Soon-to-open Superdry, Durham (16 Nov 2011)

Superdry – the SuperGroup-owned fashion chain of the moment – is gearing up to open its new store in Durham’s Silver Street at 9am this coming Friday (18 November), though the shop was still under wraps when I went past this morning.

By opening in the midst of the Durham Lumiere festival – which runs from 17-20 November, and attracts large crowds to the city – Superdry should be well placed for a successful launch.

Until recently, the unit at  30-31 Silver Street was occupied by Burton and Dorothy Perkins. However, in keeping with Sir Philip Green’s property consolidation strategy for Arcadia Group, both brand’s ranges now feature instead in the city’s nearby BHS store, the anchor tenant for the Prince Bishops shopping centre.

Soon-to-open Superdry, Durham (16 Nov 2011)

While Arcadia shrinks its estate, Superdry is rapidly expanding it – and since the first Superdry store opened in 2004, the chain’s growth has been spectacular. Durham will be the 57th standalone Superdry store in the UK – and only its third in the North East, after Newcastle and Metrocentre – alongside 21 shops under the Cult brand and more than 40 concessions in House of Fraser, Harrods and Selfridges department stores.

Cult store in Oxford (11 Nov 2011)

The Superdry estate has also grown rapidly overseas, and currently comprises more than 100 stores across Venezuela, the USA, Taiwan, Spain, South Korea, Panama, the Netherlands, Luxembourg, Italy, Indonesia, Germany, France, Finland, Denmark, Belgium, Austria and Australia. The Superdry website has also become a major sales channel, buoyed by its free delivery offer within the UK, Europe and North America.

Not surprisingly, this expansion has fuelled rapid growth both in group sales – up 42% in the three months to 30 October, following the 66% increase recorded in the previous quarter – and in profit (£47.3m pre-tax profit in the year to 1 May 2011). However, an absence of like-for-like comparisons makes it difficult to discern how sales are holding up in established stores, and the extent of any cannibalisation by newly opened shops.

Commentators’ questioning of how long SuperGroup can sustain such growth – alongside recent distribution difficulties (now apparently resolved) and a sense that the Superdry brand may be becoming overexposed – makes it one of the most fascinating retailers to follow right now, and is reflected in the business’s fluctuating share price. In March 2010, SuperGroup successfully floated on the London Stock Exchange, with the company’s share price subsequently rocketing from its initial £5 to a peak of more than £18 in February this year. However, the share price has since fallen back to just over £6.

Nevertheless, for all those question marks, Superdry’s development of good-looking stores on the high street in the midst of an economic downturn is both impressive and welcome. Presumably due to its student-heavy population, Durham has done well to secure a standalone Superdry store ahead of the larger North East retail centres of Sunderland, Middlesbrough and Darlington, and the chances are that it will be a success. However, time will tell how much further Superdry can grow – in our region, the UK, and overseas – before it starts to see increasingly diminishing returns.

Amar Atelier, Moraira (17 Jun 2011). Photograph courtesy of Amar Atelier

Many of you will have seen my retail column in the Bdaily last week, where I discussed some of the key ingredients that help to make a successful independent retailer. One of those ingredients is the outside of your shop – and making a great first impression through eyecatching window displays and good-quality signage.

The examples I cited in my article – Who-ray! and Chocs Away – were both in Stockton, and winners in the borough’s inaugural Town Centre Business Awards. However, I was pleased to hear from my friend, Jennifer Mullan, about a North East-influenced indie retailer that’s in a rather more far-flung location – Moraira, on Spain’s Costa Blanca.

Based in Whitley Bay, Jennifer runs a business called Jenius Image and Design, combining her talent as a designer of fashions and accessories with logo and graphic design work. Now, one of her logo projects has turned into an actual shop – Amar Atelier.

Amar Atelier, Moraira (15 Jun 2011). Photograph courtesy of Amar Atelier

Jennifer explained to me that Amar Atelier is a ‘lifestyle boutique’ selling gifts and homewares, and is the brainchild of Amanda Kingman, a British woman who has recently moved to Spain. Amanda had previously been selling gifts and accessories through her website, Coasting Along, and decided to branch out into high-street retail.

Sensibly, Amar Atelier seems to be capitalising upon this background to build a multichannel presence, with its website promising a ‘webshop coming soon’; managed well, this will help to build awareness of the physical store, as well as being an important sales channel in its own right.

In the meantime, the site is quite a simple affair, but it includes the core information that I flagged as crucial in my August 2009 blog about retailers’ websites: namely, the times that the shop is open; where to find it; and how to make contact. Good quality images are also effective in conveying the look and feel of the shop, and giving a flavour of the products.

Screenshot of Amar Atelier website (23 Oct 2011)

As Jennifer told me, the story behind the collaboration is an interesting one, coming about as a result of the website platform – Mr Site – upon which both the Jenius and Coasting Along sites were built:

“Amanda approached me via my website, after seeing my business and website link on the Mr Site newsletter, and asked me to do the logo for the shop. A lot of my work is done remotely, and it is possible to send the relevant files via email, so location is not limited.

“Amanda already had the name, and some rough ideas about what she wanted, so she gave me a brief including font ideas, colour schemes and photos of the empty shop.

