Amid the squeezed margins, closing stores and boardroom upsets, a select group of companies are bucking the trend by growing sales during the worst Christmas for retail in a decade.
Rather than the department stores or high street stalwarts, sales and profits are coming from different directions, powered by brands with a clear sense of identity, a commitment to serving their core customer and the agility to keep pace with new trends.
Joules is a notable example of a brand succeeding in the fashion sector as rivals continue to crumble. During the seven weeks to 6 January the company’s retail sales rose by 11.7% year-on-year across all product categories.
The fashion retailer, now in its 30th year, describes itself as operating a ‘total retail model’, spanning stores, online and wholesale across womenswear, menswear, childrenswear, footwear and home. In addition to more than 120 stores across the UK and Ireland, and over 2,000 stockists worldwide, the brand also boasts a growing online business which contributed almost half of sales during the period.
CEO Colin Porter attributes this success to the strength of the Joules brand, a growing loyal customer base and the flexibility of its model to adapt to changing customer behaviours.
He explains that Joules is genuinely agnostic about where its customers decide to shop. The wholesale strategy has, however, helped Joules expand to 1,000 stockists in the US, a market that buys into the brand’s family-focused values with a British twist.
Joules has also maintained a carefully managed approach to discounting, using a rich database of consumer data to provide targeted offers.
We don’t have the luxury of multi-million pound budgets, so we need to think smart.
Hannah Squirrell, Greggs
“You can’t ignore something like Black Friday because customers are used to it. So it’s more about how you use those sorts of events. On Black Friday we don’t do blanket discounts, we do targeted discounts. That works well for the customer and for us,” Porter explains.
From a marketing spend point of view the approach is digital first, mixing email, PPC and affiliate, alongside Facebook and Instagram. The stores play a crucial role in raising brand awareness and acquiring the majority of Joules’s new customers.
Furthermore, it is the brand’s signature design style, tapping into the label’s outdoor roots, that helps Joules continue to attract a growing cohort of customers.
“We don’t chase fashion. Joules isn’t about being the fashion leader in the branded retail market, we’re about offering our customers products for their lifestyle, so an element of practicality done with a twist,” Porter explains.
“It’s about keeping your handwriting and your brand top of mind in all that you do. That makes you stand out from the crowd. When you chase fashion you’re quite often all chasing the same thing so you end up looking the same.”
Retail analyst Richard Hyman agrees that Joules benefits from having a particular ‘handwriting’ and the very fact it is not for everyone is the brand’s key strength.
“It would be for more people if they watered it down a bit, but they haven’t and I think that’s exactly right. I know it’s a bit uncool now to talk about Ted Baker, but as a retail brand it is another great example. Ted is not for most people, but its philosophy is let those people shop in other places,” Hyman explains.
In this challenging market it is important for retailers to focus on their core customer and resist the temptation to try and attract customers with new product lines that dilute the brand and sacrifice real engagement, he adds.
“Joules, however, is a very good example. It is in all those channels [own retail, digital and wholesale] which is good. It covers all the potential bases, but the key thing is that it is in those channels in exactly the same way, with a tight, consistent and focused product,” says Hyman.
The art of shopkeeping
Focusing on the core customer and creating great product at an affordable price is all part of the art of great shopkeeping, according to Cornish womenswear brand Seasalt.
The business experienced a record Christmas with in-store sales rising by 31% in the five weeks to 5 January, online sales rocketing by 39% and international growth up 35%.
Seasalt is thriving thanks to a mixed model of own-retail, digital and wholesale, matched with a full-price strategy with scheduled periods of discounting. CEO Paul Hayes explains it was a conscious decision for the brand not to follow the trend for discounting to maintain brand integrity.
“From a product perspective we believe, where possible, in using the best fabrics so we can bring the best quality products to market. Maintaining that full price sell-through means we can continue to innovate,” Hayes explains.
“Then, in order to run a good website you need to be able to invest in technology and marketing, and you also need to invest to build the sorts of stores we do. We believe we need to create a quality environment, but in order to do that you have to keep your margins high.”
On Black Friday we don’t do blanket discounts, we do targeted discounts. That works well for the customer and for us.
