Existing Kingston store

The much-blogged-about Swedish hardware retailer Clas Ohlson published its sales figures for June yesterday.

What’s interesting is that sales for the UK are now being stripped out from those of Finland, giving us a much clearer idea of how the UK business is doing. Total sales were SEK 442m, of which the seven UK stores accounted for SEK 15m. A year ago, the UK business delivered sales of just SEK 5m, with the June 2010 figures representing a seemingly impressive 176% increase – or 203% in local currency. Sales in Clas Ohlson’s home market of Sweden, in contrast, were unchanged year on year.

The trouble, of course, of eyecatching percentage figures like these is that they are not based on like-for-likes – in other words, the year-on-year comparison takes no account of any stores that may have opened or closed in the intervening period.

To give another example, this is why, at a time when the business is expanding rapidly, the John Lewis Partnership’s trading figures – which again show only the raw increase in sales, not like-for-likes – need to be interpreted carefully. There’s no doubt that both the eponymous department store chain and Waitrose are trading well right now, with the latter’s latest weekly figures, published today, showing a 13% sales increase compared to a year ago. It’s just that once you take out the effect of new stores opened in the last 12 months, the actual sales increase in the established stores is inevitably lower than the headline figure.

Clas Ohlson fascia

Apply this to Clas Ohlson, and you realise that while the June 2010 figures are for seven stores (two of which had, admittedly, only been open for a month), the June 2009 stats are for just two (Croydon and Manchester). On this basis, the threefold increase in UK sales is just about what you would expect, especially since two of the five new stores are the smallest in the estate.

By way of an alternative measure, what happens if we look at each country’s sales figures for June 2010 in relation to the number of stores?

• For the UK, sales work out an average of SEK 2.1m for each of the seven stores.
• Finland has 16 stores and a turnover of SEK 35m – so that’s SEK 2.2m per store, a little higher than the UK.
• There are 42 stores in Norway – with total sales of SEK 182m, that’s an average of SEK 4.3m for each shop.
• The rest of the stores – 56 – are in Sweden. If total sales are SEK 210m, that works out at SEK 3.8m per store.

What does this tell us? Well, it basically confirms the trends that Clas Ohlson highlighted in its own year-end report for May 2009 to April 2010. Here, the retailer notes that “the response from customers to the newly opened stores in the UK has been positive and the number of visitors to date has been higher than the Group average”, but that “the conversion rate and average purchase in the UK have been lower than the Group average, which is generally the case in conjunction with the penetration of new markets.”

Looking forward, the report explains how “Clas Ohlson anticipates that establishing its brand name and position in a completely new market will take time, and that the conversion rate, average purchase and sales will gradually increase in coming years.”

In other words, while the sales densities for the UK stores are indeed currently lower than those of the more established Scandinavian branches, Clas Ohlson’s message is that this is just a normal part of entering a completely new market, and that they’re in it for the long haul.

As more UK stores open, and the Clas Ohlson brand becomes more widely known among British consumers, it will be interesting to see how quickly the UK sales densities can catch up with those in the retailer’s more mature markets.

The delights of Northumberland Street await the Faroese

Delighted to see from BBC News that Tyneside’s retail offer is sufficiently exciting to attract a festive shopping visit from 1,000 Faroe Islands residents!

Surely though, 24 hours isn’t nearly enough time to see everything?

Update: There’s a bit more detail about the visit in today’s Evening Chronicle.

Clas Ohlson sign

With so many old Woolworths sites being taken over by familiar high street names and pound shops, it’s nice when the new arrival is something a little more interesting. So I was pleased to read that the Swedish “modern hardware brand” Clas Ohlson is going to be opening up in the former Woolies in Kingston upon Thames, and is also looking to occupy the old Woolworths site in Reading.

If you’ve never heard of Clas Ohlson, you can be forgiven. Established by Mr Clas Ohlson in 1918, the company has grown to over 100 stores across Sweden, Norway and Finland. However, its presence in the UK goes back only to November last year, when it opened its first British store in Croydon’s Whitgift Centre (a unit previously split between Books etc. and a standalone George store), followed by a second, in Manchester’s Arndale Centre, in April.