“I took it from there and came up with some ideas. After narrowing it down to the final logo, Amanda got a local tradesman to apply the logo to the awning and the shop window. The logo also appears on swing tags, business cards and other stationery.

“As a designer it is great to see my work in an actual shop!”

Sadly, my blogging budget doesn’t stretch to visiting the Costa Blanca, but I do like the look of Amar Atelier as a shop, with its interesting products and creative merchandising. Furthermore, the visual identity that Jennifer has created for it is simple and elegant, yet slightly quirky – and completely in keeping with the store’s personality. Hopefully in time the logo will appear more prominently on the shop’s website too, to more explicitly connect the different parts of Amar Atelier’s fledgling multichannel offer.

Isabel Macdonald outside her new store

Tamworth’s new John Lewis at Home opened its doors on Wednesday (12 October), eight months after I broke the news of its impending arrival.

The 42,000 sq ft shop at the edge-of-town Ventura Park is John Lewis’s sixth in the ‘at Home’ format, following the opening of stores in Poole, Croydon, Swindon (which I recently visited), Tunbridge Wells and Chester. Further John Lewis at Home shops are set to open in Ashford, Newbury and Chichester during 2012, while the retailer’s new Exeter store – originally announced as an ‘at Home’ shop – will, as I recently noted, be the first of a new ‘flexible’ department store format.

Cutting the ribbon at John Lewis Tamworth

While the ‘at Home’ stores focus on furniture, homewares, furnishing accessories, electricals and home technology, John Lewis’s strength as a multichannel retailer – highlighted in my recent Bdaily column – means that the full John Lewis range is available to Tamworth shoppers via ‘Click and Collect’. Products can be ordered online or instore by 7pm, and picked up from the store after 2pm the next day.

In a recent tweet, I suggested that John Lewis’s arrival in Tamworth was the biggest single retail event to happen in the town for decades – probably since the opening of the Ankerside shopping centre, in 1980, transformed the town centre’s retail landscape. The fact that there is now a store called ‘John Lewis Tamworth’ is remarkable enough in itself, but the 218 jobs that have been created by the £7m store – 200 of which are brand-new John Lewis Partners – also make it one of the biggest single retail investments that Tamworth has ever seen.

One of the Partners to have transferred from elsewhere is the new branch manager, Isabel Macdonald, whose career with the company goes back nine years – including seven years in the Reading store before her most recent stint as operations manager at Solihull. Hours after the store’s opening, Isabel took a few moments out to chat to me about getting the store ready for launch; the excitement of the opening morning; how John Lewis is seeking to establish itself as part of the Tamworth community; and how it is a “dream come true” to be branch manager of a store just twenty miles from where she was born and grew up.

Opening preparations

John Lewis at Home, Tamworth (3 Sep 2011)

John Lewis Tamworth’s transformation from a steel frame when I first visited in June to a fully-clad building in September and an operational store now is pretty impressive, and the efficiency of the process to train new Partners and stock the store is no less remarkable.

Isabel told me that her own work at Tamworth started seven weeks before opening, working with her team to ensure that the store had the “best-trained” Partners who would “give customers the service they would expect from John Lewis.” Meanwhile, she revealed that the process of filling the store with £3m of stock had taken just nine days to complete.

Three hours after the store opened at 9am, Isabel reported that cars had been “flooding in” to the 311-space car park, and that there had been 100 customers waiting in the queue for the doors to open – including one keen gentleman who had arrived at 6am. Early customer comments had been “lovely”, and the 80-seater instore café was also gaining positive feedback.

Shoppers enter John Lewis at Home Tamworth

Given Ventura Park’s reputation for traffic chaos, I was bound to ask Isabel for her view on how the roads had coped in those first few hours. While it was obviously early days, she suggested that the recent improvements to the road layout and traffic control – initiated as a direct result of John Lewis’s arrival and the nearby B&Q-anchored Cardinal Point development – seemed to be working. Clearly it will be something to keep an eye on, however; as Isabel noted, “We are keen to work with retailers and the council to make sure that Ventura Park is the most convenient place to shop for customers in the West Midlands.”

Range

A month ago, Retail Week reported that John Lewis was planning “tweaks” to the ‘at Home’ format in response to a performance that was “a little bit below what we expected”, and I raised this with Isabel.

While Retail Week suggested that John Lewis at Home stores will start to stock some lower-priced items – such as pictures, mirrors and rugs – Isabel was clear that the retailer’s longstanding ‘Never Knowingly Undersold’ promise stands it in good stead: “What customers are saying is that they want to know they are getting value from John Lewis – that’s not necessarily being ‘cheap’, but offering value in terms of quality, price and service.” She gave the example of how the Tamworth store is offering a new, fully bespoke furnishing fabric service, where curtains can be ordered in custom sizes.

Birmingham

Not long after news emerged of Tamworth being the first John Lewis at Home in the Midlands, the Partnership announced, back in February, that a new full-line, 250,000 sq ft department store would open in Birmingham in 2014 – just 20 miles or 30 minutes’ drive away. With John Lewis already present in Solihull, Leicester and Nottingham, is this not a lot of stores in a relatively small area?

