Why Primark couldn't say 'no' to ASOS

With a one billion pound sales ambition in sight, the UK online-only retailer Asos achieved notable results by aiming for aggressive momentum.  Founder and CEO Nick Robertson has had a very positive outlook for the company's global expansion, narrowing its target audience to a niche market of trend-forward twenty-somethings.  

 

Associated British Foods' budget retailer Primark has unexpectedly announced a trial partnership with Asos just two month after deciding not to go forward with their own online channel.   

 

Primark is steadfast in its opposition to an online operation, preferring to open new and bigger stores at a time when high street rivals are focusing on multichannel sales, smartphone apps and click-and-collect services
— The Guardian

Although Primark has reported exceptionally strong sales figures this year, with a 24 percent increase to £2 billion for the first half of its financial year, the opportunity to partner with Asos was perhaps to good to say 'no' to.  As done in their Boutique section, Asos will run trials consisting of a small product selection, which will allow Primark to continue to focus on its brick-and-mortar expansion.  The deal allows Primark  to test how an online channel will speak to its international customer without a heavy up-front investment.  

 

Asos has proven global success with a 37 percent increase in quarterly sales, drawing from British high street fashion and maintaining a keen eye for trend.  Primark's rival high street brand New Look joined Asos last year on the site and has become one of the site's top selling brands. 

 

Source: AB Foods 2012 Annual Report 

 
 

Mango bears the fruit of Zara's business model

Photo credit: the Random Noise

Photo credit: the Random Noise

Photo credit: the Styleless Diaries

Photo credit: the Styleless Diaries

Spanish-based retailer Mango recently out-competed Inditex, the parent company of Zara, in percent increase for home-country revenues.  Mango's domestic sales increased by 20 percent, while Inditex's fell by 5 percent.  The company is applying various aspects of Inditex's now-standard best practises, including:  

  • FOCUS ON CASUAL WEAR: Two years ago, 70 percent of Mango's revenue came from party-wear.  Now, the company has flipped its blend and is seeing strong results with it's assortment grounded in casual wear.  
  • LOWER RETAILS: Mango has cut is prices to nearly 20%, significantly narrowing the price gap between comparable products at other fast fashion retailers.  
  • BRAND DIVERSIFICATION: Mango has recently launched stand-alone brands for mens and accessories with further plans for teens and specialty sizing.  
  • GLOBAL EXPANSION: Mango intends to open 300 new stores this year, compared to Inditex's 450.   

The fast-fashion sphere continues to be highly competitive, and although Mango is far from achieving Zara's top-line or productivity results, they are certainly seeing promising signals with gains in Spain where unemployment is at over 25%. 

Courtesy of GUIDANCE & CONSULT

Courtesy of GUIDANCE & CONSULT

Starbucks' Relationship-Focused Model

Written by Darren Fernandes

Beyond new product and services, Starbucks has upheld a commitment to strengthen its global business by supporting the diverse communities it serves. Last year, the company endorsed a Washington state bill to legalize same-sex marriage, which led the National Organization for Marriage to organize a boycott of the coffee chain. The company's endorsement was criticized last week by shareholder Thomas Strobhar, the founder of the Corporate Morality Action Centre. CEO Howard Schultz's response during last week's shareholders meeting garnered significant media attention, "If you feel, respectfully, that you can get a higher return than the 38 percent you got last year, it's a free country. You can sell your shares of Starbucks and buy shares in another company".

 

The company's decision to voice its support in the same-sex marriage debate clearly connects the values of its core customer and employees - both of which contribute to the dollars and cents of the company's bottom line. In his leadership letter, Schultz writes,

Consumers have long rewarded brands with their loyalty when they feel a company's mission and aspirations align with their own.

 

Further, in a Harvard Business Review post, Schultz commented on the importance of relationship-driven innovation for a prosperous business venture.

 

When looked at through the capitalistic lens, innovating the very nature of corporate-community relations is good business...Values increasingly drive consumer and employee loyalties. Money and talent will follow those companies whose values are compatible with their own.

Starbucks exemplifies how a company can utilize both a responsibility and relationship based approach to business, and harvest a loyal customer- and employee-base.

Lululemon recap

CEO Christine Day still stood by the company's reach for quality, saying: “delivering the top quality our guests expect is a critical factor in our differentiation in the market place.” This, however, may be debatable as the recall is not the first supply chain problem in recent quarters.  Last year, there was a dye bleeding issue affecting some bright coloured tops and sheerness problems in other products. Further, there was a scandal in 2007 regarding Lululemon's VitaSea clothing line, which falsely advertised it was made from seaweed fibers to reduce stress and provide anti-inflammatory, antibacterial, hydrating and detoxifying benefits. What does this negligence in quality control say about a company's product value? 

