films available on an array of devices. tangible benefits. Normally, stores are only allowed to open for six hours on a Sunday; however, if the temporary rules are extended, they would allow The online streaming market has been growing swiftly over the past two shops to open for 24 hours. The plan has divided opinion among many years, as the physical market sees a decline in demand. Users are retailers, with Asda chief executive Andy Clarke openly supporting the idea, increasingly valuing the ease of availability from an online service over and the general secretary of the Union of Shop, Distributive and Allied physical stores like Blockbuster and HMV. Improvements in Internet speeds Workers, John Hannett, stating he felt alarmed that the government was have also greatly benefited the market, as the need to wait for films to load even considering the move. is greatly diminished, and as consumers take up more mobile devices to watch films and TV series on the go. This trend toward digital is going to Extending the trading hours on Sundays will enable retailers to offer more continue in the coming years, with Amazon recognising the need to hedge flexible opening times for their customers; however, the benefits are clearly its options with its own LoveFilm streaming service. For Netflix to continue its more favourable for large retailers that can afford the increased cost of rapid growth, it will need to continue to invest in marketing, as the extended Sunday trading. Independent retailers are likely to struggle to differentiation between services is likely to be minimal once licensing provide cover for their stores, as so many have reduced staff numbers due agreements for content become more widespread. to a decline in demand, and pressure from the Internet. Best Buy names Joly as chief executive US electricals retailer Best Buy has announced the appointment of Hubert Joly as its new chief executive. Joly has previously been chief executive Electricals & Entertainment officer of privately held US hospitality and travel business Carlson, and has By Matthew Rubin also been on the board of Ralph Lauren. The appointment comes amid Best Buy founder, and holder of 20% of the company’s shares, Richard Schulze Netflix hits 1 million UK and Ireland subscribers failing in a bid to take over the remainder of Best Buy for £5.7bn ($9bn). His Video streaming service Netflix has announced that it has reached 1 million attempt to take over the ailing retailer came up against strong opposition subscribers in the UK and Ireland – despite only being available in the UK from the board, which had repeatedly rejected and delayed his requests to since January. access the company’s accounts.Web: www.verdict.co.uk | Tel: +44 (0)20 7551 9664 | Email: enquiries@verdict.co.uk
  5. August 23, 2012 News Review Best Buy has been suffering declining sales and market share against a Furniture business Hovells to close consumer shift to online retailers, particularly Amazon. It has struggled to After a sale to clear £2.4m ($3.8m) of remaining stock, furniture retailer adapt its big box stores to a multi-channel setup; however, recent openings Hovells is set to close its stores, with an expected loss of 25 jobs. Director of smaller inner city stores have suggested the retailer will look to downsize Jonathan Butcher blamed the economic conditions for the closure, with the its selling space and store portfolio over the next few years. The combination of increased product costs and pressure on pricing, due to appointment of Joly is a risk for Best Buy, as he has had little experience at shoppers being able to compare prices online, wiping out margins. Despite such a large-scale retailer; however, his proven track record at turning developing its website offering four years ago, the retailer has been unable around declining businesses, including media and telecom giant Vivendi, to effectively compete in the furniture business, with a foray into selling gifts means he is well prepared to make changes. and accessories not enough to turn the tide. The furniture sector has been struggling due to a weak UK housing market, Home & DIY causing demand for new home furnishings to decline. Habitat suffered a By Matthew Walton similar fate to Hovells in 2011, falling into administration; however, it has since been purchased by Home Retail Group. Small furniture retailers are finding Big rise in women taking up B&Q DIY classes that they do not have sufficient scale to keep costs down when budgets are B&Q has seen an increase of over 400% in the number of females enrolling in under pressure or to fight off increased online competition. its You Can Do It classes in the last year. There are 15 centres offering the service around the UK, with classes offering a range of skills to learn, with plastering and wall tiling proving to be the skills of choice for women. The growth in female enrolment is part of a concerted effort by B&Q to increase Stay in touch their participation, with the retailer hiring Kirstie Allsopp as its celebrity ambassador. Contact us to see how we can help Tel: +44 (0)20 7551 9664 The DIY specialist has conducted a number of surveys that suggest a Email: enquiries@verdict.co.uk growing trend of women who are prepared to take up DIY, and who would rather do these jobs themselves than rely on someone else. This change in Share your views with our analysts and the Verdict community through our the perception of who is more likely to work on projects around the house social media channels. provides B&Q with an opportunity to target a new market. By making its LinkedIn stores appealing to both genders, and more importantly by encouraging Twitter women to take up DIY, it will provide growth for a sector which is suffering due to a slowdown in the housing market. Sign up to our emails for news from the UK and across the globe. Verdict FreeViewWeb: www.verdict.co.uk | Tel: +44 (0)20 7551 9664 | Email: enquiries@verdict.co.uk

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