Seemingly not. Citing John Lewis’s investment in both online and shops, Isabel was clear that “the Tamworth and Birmingham shops have distinct catchments, and there is enough room for both to trade successfully”. While the Birmingham store is about having a presence in a major city centre, Tamworth – and the ‘at Home’ format generally – is “all about convenience”. The transport connections to Ventura Park seem to have been a big factor in choosing that location, with Isabel noting that the new Tamworth store will also serve towns such as Lichfield and Sutton Coldfield that have previously been outside a John Lewis catchment.

Town centre impact 

The latest CACI Retail Footprint map flagged Ventura Park as the UK’s tenth biggest retail park by expenditure; the arrival of John Lewis, with a new B&Q, Maplin and Next to follow, will surely propel it up the rankings. So, what does all this mean for Tamworth town centre – a location that has already rather struggled to define itself as major retailers like WHSmith and New Look have decamped to the edge of town?

Isabel was clear that John Lewis aims to work alongside the local retail community and to help “make Tamworth the best possible destination”. She observed that data following previous ‘at Home’ openings has demonstrated a “John Lewis effect for the whole area”, as shoppers take the opportunity to check out other attractions in those locations. The positive impact of the 200 new jobs will also filter through into the local economy, she argued, with many of the new Partners living in the Tamworth area.

Apart from the footfall and economic benefits, Isabel noted that her store is also working with three local charities – Tamworth Volunteer Centre, Rosie’s Helping Hands, and Bancroft Community Association – who took part in the opening-day ribbon-cutting ceremony and will each benefit from a donation from the retailer’s Community Matters scheme.

For all Tamworth town centre’s flaws – most notably its underwhelming market and lack of upmarket stores – there is, as I’ve observed before, much for visitors to enjoy. Visitors recently flocked to the Staffordshire Hoard exhibition at Tamworth Castle; the UltraSound Music Festival attracted a younger crowd to enjoy artists such as Tinie Tempah and The Wanted; and the town’s colourful floral displays this summer were, as always, among the best anywhere. The town centre also has some interesting and distinctive shops – notably the Irish fashion retaiiler, Dunnes; the independent Tamworth Co-op department store; and plenty of appealing independents.

John Lewis at Home is different to many of the other tenants at Ventura Park in that there was never any question of it being able to, or wanting to, open in Tamworth town centre. Ultimately, I would argue, it’s a format that works best on a retail park, and that was attracted to Tamworth specifically because of Ventura Park’s popularity and location.

However, if Isabel is right, and even a small proportion of John Lewis’s visitors check out what the town centre has to offer, the arrival in Tamworth of one of retail’s biggest names may indeed be cause for wider optimism about the town centre’s future.

Clas Ohlson billboard, Gateshead (8 Aug 2011)

Everything seems to be gearing up nicely for the opening of Newcastle’s Clas Ohlson store, just two weeks today on Wednesday 24 August.

The Northumberland Street store’s hanging signage (below) has now been in place for a week or two, and there seems to be a big marketing push going on to build local awareness of the Clas Ohlson brand.

Hanging signage at new Clas Ohlson store, Newcastle (8 Aug 2011)

Out and about on Monday, I spotted at least two billboards (in Gateshead) and posters at various Metro stations, including Jarrow, below. Under the tagline “Prepare to have a new favourite shop”, the posters emphasise Clas Ohlson’s range of “practical products” as well as celebrating the retailer’s Scandinavian heritage.

Clas Ohlson poster on Metro (8 Aug 2011)

As a relatively new entrant to the UK market – Newcastle is its twelfth store – Clas Ohlson’s need to raise awareness and understanding of its brand mirrors the position of the US electronics giant, Best Buy, which currently has 11 UK sites.

When I’ve mentioned Clas Ohlson’s arrival to people I know here in the North East, most have never heard of the chain; however, with the nearest store currently in Leeds, that’s hardly surprising.

While the hoardings around the site have been prominently plugging the store’s imminent opening for the last couple of months, there’s clearly a job to do in telling Newcastle shoppers about what Clas Ohlson is – especially as the store’s lower-ground-floor location (previously occupied by Collectables) will make it more challenging than usual to attract unknowing people in off the street.

Best Buy recently began a nationwide TV campaign on the back of launching its transactional UK website late last year, and this activity has potential to drive multichannel traffic, encouraging visits to the online store, big-box locations or both.

Clas Ohlson website (10 Aug 2011)

Clas Ohlson, similarly, has been building up its physical store presence ahead of launching its online shop, which, according to its website, is set to go live early next year. Being able to reach customers anywhere in the UK will be a critical stage in Clas Ohlson’s penetration of the British market, and, like with Best Buy, will make it worthwhile marketing the brand at a national as well as a local level. The hope will be that traffic to the physical and online stores reinforces one another, as well as potentially paving the way for further high-street store openings through 2012 and 2013.

For now, Newcastle is set to be Clas Ohlson’s only UK store opening of 2011, but the launch of the online store in 2012 should ensure that shoppers elsewhere – be it Bristol, Southampton or Glasgow – are more clued up in advance should a Clas Ohlson eventually set up shop on their high street.