 

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London's Bond Street Reinvention Brings about a Larger-than-Life Luxury Wonderland

While Bond Street has been synonymous with London fashion since the 18th century, this street in Mayfair has grown from a collection of boutiques and small shops into an epicentre of luxury retail and a major tourist destination in and of itself. A series of megastores – for brands like Chanel, Dior, and Fendi – have been slated to open in the coming year, joining the noted Louis Vuitton flagship. 

Louis Vuitton opened its London flagship store called “Maison” in May of 2010 at the junction of Clifford and Bond Streets. Marc Jacobs, the creative director of Louis Vuitton, described the megastore as “probably one of the most magnificent retail stores in the world for the best luxury house, the greatest luxury brand."

The coming Bond Street reinvention, like the "Maison" store, will feature architecture from design mastermind Peter Marino, taking shoppers to a larger-than-life luxury wonderland. With notable artwork commission tabs ranging up to $3 million and demanding complete collaboration for his bespoke boutiques, Marino explains, “I think luxury brands want people to equate anything exquisite in life with their product."

London currently draws in more than 15 million foreign visitors per year, making Bond Street a targeted strategic focal point for global luxury brands. This reinvention encapsulates the recent unabashed ambition for luxury branding and offers customers an unprecedented level of luxury retail that has yet to be seen in the Western world. Perhaps this growing standard is an influence from the Eastern shopper?

Suleman Anaya critically describes the importance of the Bond Street megastores as a premier luxury showcase in a recent article on the Business of Fashion, writing: "Indeed, Bond Street is now at the centre of a number of powerful crosscurrents that have transformed the once-quaint street into a thoroughfare of international significance. As such, the new luxury megastores going up on the street are much more than outsized local flagships; they are beacons intended to project their brand’s international clout and ambition to a global audience. Perhaps more that anything, this explains their unprecedented scale."

The UK's John Lewis' 4 year growth trend

The John Lewis Partnership which owns the iconic John Lewis department store, announced over the weekend that its entire staff of partners - 84,700 people - will be receiving a 17% bonus based on the performance of the company which also owns Waitrose.   JLP's Chairman has recently contributed a column in The Times on the topic of employee ownership, which he attributes to the consistent growth they've seen of late.  

But it isn't just a focus on employees, an acute understanding of their customer is also evident with double-digit increases in same-store sales, in addition to a 10% increase in UK clothing market share.  Peter Ruis, John Lewis' buying and brand director told the Guardian, "Historically we have been told that our customers are more affluent and a bit older, but increasingly research has shown that to be a bit simplistic".  The "sweet spot" is among 35 to 44 years old, and the store's cross-channel combination of home product, technology, beauty and fashion assortments reflect how that urban customer is shopping.  In 2012, Electronics, Home and Technology saw an increase of 29% year-over-year, and the online channel grew by 41% - both figures significantly outperforming the industry.  

John Lewis' Spring 2013 advert

John Lewis' Spring 2013 advert

Heading into 2013, capital spending on square footage and a boost in private label business are key areas of focus.  Ruis is also likely to bring in a new designer name for menswear, but is maintaining focus in ensuring it will be the right name, "I'd hate to have 20 or 30 of them and lose our point of view."

 "The pace and quality of innovation and initiatives has been extremely strong and is one of the central reasons for its outperformance" says Neil Saunders of Conlumino.  

 

Qatar's investors makes small moves into the Global Fashion Arena

Qatar first came onto the fashion radar with the purchase of Harrods by Qatar Holding, the sovereign wealth fund.  The Holding company is slowing increasing its stake in other high quality luxury stocks, including a 1.03 percent share of LVMH Moet Hennessy Louis Vuitton and an 8.7 percent share in Tiffany & Co.  

The country's investors are on the industry's radar again as unidentified Qatari investors are in the midst of exclusive talks with the owners of Printemps in Paris.  As the wealthiest country per capita, the potential pool of investment income is high and with an appetite to participate in the luxury retail and hospitality sectors we will increasingly be seeing the mark of the nations talent.  Mayhoola for Investments has bought Italy's Valentino Fashion Group SpA, and Qatar luxury group has signed a lease on Avenue Montaigne for the opening launch of their luxury label Qela.  

Read the WWD article here