QUESTION TIME
uestiontime
This month’s question:: should UK department stores invest into own-brands and focus less on concessions?
The trouble that the Alexon Group of fashion brands fell into in the latter months of 2011 left many of you unsure of what the future of the company and your concessions would hold. Many of you rely heavily on concessions across a variety of categories, but should this be reconsidered? Could focusing on and expanding own-brand offers provide more stability, better margins and an element of exclusivity? The fight for footfall continues, so perhaps developing an own- brand identity could help you to differentiate yourselves from your competitors, and offer your customers value and innovation. Developing an own- brand requires a lot of investment and careful positioning; if done well could provide long-term returns but equally if it could significantly alter your identity for the better or worse. The question is: should UK department stores invest into own-brands to secure future success? And should they focus less on concessions?
Graham Hoyle MANAGING PARTNER OF RETAIL PERFORMANCE IMPROVEMENT
Let’s face it: concessions can be a lazy retailer’s way of filling sales space, leeching off others’ brand and product offers to deliver footfall and sales. However I am pragmatic about the value of concessions: they bring with them customer recognition, product expertise, store positioning reassurance for customers and much needed sales. But as ever, good department store retailing is about balance, and, getting the balance right between concessions and own-brand or own-bought product. Lest we forget, department stores invented the stylish, the quirky, the different and the store for its target customers to experience product choices not found readily elsewhere. It’s just that as some department stores chased cost controls and disinvested in their own buying operations, having a range of concessions across the store became more and more appealing. The problem was and is that for some, this means their brand proposition was weakened, losing elements of the better, different and special that makes a department store a must visit location in the minds of customers. As long ago as 2009
Debenhams reduced its concession space as sales from own-bought ranges drove performance. At the time Debenhams deputy chief executive Michael Sharp said the own-bought focus, “gives us greater control of our destiny in a volatile world”. And a recent
8 | Department Store Buyer |
DepartmentRetailer.co.uk
trading update states, “We will use a combination of own bought ranges, including H! by Henry Holland from the Designers at Debenhams portfolio, and concession brands to ensure we continue to offer choice.” If we can accept the argument
that concessions mean that department stores lose some of their sparkle and difference and that along with this comes tying the store into contracts that limit flexibility and being fleet-of-foot, then in these volatile trading times department stores should reconsider whether revitalising their product offer is almost a mandatory move forward. As the product and price gap across retailers diminishes and the competition increases, the need to deliver an exciting product experience becomes a significant differentiator. As I have said before, it’s about creating emotional experiences that lock the customer into wanting to shop one particular store over another. So, to answer the question
specifically, yes, UK department stores should invest into own- brand and own-bought product ranges to secure future success, and they should focus less on concessions. The answer is department stores should re- embrace being individual, unusual and different from each other, they are after all individual in their locality, their shoppers are more often than not individuals who live and shop locally, or at least within reasonable travel-time. Not that I think the pendulum should now swing completely the other way, balance is key, and key concessions should be identified and harmonised into the new product proposition.
Each department store
operator needs to establish its core brand values and the product proposition that most connects with its customers; ask yourself, “What are we famous for?” or “What could we be most famous for?” Investing in own- buying across the product spectrum is not to be recommended as a stage one approach. Start in one key product category, probably for most, womenswear. Define and plan exactly what the shape, content and price hierarchy of the ranges should be. Investing in a good buyer, who understands the market sector you are targeting is a given, which in itself is a serious commitment. This can either be done by appointing a permanent buyer, or possibly less risky, on a contract basis. The reality of such a move is that apart from the length of time to recruit the right candidate, the lead-in time to deliver the range is likely to be two seasons, so no quick fix, but the time can be spent wisely, planning the reduction of concessions and the new store plan layout for showcasing own bought merchandise and delivering a more profitable and unique product mix to your customers. And a final word from Michael
Sharp, chief executive of Debenhams, "Looking forward, although we remain cautious about the strength of consumer confidence and the timing of an economic recovery, we will be focusing on the retail basics of giving our customers great products in an inspirational shopping environment. We are therefore confident that we can continue to make progress over the coming year." Copy that!
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