Welcome to Lake Bled, Slovenia (17 Jul 2011)

Coming from Tyneside, there’s little avoiding either Mike Ashley or his continually expanding Sports Direct chain.

Newcastle city centre has two large Sports Direct stores – a former Lillywhites in Eldon Square, and a former JJB in Monument Mall – while Ashley’s ownership of Newcastle United Football Club ensures that he is constantly in the news. In turn, retail and football come together in the popularly named ‘SportsDirect.com @ St. James’ Park Stadium’, which I can see right now from my office window.

Sports Direct at Newcastle's Monument Mall (14 Apr 2011)

One of the joys of overseas holidays is the opportunity to escape the familiar and enjoy some different scenery. So, arriving in Bled, in Slovenia, last month, imagine my surprise (and, I admit, an element of dismay) when one of the first things I saw was a Sports Direct billboard at the side of the main road into the resort.

Screenshot showing Sports Direct's Slovenia stores (3 Aug 2011)

Though I wasn’t aware beforehand, it turns out that Sports Direct has had a physical store presence in Slovenia since the mid-2000s, wholly owned since 2007, and currently comprising 14 stores from Koper on the coast to Murska Sobota in the Prekmurje region bordering Hungary.

Together with stores in Belgium, Luxembourg and the Netherlands, these now make up a wholly-owned estate of more than sixty Sports Direct stores outside the UK, alongside others that are run either as joint ventures or through license agreements. The company also ships to more than sixty countries via its online store at SportsDirect.com.

Hala A at BTC City, Ljubljana (26 Jul 2011)

I spotted one of the Slovenian stores in the sprawling Hala A mall that forms part of the vast BTC City out-of-town shopping complex, and it certainly appeared to be busy. The store itself, as you might expect, looks much the same as those in the UK, with its garish signage and chaotic interior.

Still, who’s to gripe at the formula when it’s consistently delivered impressive pre-tax profits for the business, including £135.5m (from sales of £1.6 bn) in the most recent year to 24 April? Giving away Joey Barton on a free transfer may not make Mike Ashley flavour of the month on Tyneside, but it’s hard to argue with Sports Direct’s recent record of success – even if it does involve giving me a surprise on holiday.

Clas Ohlson, Leeds (21 Jan 2011)

Things have been pretty quiet on the Clas Ohlson front since the Swedish hardware retailer announced the latest stage of its UK expansion, back in August. Those new stores in Cardiff, Doncaster and Norwich have subsequently opened, just before Christmas, but there’s no news yet on where the next additions to Clas Ohlson’s 11-strong UK store portfolio might be.

In August, the retailer’s chief executive had suggested that the chain could grow to as many as 200 UK stores, though a statement in December indicated that its rate of expansion in Britain was being scaled back due to the “strained” UK economy. In terms of actual store openings, this meant that Clas Ohlson would be envisaging 4-6 new UK stores by the end of the current financial year, rather than the 6-10 that had originally been planned.

Window display at Clas Ohlson, Leeds (21 Jan 2011)

An article in Monday’s Guardian recycles some of this earlier commentary, but gives some positive news regarding Clas Ohlson’s long-term plans for this country. It quotes boss Klas Balkow as saying that “there’s no panic”, and that “there is a long-term commitment from myself, the board and the company’s owners. We are not rushing – we are taking it step by step and building the brand.”

Screenshot of Clas Ohlson website (9 Feb 2011)

The article indicates that “a UK website will be launched in the second half of this year” – presumably a transactional one, given that a basic site with product information already exists – but gives no clues regarding the locations or timing of the next high-street shops. However, in just the same way as US giant Best Buy is selling online in the UK at the same time as building a fledgling store estate, making the Clas Ohlson website transactional will be an important step in increasing the retailer’s UK reach, and in continuing to develop awareness of the brand.

As you’d expect, I couldn’t resist paying a visit to Clas Ohlson’s Leeds store when I was in the city last month. Occupying a prominent corner chunk of The Headrow’s Broadgate development – the building that used to house the Allders (and, before that, Lewis’s) department store – the store benefits from a fantastic, prime location at the top of Briggate, with double-height glazing that makes a bold impression on the street.

Clas Ohlson from top of Briggate, Leeds (21 Jan 2011)

Inside, the 23,142 sq ft store is spread across two floors, and feels very spacious – indeed, other than the shop in Manchester’s Arndale Centre, the Leeds store is Clas Ohlson’s largest to date. On the downside, I was less impressed by the choice of piped music (maybe it’s my age, but I don’t find rapping condusive to relaxed shopping), and the store seemed much, much quieter than it really should have been on a Friday afternoon at 5 o’clock, a full one and a half hours before closing.

Clas Ohlson, Leeds (21 Jan 2011)

Perhaps I just visited at a quiet time, as Clas Ohlson’s UK sales figures continue to be quite strong. The latest figures, for December 2010, show UK sales of SEK 42, compared to SEK 26 a year earlier. As usual, however, it’s important to understand what’s being compared with what – where December 2010 had eight stores trading for the whole month and the three new ones for only part of it, December 2009 had only four fully-open stores with a fifth (Watford) opening during the month. On this basis, and taking into account the generally smaller size of the recently opened shops, sales densities would seem to be more or less on a par with a year ago.