Colin Porter, Joules
Another core part of the brand proposition is having a quality customer service team, which is based in Cornwall. The brand prioritises diversity across its teams, which span 1,000 people in the UK, so that staff can relate to customers of all ages and backgrounds.
Seasalt is also very considered in the way it approaches opening new stores, with its 60th store due to open its doors in February in Windsor. The brand is keen never to open in a location just for the sake of it, preferring to find sites that fit with its customers’ lifestyles.
“We don’t always look for the obvious location. You wouldn’t necessarily have thought that we would have opened in Lytham St Annes last year; it wasn’t an obvious choice as there aren’t a number of similar retailers in that area,” Hayes explains. “Some of our best locations are also in market towns and we’re not afraid to try other things as well.”
Keeping it lean
One business reaping the rewards of a lean operational structure is value footwear player Shoe Zone. The retailer’s revenue rose by 1.8% to £160.6m in the year to 29 September, with digital revenue up 19.9% to £9.8m and pre-tax profit increasing by 18.4% to £11.3m.
CEO Nick Davis believes the success of the business is underpinned by having a really clear customer proposition, a supply chain dealing direct with factories in China and an expanded offering of global brands such as Skechers, Clarks and Kickers.
“If you look at what other successful discounters like Aldi and Lidl have done in terms of bringing in a new demographic to their business, it’s very much like that,” he explains.
“If you can offer the right value proposition for all of your customers you can build on the demographic and we’ve put a lot of work into the branding, and the look and feel of our stores, to make them more contemporary and inviting.”
To drive its digital footprint, Shoe Zone plans to introduce an autonomous digital team that will no longer play “second fiddle” to the stores. The plan is to double its digital marketing resource, bring in a new SEO agency and hire a digital buyer responsible for growing the range of 150 online exclusive lines by tenfold.
Shoe Zone has also stepped up its communication with consumers, increasing the number of emails sent in 2018 by 26.2%, which drove an 18.8% sales increase compared to the previous year.
“One of the big drivers has been making sure what we’re offering them is good, engaging content that has a promotional lean to it, so we are doing genuine giveaways,” Davis explains. “The other driver is to improve the segmentation of the data to make sure people feel like they’re getting rewarded with loyalty, because they’re getting relevant offers.”
Shoe Zone’s strong store footprint is driving the digital business, explains Davis. Only 11% of its online orders are returned – return rates are often quoted as being around 30% on average – plus 90% of these products are returned in-store where shoppers can exchange or be sold an alternative product.
The business remains committed to the high street, despite the fact Shoe Zone is adding to its number of out-of-town ‘big box’ stores. Of its 496 UK stores, 25 are now in out-of-town locations with plans to open a further 20 by the end of 2019. Crucially, the company never commits to leases of more than five years to give it greater flexibility.
Each store now opens a week quicker than normal thanks to a modular design that can be fitted by staff, saving £50,000 per refit. The profitability of the store format means each new shop typically pays the business back within one year.
Aside from running a lean operation, Davis believes Shoe Zone benefits from being a “sticky brand” that attracts a loyal customer base.
“People do sometimes trade down to us in slightly tougher times when they are looking around for good value and realise we’re a diamond in the rough,” he adds.
Rather than playing catch up, some brands are defying the gloom by keeping pace with evolving consumer tastes.
Bakery chain Greggs has excelled in the grab-and-go market by tapping into the latest food trends. The sell-out success of its vegan sausage roll, launched in January, was powered by a tongue-in-cheek YouTube video shot in the style of an Apple iPhone ad.
“We don’t have the luxury of multi-million pound budgets, so we need to think smart, and we always look to ensure that every pound of our spend counts,” says Greggs customer and marketing director, Hannah Squirrell.
“Therefore, we need to make sure our activity stands out and is never just a run-of-the-mill advert. We always think about how the work we create can drive conversations and get people talking and thinking about Greggs.”
In 2018, the bakery chain catered to the festive market with the launch of its first Christmas gift range of doughnut socks and sausage roll phone cases. This festive cheer, combined with a clear focus on the breakfast sector, helped Greggs grow sales by 7.2% during the financial year ending 29 December. Like-for-like sales rose by 2.9% as the bakery chain opened 149 stores, taking its total to 1,953 nationwide. This year Greggs expects to open an additional 90 to 100 locations.
