The UK’s Xmas holiday trading figures are emerging and there are a few headline-making successes and failures already.  But the “surprises” that a lot of commentators are fussing about aren’t really surprises at all.

Take the department store sector.  We have five big names in the UK – House of Fraster, Debenhams, Marks and Spencer, John Lewis and Selfridges and everyone seems shocked by the news that M&S and Debenhams bombed while the others are hyped with Christmas cheer.  I don’t get it.  Its obvious why Debs and M&S missed the gravy train – they are boring and middle-of-the-road.  After clawing their way up from the pits a few years ago M&S stopped short of owning the sector and sat back on a formula that was making ground for them.  As we all know, sitting back and milking a formula never was sustainable and these days with the pace of change accelerating exponentially you rather have to be in a continuous cycle of re-invention. As I repeat in my seminars “you are really only as good as your next big idea” and Marks and Sparks don’t appear to have one.

The same goes for Debenhams. For those who don’t know them, Debenhams is a brand that has always looked uncomfortable in its own skin.  In fact it looks almost as uncomfortable as shoppers seem to find their stores.  And that’s understandable. Drab decor, cheap lighting and middle-of-the-road brands shoulder-to-shoulder with their own institutional labels that have neither the style of brands like Van Graff nor the price advantage of Primark. Debenhams were also on the critical list a few years ago, but looked to be making a recovery until they too settled for “doing enough to get by”. Just when you felt they were building up for a big re-birth everything stopped.  Now their constant price promotions bare witness to a brand that’s all out of ideas.

Their competitors on the other hand have stores that may not suit everyone, but certainly look full of confidence.  As John Hegarty is reported to have said “Don’t hide your differences, shout about them” and that’s one of the golden rules of brand development. Bland people and bland brands have few friends!  There is however a ray of hope for Debs in the form of a £50million investment by Sports Direct whizz and Newcastle United owner Mike Ashley.  Judging from Sports Direct the outcome may not be pretty, but it surely will be effective.

There’s  lot of discussion about the abject failure this year of the supermarket chain Morrisons. The Northern-owned company that made a name for itself as the “old-folks supermarket” and took on the old Safeway sites to achieve national coverage has been making ground lately on the back of a “food” specialist proposition (something like the Belgian Delhaize group) but still relies on an “older” clientele. One theory is that its absence from the multi-channel game is the reason for its struggles, but Morrison’s customers aren’t habitually on-line shoppers anyway, so what difference will that make?  I think Morrison’s, problems are far more fundamental – its not exciting enough to bring in the younger customers, its a mid-price operator getting squeezed from above by the likes of Waitrose and below by Aldi and Lidl and its customers are getting too old to make it to the shops anymore.  Its scope is also limited because their stores are too small for the inventory it has already let alone any expansion, hence, I suspect the “food specialist” proposition, but too big to fit the convenience store model that Tesco and others are counting on to save their bacon.

What this is all telling me is that the entertainment element of physical retail channels is as important as it has been in the past.  With on-line adding to the options of an increasingly fickle and impatient consumer retailers can’t afford to stick with a formula unless that formula is constant change.  I repeat, “you are only as good as your NEXT big idea”.

Phil Darby
January 14, 2014

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