Going back a couple of months, Clas Ohlson announced sales of SEK 18m (about £1.64m) from its then seven UK stores during October 2010 – again, a seemingly headline-grabbing 216% increase from the SEK 6m figure recorded a year earlier, when the retailer had just two stores in this country.

While Clas Ohlson does not publish like-for-like comparisons explicitly – the reason why meaningful comparison of the numbers is difficult – we do know, as I previously blogged, that sales for June last year were SEK 15m. Given that Clas Ohlson’s UK store portfolio (seven stores) was the same in October as it was in June, October’s SEK 18m figure indicates a 20% increase in like-for-like sales over this 4-month period – a strong performance by any measure.

On the other hand, while the increase in UK sales densities – from SEK 2.1 m per store in June to nearly SEK 2.6m in October – is heading in the right direction, there’s still a way to go before the UK branches are generating as much income as their more mature equivalents in Sweden or Norway.

Still, as long as Clas Ohlson is determined to persevere with its UK ambitions, ride out the economic downturn, and make its offer available to more British shoppers, there’s every chance that its quirky ‘usefulshopps’ will become an increasingly common fixture on our high streets.

New and old logos

Last week’s news that the celebrated Wellworths store, in Dorchester, is being forced to change its name by Shop Direct reignites one of the most interesting threads to emerge from Woolworths’ collapse – the battle for the good bits of Woolies’ legacy.

The gist of this latest development is that Shop Direct – who, you’ll remember, bought the Woolworths brand from the administrators following the retailer’s collapse – was apparently content for Wellworths to keep its current name, provided that the business curtailed any expansion plans.

According to Wellworths’ statement, Shop Direct “initially supported the opening of the former Woolworths store in Dorchester as Wellworths, but then sought an agreement which would place limits on the growth of the business under the Wellworths name.”

It continues: “Regretfully, rather than accept those limits, Wellworths have decided to replace the Wellworths name with Wellchester over the course of the next two years.”

Wellworths store in Dorchester. Photograph by Nigel Mykura

Inevitably, the ‘well worth the money’ tagline will have to go too, with trade mark details on the Intellectual Property Office (IPO) website suggesting that it will be replaced with (the admittedly rather bland) ‘something for everyone.’ If one is being critical, it’s also fair to ask whether Wellchester – a name so obviously associated with the retailer’s place of origin – is the best brand for rolling out to other parts of the country. Still, the fact that the new name can still be abbreviated to ‘Wellies’ was surely part of the thinking behind it.

Screenshot of Shop Direct's Woolworths.co.uk site (2 Nov 2010)

No-one disputes that Shop Direct, like any other business, is entitled to protect its brand – but at what price? Time will tell whether the benefits of its actions outweigh what seems to be the overwhelmingly negative reaction from both the media and the public.

Writing on Twitter, for example, the editor of industry bible Retail Week remarked that “Shop Direct are idiots for making Wellworths change its name”, describing the move as “astonishingly petty.” His colleague, George MacDonald, agreed, branding the move “heavy-handed.”

Other Twitterers, such as dorset_flickr, voiced similar views, remarking how it was “interesting that such [a] big company feels so threatened by [a] name that isn’t [the] same – obviously Wellworths could go places.” Comments about Shop Direct’s actions on the Dorset Echo website have been similarly uncharitable, with the words “petty” and “heavy-handed” consistently used.

All this reaction matters, because these are the same people who will determine the success – or not – of Shop Direct’s own Woolworths.co.uk operation. Merely owning the Woolies name isn’t enough – Shop Direct needs to understand the heritage of the brand that it’s acquired, and to harness the goodwill that used to be associated with that name. Without that magic, the business is just Littlewoods with a different label.

Alworths fascia

Perhaps the nub of the issue is that Wellworths and the other fledgling ‘son of Woolies’ enterprises, such as Alworths and Smallworths, seem to have understand what people most liked about Woolies, and have embraced those cherished values of friendliness, warmth and convenience on the high street – values, indeed, that are challenging to replicate in an entirely online operation, however much pic ‘n’ mix you’re able to send out by City Link.

Instead of Shop Direct fighting battles for Woolies’ legacy – and Alworths MD, Andy Latham, is understandably coy about what the Wellworths decision might mean for his own chain – it could do worse than learn from the successes of its not-quite-namesakes.

Thank you to Nigel Mykura for the use of the photograph of Wellworths, which is © Copyright Nigel Mykura and licensed for re-use under the Creative Commons Licence.

Yet Another Sale

This guest post was written by Simon Barnett. Graham has kindly allowed me to write a few words on the subject of discount retailing. I have experience in this area and regularly contribute to a website about online discount codes.

Reading Graham’s post about his visit to Barnard Castle, I was struck by his observations of the discounting approach that’s been taken by the Edinburgh Woollen Mill chain of stores. Like many retailers, it seems that here is an example of a business that believes that the best way to succeed is by trading at the “bargain bucket” end of the retailing spectrum.

It’s clear that many retailers take such an approach because they believe that serious discounting will lead to a significant increase in sales and profitability. But such thinking may not necessarily ring true. Competing on the basis of price in this way has some inherent dangers.