Clas Ohlson's existing Croydon store

In the middle of a recession, some might say that it’s a brave move for any company to make its first ventures into the UK market – particularly given the fate that has recently befallen other homeware retailers such as ILVA and The Pier. To be fair though, Clas Ohlson’s positioning seems to be more as a funkier, Scandinavian twist on Wilkinson or Robert Dyas, mixed with a Lakeland-rivalling array of useful (or merely baffling) gadgets such as plastic drain cleaners, battery testers, painted Dalecarlian horses, and scrubbing gloves for root vegetables.

Certainly, Clas Ohlson’s product range is eclectic and difficult to pigeonhole, with categories such as art supplies, clocks, fishing equipment, stationery and toys sitting alongside an extensive range of household, garden, DIY and electrical products.

Cannily, Clas Ohlson’s assortment also seems to tapping into the growing trend among credit-crunch-savvy Brits for mending rather than replacing, suggesting that:

“British people are just as interested as us in the Nordic region in fixing various things in their homes. Our broad range of products that solve small, practical problems in everyday life satisfies these interests and needs.”

With only Croydon and Manchester to choose from, I haven’t yet had the opportunity to visit either of Clas Ohlson’s UK shops. However, it looks and sounds very much like the type of store in which I could happily spend some considerable time, with lots of interesting, practical items presented within a store environment that is typically Scandinavian – clean, modern, and with a distinctive and engaging personality.

During the 2009/10 financial year, the company apparently plans to open four to eight stores in the UK, which raises the question of where those additional new stores might be. Might Newcastle be on the target list?

Clas Ohlson is certainly the type of store that would bring some more interest to Newcastle city centre, and with the completion of the Eldon Square extension next spring there will be a fair amount of existing retail space being freed up. Realistically though, the city centre doesn’t have very many units available that are big enough or in the right place.

Eldon Square’s new St Andrew’s Way, anchored by Debenhams and New Look, will offer the quality, modern space that Clas Ohlson would be looking for, but seems fairly full up already - mostly, it must be said, with relocations from the older parts of Eldon Square (more of that, perhaps, in a future post). The premises that New Look will be freeing up (the former WHSmith store in Sidgate) are over two levels and are about the right size, but suffer from being at the gloomiest and seemingly least visited end of Eldon Square. So, no good there.

Elsewhere in the city centre, something must surely happen eventually to the wonderful former Co-op department store building in Newgate Street, particularly now that it has become a prime location directly opposite the entrance to the new Debenhams. With five floors to fill, however, it’s unlikely to suit Clas Ohlson – or any of the other big names currently missing from Newcastle, such as Zara – unless the building gets carved up between several retailers.

The empty Co-op department store in Newcastle

The unit previously occupied by The Pier in the attractive Eldon Garden shopping centre might also be an option. Across two floors, it’s probably just about big enough, and would attract those gadget-hungry shoppers who already visit the nearby Lakeland shop. On the downside, Eldon Garden’s rather peripheral location and seemingly high turnover of stores may not offer the best environment for long term success.

Rather, I would put my money on the ideal location for Clas Ohlson being the old Zavvi store in Monument Mall. As I observed in a blog post just over a year ago, Monument Mall seems to have been struggling of late, with the unfortunate, but unavoidable, loss of Zavvi following on from the departure of Boots, Benetton and JJB Sports.

With so many closures, you can perhaps excuse the floor plan on the Monument Mall website for suggesting that the shopping centre still houses all these shops, along with a ’Virgin Megastore’. (Seriously, though – what on earth is going on when a shopping centre’s official website features a mall guide that is two years out of date? Truly terrible PR.)

Given this backdrop, Monument Mall would surely welcome the arrival of a strong anchor store, while the three-storey Zavvi unit would give Clas Ohlson all the space it needs along with a prominent frontage on Northumberland Street, Newcastle’s prime shopping thoroughfare.

So, Clas Ohlson – how about it?

Tesco in Eger, Hungary

How about starting off with this very large (and seemingly very successful) Tesco on the outskirts of Eger in Hungary? The planners would never allow letters that big on a UK Tesco Extra.

And what about admiring the Tesco department store – spread over several floors – in Košice, Slovakia?

Tesco in Košice, Slovakia

I’ve probably got some more eastern European Tesco shots somewhere, if anyone is really interested… go on, say you are! :)