Squirrell insists the product and service will continue to evolve, with Greggs using marketing to make the bakery chain mean more to a greater number of people by keeping its message “down-to-earth and relevant”.
In addition to getting closer to their core customer, hopping on the latest trend and ramping up their online investment, many successful retailers are focusing on their brand experience.
This Christmas, craft specialist Hobbycraft capitalised on the rise of personalised gifting, with the popularity of its experiential in-store workshops and ‘How to’ online content driving like-for-like revenue by 7.1% in-store and 28% online in the six weeks to 24 December.
Sales of Hobbycraft’s ‘Christmas Eve Boxes’, personalised boxes for children, rocketed by 119%, while views of its blog content and Christmas look book surged by 10%.
The retailer also struck gold with its ‘12 Makes of Christmas’ workshops showing shoppers how to make a different crafting project each week. During the festive period alone more than 21,000 crafters took part in the workshops across Hobbycraft’s 94 stores.
“The ‘12 Makes of Christmas’ was publicised through all our social media channels, our blog and in-store, so very joined up across all the touchpoints,” explains head of marketing, Joel Pickering.
We’ve put a lot of work into the branding, and the look and feel of our stores, to make them more contemporary and inviting.
Nick Davis, Shoe Zone
“This year alone we’ve driven 100,000 people into stores through this experiential form of marketing. It’s quite a new thing for Hobbycraft. We’ve always done the occasional workshop, but by giving customers a really clear overall plan of what’s happening each week, making it really easy to book online and come down to the store, it’s becoming a thing.”
As well as investing in the in-store experience, Hobbycraft wants to move into video on Facebook Live and Instagram Stories, giving customers a view of the projects across multiple platforms. This year, the retailer will build on the success of its workshop programme with a new initiative called ‘Get Started In’, introducing its 3.7 million Hobbycraft Club members to a new hobby each month.
“We listen to our customers, they want value and newness, but they also want help and advice and we can see other retailers shift into this online space. For us it’s a great opportunity to continue to really grow our business and take it to the next level,” Pickering adds.
It was also a bumper festive period for The Fragrance Shop, which saw online sales rise by 19.3%, with overall like-for-like sales up 3.6% in the six weeks to 29 December. The retailer tapped into the experience economy with the roll out of pop-up ‘sniff bars’ at its stores in Leeds and Birmingham, allowing consumers to sample fragrances.
The concept responds to a desire among consumers for fresh, relaxed shopping experiences, explains marketing director, Lisa Windsor. The plan is to introduce more pop-ups in high footfall areas, as well as work on ‘sniff bar’ events and brand takeovers.
She says customers responded well to extras such as such as engraving and gift wrap that make gifts feel more personal.
“We took the time to assess what our customer wants and needs, ensuring we are always developing to suit their requirements. Our whole ‘No idea?’ Christmas campaign was focused on solving problems for our customers. We even had category pages for each customer type [Secret Santa, luxury gifts, etc] to make it easier to shop.”
A wider perspective
Whether they hail from Leicester or Newcastle, Bournemouth or Cornwall, a common thread between these successful businesses is the fact that they are all headquartered outside the capital.
In a retail environment where understanding the consumer is crucial, retail analyst Hyman believes it is a huge advantage for retailers to understand that London is not representative of the rest of Britain.
“It’s amazing how many people in London never go outside the M25, so it makes their appreciation of how people live their lives, what their values are and how they prioritise their household economics much more difficult,” he explains.
“They can spend whatever they want on customer research, but it’s about starting off knowing that. Should retail businesses move their headquarters out of London? That’s ridiculous. Is it an advantage? It’s a critical factor to understand your customers so it can be an advantage to have a better understanding of the whole market you trade in as opposed to just the capital.”
Seasalt’s Paul Hayes believes that being based in Cornwall not only gives the brand its distinctive design feel, but has also enabled it to harness the talent of creatives living in the area, which adds to the brand authenticity.
While Pickering is not sure if it makes a difference where Hobbycraft’s headquarters are based, he agrees it is vital to understand the nuances of different consumers and how they live, both in London and elsewhere in the UK.
“When we open new stores in different parts of the country we do see trends,” he adds. “In certain parts of the UK we see certain trends happening that don’t happen elsewhere, so largely speaking that’s our job to get out there and make sure we understand so we can be on the front foot.”