Damaging the brand

In my local high street there are a number of stores that seem to have cropped up in the last few months. They are selling “everything for a pound”, or are already having a “clearance sale”. They probably won’t be there by Christmas. But they’ll be replaced by other stores with similar product ranges.

As consumers, what do we think of these shops? We may well think that there’s the chance that we can pick up a bargain. But we also know that they are unlikely to sell high quality goods. We probably wouldn’t choose to buy a High Definition television set, for example, in one of these stores. That’s because we tend to think of cheap goods as being of a low quality.

This encapsulates the problem that faces many retailers, both on the high street and when trading online.

If they discount too heavily then consumers will naturally start to question what is being offered. Are the products going to be safe? Will they last? Why were they so much more expensive to begin with?

Once consumers start to question the quality of products on offer, it’s a slippery slope for the retailer. Before long, customers will start to drift towards alternative stores when it comes to making quality purchases.

In short, the brand will have suffered.

Hitting profitability

But this damage to the brand is not the only danger. The problem with discounting too heavily is that it starts eating into margins. This means that the move is likely to be heavily reliant on a significant uplift in sales.

That uplift in sales may not be as dramatic as expected. Alternatively, it could occur but cause its own problems. A retailer would need to consider, for example, whether they would be able to handle a doubling of sales. Do they have the warehouse capacity, the staff numbers and the necessary stock levels?

If not, the increased costs could actually wipe out any gains that have been achieved through the improving sales. Or worse still, the slashed prices could actually cost the retailer more than is earned.

A failure to maintain the low prices, or to provide the required level of service, could lead to yet more problems. Disgruntled customers are often keen to discuss issues with friends, family members and, increasingly, using internet forums.

Understanding online retailing

The internet has allowed many new entrants to appear in numerous markets. It could be argued that it’s never been easier to open a store. It’s certainly never been easier to reach a wide audience.

This has led to many inexperienced business owners looking to the internet as some sort of cash cow. The reality, however, is often frighteningly different to their expectations.

Attempting to compete with other internet retailers by constantly lowering prices is a hazardous approach. Many larger retailers will have negotiated better deals with suppliers, ensuring that they have larger margins to work with. Sometimes a smaller store simply can’t compete on price. At least, they can’t if they wish to remain profitable.

The key to success is surely understanding that selling online isn’t always about pricing strategies. Consumers are actually willing to pay more if they believe that they are receiving high quality products and a good level of service. As mentioned above, negative stories soon spread online, but positive ones do too.

If a retailer can build up a good reputation online then they can actually charge a premium for what they have to offer. Does this mean ignoring pricing? No, but it does mean taking a realistic approach.

Provide great service levels

John Lewis, the UK department store chain, are famously “never knowingly undersold”. They promise to price-match with competitors. By doing so, they ensure that they are seen as offering a good deal. But they don’t desperately discount products. In fact, they won’t price-match with online retailers.

That’s because they know that some internet retailers are simply offering unrealistic prices. But it’s also because John Lewis don’t need to compete on those terms.

They’ve built up a strong reputation. Their staff are generally knowledgeable and customer-focused. These are the things that consumers will pay extra for.

Building a great business should be all about the customer. We all want to feel like we’ve got a bargain deal. But that’s not just about the price – it’s about the entire shopping experience. That’s something that some retailers are still learning.

BathEmpire.com homepage

This guest post was written by Rob Watson. Graham has allowed me to hijack his blog to throw in my perspective of retail on the Internet. I work for a company called Supplyant which offers marketing and e-commerce services.

I wanted to share a few recent insights from dealing with a client that runs a very successful eBay store.

Our client sells bathrooms products. Showers, shower enclosures, taps, towel radiators, etc. It’s all excellent quality stuff and I’d love to offer you all a discount, but I’m afraid that’s not my call.

Anyway, before I completely digress, the client approached us because he wanted to build a little space of his own on the Internet. To have his own brand, increase his reach and ultimately sell lots more showers!

Now, before this article starts to turn into a horrible-to-read testament to how fantastic we are (feel free to come to our own website to read that!), I’m going to get to the point. Despite their similarities, there are some huge differences between eBay and e-commerce. But I’ll get to that in a bit; first the similarities.

(Let me just point out that when I refer to e-commerce, I really mean selling products through your own website.)

Early spring 2009 we launched the BathEmpire website. To get things going, all advertising was done through Google’s AdWords program. And here I come to my first similarity:

Cost

eBay do an excellent job of marketing. They bring 100,000s of potential customers to their site everyday, so it’s only fair that you should be paying a fee for being there. Once you’ve been selling a while you can even reduce those costs as listing fees drop. The biggest cost though tends to be your pricing. eBay is rife for people trying to undercut you. You will find your margins being ripped to shreds to get a look in.

Compare that to going alone though. Is that any cheaper? Hell no! Advertising costs through Pay Per Click (PPC) programs, like AdWords, can really ramp up. Plus there is a ton of other marketing channels to explore. SEO, shopping comparison sites, social media, email marketing. They all require money and resource.

