Weekly Winners in Retail

Weekly Winners in Retail 22.06.20

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Its been another busy week in retail, with the main headline of course being the reopening of non-essential stores in England, with Wales and Scotland to follow this week and next week respectively. However, there has been many other good news stories, which has caught RetailRecovery’s attention this week. We have spent some time profiling what the news story is and what we expect to see as a result of this

  1. Non-essential retail stores reopen

When: 15th June

What’s the news?

As the high street reopened across England, we see shoppers starting to return to their favourite stores. Many scenes across the news however showed that shoppers failed to keep the two metre social distancing rules when in queues. Research company Springboard reported that by 5pm, footfall was up week on week by 38.8%, although footfall was still down 50% Year on Year, with many shoppers staying away. By the end of the week numbers had improved slightly, with footfall up by 51%, however still down by 47.7% Year on Year.

Source: Yahoo News

Mass queuing as the high street reopens in England

What we expect to see next?

Although it is still early days, we do not see footfall and offline sales numbers returning to pre Covid-19 levels, even as the restrictions are removed, 20% down year on year. The role of the traditional store isn’t over, however it will need to change to meet customer needs, with an emphasis on how it supports convenience and online sales e.g. store collection. We see up to 50% of stores being closed by the end of this year, especially if store rents cannot be re-negotiated.

  1. Oak Furnitureland’s Future Secured

When: 16th June

What’s the news?

Oak Furnitureland’s future has been secured through the acquisition by Davidson Kempner Capital Management with all stores and employees jobs saved. More details can be found in the Retail Gazette news release:

Source: Retail Gazette

Oak Furnitureland will continue to be a familiar brand in UK retail parks

What we expect to see next?

With no stores or job cuts announced, we expect Oak Furniture Land will be spending time reviewing and streamlining their operational processes and understanding to what extent they need to change their go to market approach and the proposition they offer to existing and new customers.

  1. Boohoo acquire Warehouse and Oasis

When: 17th June

What’s the news?

Following Warehouse and Oasis both going into administration in April, Boohoo repeat last years acquisition of Coast and Karen Millen, through acquiring the two brands.

Source: BBC News

Oasis & Warehouse join Coast and other brands acquired by Boohoo

What we expect to see next?

We expect to see the Warehouse and Oasis eCommerce stores to be open again soon, with Boohoo taking advantage of the brand awareness, equity and customer base they have. The big question is whether any of the physical stores are re-opened. Our view is that whilst concessions will be an appealing route to market, Boohoo will not look to reopen the closed stores, due to the profitability challenges in a declining offline market.

Don’t also be too surprised if this isn’t the first of many acquisitions by Boohoo, as they have only invested 5.75m of the 200m funds raised in May, which is reported to have been created to support acquisitions. The current economic climate tells us that there will be more brands available to acquire, significantly below pre Covid-19 valuations in the coming months.

  1. UK Retail sales bounce back in May

When: 19th June

What’s the news?

Retail sales showed signs of recovery last month, thanks largely to DIY and Garden Centres, with a 12% month of month growth in May.

Source: The Guardian

Retail sales recover, however there is still a long way to go

What we expect to see next?

Although an encouraging sign for retail, caution should be taken, with overall sales still lower than pre Covid-19 levels. We do expect that sales month on month will continue to rise, and there is a strong likelihood that Year on Year sales will be higher in July and August with a full month of high street trading from July and consumers will be less likely to be able to travel abroad for their annual summer holiday. Looking later in the year though, as the employer contribution to the furlough scheme increases and the scheme will stop by the end of October, we see a high un-employment rate, which will negatively impact year on year peak trading levels, in November and December.

  1. M&S Chief Executive to take ‘urgent action’ on diversity & racism

When: 19th June

What’s the news?

In an announcement, M&S Chief Executive Steve Rowe has taken time to reflect on their employment approach following the much-publicised death of George Floyd, stating that ‘urgent action’ is required.

Source: The Industry .Fashion

M&S taking urgent action to review it’s diversity policy

What we expect to see next?

Like sustainability, which has been a big trend over the past 2 years, we expect that more brands will have to focus more as consumers will want to understand their policies and will be less likely to buy if communication is inexistent, not clear or brands fail to meet societies expected levels. As a result, brands will need to more transparent about their approach to recruitment, demonstrating that they are not just paying lip service.

Want to be a retail winner?

If you need to get your retail strategy back on track, our RetailEvaluator framework enables you to understand where you can improve your retail plan both today and in the future.

Alternatively, you can download our FREE Covid-19 retail strategy whitepaper, containing more than 110 practical recommendation, to help you navigate today’s current climate and plan for business growth.

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