Competition

On the Internet your competition are never far away. But on eBay they are listed right next to you. With very little for the customer to go on, it’s not surprising the cheapest seller gets the business.

46,402 shower listings

With your own website it’s not much better. Sure, once people are on your site you have their undivided attention, but for how long? Your offer needs to be good, otherwise they will be back on Google quicker than you can say “how much did I pay for that click?”

Reputation

Get a bad customer rating on eBay and your business can be ruined. The perks to having a high level of customer satisfaction are so huge that should you lose that, you can be sure you will feel it.

This pain isn’t quite as immediate with your own e-commerce store, but you can be sure it will affect your ability to grow. Online shoppers are increasingly turning to sites like Review Centre before buying from a new site. When comparing two retailers, all it can take is a bad review for you to lose a customer.

OK, now to the first major difference.

Scale

eBay’s reach is huge. But it is finite. Unless you continue to sell more and more products how many more listings can you hope to gain? Our client is already highly visible in the bathroom category on eBay. He’s not afraid to increase his range to cover other bathroom furniture, but that involves greater costs.

With good marketing, PR, social media, etc., the growth of bathempire.com could be huge. Our client is already planning on opening a showroom in Coventry early next year. Would that really be possible with just an eBay presence?

Control

We just recruited a new employee who worked for a company which sold packaging through eBay. They enjoyed the perks of a high customer satisfaction ranking, but then they suffered with an issue with their supply. Some customers were let down by the service, their ranking dropped below the level needed for Trusted Store status and the business folded shortly afterwards.

The point is that when you are selling through eBay, it’s eBay that calls the shots.

With your own website you are in control. Sure, unhappy customers will definitely cause you pain, but it certainly won’t put you out of business.

Brand

So you are an eBay seller that offers great products, great prices and great service. You go out of your way to keep every customer happy. When that customer tells their friends about the great buying experience they just enjoyed, who do you think they credit? Who do they say they just brought from? eBay of course. All your hard work has been a massive boost to eBay’s brand.

How much better would that feel if they were to tell their friends about your store? Where your business gets the kudos. That would feel good, right?

Now, I’m not trying to knock eBay. It’s without doubt an incredible selling tool. But it has its limits and a great eBay business could easily become an amazing e-commerce business in it’s own right. It’s just time to start thinking bigger.

Cover of 'The Retail Doctor's Guide to Growing Your Business'

This post is something of a first for Soult’s Retail View – a proper book review! Before I talk about the book - which is the The Retail Doctor’s Guide to Growing Your Business, by Bob Phibbs – it’s worth just mentioning how I got to hear about this new title in the first place.

After years of LinkedIn feeling like a rather static and worthy business networking environment, the recent growth of its Groups feature has really brought the community to life. I’ve had my LinkedIn account for a while, and now belong to several worthwhile retail-related groups. The largest and busiest of these is the Retail Industry Professionals Group, a community with almost 55,000 members worldwide and many active discussion threads.

Currently, the most popular of these threads – with 100 comments, and rising – is one entitled “Who has a blog re: to retail out there?”, where, as you would expect, I flagged up Soult’s Retail View a few months ago. It was as a result of this post that I got a message from Bob Phibbs himself, suggesting that I review his new book.

Checking out The Retail Doctor’s Guide to Growing Your Business on Amazon, I was able to find out a little more about what I’d be letting myself in for. The book, essentially, is aimed at “the thousands of retailers frustrated by market challenges and looking for ways to take control of your business” – whether they are “a mom-and-pop, chain, franchise, or service business.” In particular, it sets out to help those retailers who are “looking for the advice of an expert consultant, but unable to spend the money” by providing “a step-by-step approach to evaluate your current business practices.”

With a copy of the 246-page book duly having arrived from the United States, I’ve been delving into it over the last couple of weeks. So, what did I make of it?

Well, even before I agreed to review the book, I did query whether it was being actively marketed in the UK – assured that it was, I felt qualified to critique it from a British perspective. Even so, the first thing to say is that the book is *very* American. The anecdotes are American, the style is American, and the language is American – and some of these may jar with UK readers.

The terms ‘clerking’ and ‘merch’, for example, were new to me, alongside the inevitable references to ‘lines’ rather than good old British ‘queues’. More generally, some might find The Retail Doctor’s tone a little preachy – he knows what he’s talking about, and the book makes sure that the reader doesn’t forget it, to the extent of making slightly comical use of a trademark symbol everytime ‘The Retail Doctor®’ is referred to. Coming across rather curiously to British eyes, this risks portraying the author as a corporate entity or brand, rather than as a real person.

So, there are a few negatives to get out of the way to start with – most of them entirely relating to The Retail Doctor’s Guide to Growing Your Business’s American feel and focus. However, as long as you can look beyond these niggles, it’s hard to dispute the book’s value as required reading for small retailers, whichever side of the Atlantic they may be on.

The book as a whole is pretty easy reading. I read it through from start to finish, which is probably the best way of doing it, though the clear division of topic areas between chapters – such as financials, hiring, selling and training – make it straightforward to also dip in and out.

One of the threads running throughout the book is the importance of understanding how personality types affect a business, with Phibbs introducing the four groups of Drivers, Analyticals, Expressives and Amiables.

Drivers and Analyticals are collectively known as ‘Thinkers’, with both displaying qualities of independence and decisiveness. However, while Drivers are confident and extrovert, Analyticals are more likely to be aloof and introvert.

Similarly, Expressives and Amiables, as ‘Feelers’, share the quality of being dependent. However, just as Expressives are talkers, extroverts and ideas driven, Amiables are introverted, indecisive peacemakers. A successful retail business, Bob argues, needs a combination of all four personalities, with the manager needing to make sure that their employees bring in whatever character attributes they themselves lack.

The Retail Doctor's website

Handily, the book gives the URL of The Retail Doctor’s Personality Quiz – part of a more extensive Retail Doctor website – and urges readers to take the test before proceeding any further. Happily, my test results suggest that I have a pretty balanced retail personality – 17% Driver, 29% Analytical, 21% Expressive and 33% Amiable. The website notes that no matter what type you are, you need to fully understand the other three, so that you can “become a chameleon when dealing with them as employees and customers.”

Progressing through the book, much of what The Retail Doctor says is common sense, yet it’s surprising how much of it needs to be restated – often quite forcefully. The book’s cover promises “no-nonsense” advice, and Bob certainly doesn’t mince his words.

It’s hard to argue, however, with the principle that “you have to take responsibility for the things that you can control” – whether that’s improving store performance, finding new customers or clearing unsold stock – or that “the only thing standing in the way of you succeeding is you.”

Similarly, as early as p.3, Bob is making clear that “you have to be profitable”, with profits meaning that “customers are rewarding you for your efforts in excess of what it costs you to run the business.” In contrast, he suggests, “if you are not making a profit, the market is punishing you for poor management, meagre product selection, inadequate location, or rotten employees.” Harsh, perhaps, but surely the essence of why businesses fail.

Much of what Phibbs advocates is about getting the retail basics right, and ensuring attention to detail. In his chapter on “the anatomy of a successful retail store”, he makes a good point about the best stores being like our homes – “neat, clean and well organised.”

In this context, I liked Bob’s statement that “no amount of promotions, events or buzz can change a store’s unwelcoming exterior, shoddy facility or bored employees.” Indeed, his anecdote of a coffee house with dirty counters, broken lighting, and staff who are more interested in talking to themselves than the serving the customer surely strikes a chord with anyone who has had a similarly underwhelming customer experience.

A point in the book about avoiding unwelcoming signs also resonates, with Bob claiming that signs such as ’No food or drink’ or ‘Children must be accompanied by an adult’ are rarely effective, but convey negative messages that “tell people to stay out” of the shop. He argues that retailers should “put out the red carpet” to grow their sales, not “the red flag.”

For similar reasons, Phibbs highlights ‘Do not touch’ signs as one of his top ‘Merchandising Don’ts’, suggesting that “you might as well put up a sign that says DO NOT BUY.” It brought to my mind all those beds that you see in department stores, too often accompanied with the warning ‘do not sit on the bed.’

An important chapter of the book is that which covers online marketing, giving effective advice on developing a website – something, Bob notes, that about 30% of attendees at his keynote speeches still don’t have. I particularly liked the illustration on p.182 of what Bob calls a “rotten title bar”, where instead of the name of the website and appropriate keywords it simply says ‘Home’. How many times have we all seen that, often on sites belonging to businesses that really should know better?

The book’s newness also means that it’s bang up to date in offering tips on how to use social media effectively – including Facebook, YouTube and Twitter, though not, ironically, LinkedIn.

The book ends with another line that really struck a chord, bringing to mind those retailers that grumble in the press every time they face the ‘threat’ of new competition. Bob’s closing gambit to those retailers is “whatever you do, don’t do a story in the local paper about how you can’t compete – because you can.”

Notwithstanding the book’s American focus and tone, this is clearly a lesson that can be applied in the UK as much as the US. Armed with Bob’s book, small retailers should be well equipped to harness the power that they do have over their own businesses – building on their strengths, tackling ther weaknesses, and working to create a customer experience that is distinctive, engaging, and that – above all – sells.

Screenshot of holding page (15 Feb 2010)

Google ‘Vergo Retail’, and the likelihood is that you’ll currently find Soult’s Retail View among the top few search results. Indeed, since this blog launched in July, five of the top ten searches that people have used to find the site have related to the Liverpool-based department store operator, with the Ipswich store proving particularly popular:

• hollister newcastle: 262
• vergo ipswich: 252
• vergo retail: 145
• vergo retail ipswich: 84
• wilkinsons logo: 81
• clas ohlson: 63
• co-op department store norwich: 48
• hollister eldon square: 47
• vergo department stores: 47
• woolworths closing down: 47.

I suspect that the main reason why this blog has consistently shown up so highly in Google has been for want of much competition: other than a dedicated site for its famous Lewis’s store in Liverpool [broken link removed], Vergo has lacked any online presence of its own to date.

However, given the evident interest from people searching for information about its stores, I’ve always thought that Vergo has been missing a trick, and wondered how long it would be before a company website appeared. Consequently, even though it may mean that my own Vergo-related traffic takes a hit, I was  pleased to see that a holding page is now in place at