With unemployment at its lowest level for two decades and inflation
below the government’s target, the UK’s economic figures paint a rosy
But ask any of our leading retailers about their business and they’ll
all confess that the going is pretty tough.
Cast your eyes over the Atlantic, and this bunching is far less
In the year to date, The Gap is some 8% up, Wal-Mart is 15% up, and Home
Depot is running at nearly 30% ahead.
Other well-known names are achieving flat sales at best.
As the FT’s Lex column reported, ’A gap is opening up between the top
one or two US retailers in a given category and the rest. For the market
leaders, it is a virtuous circle. Increasing scale and national presence
gives them cost advantages smaller rivals cannot match.’
Joining this virtuous retailing circle has long been an ambition of
major UK retailers.
Progress has been much much slower, but there are signs that one or two
may be getting there.
But, in their moment of glory, are these power retailers under
With their constantly increasing investment in bricks-and-mortar, are
they onland sitting ducks for the rapidly increasing forces of
If they add an online presence, will they simply cannibalise their
Asked that question this time last year, when we were gathering for
Goldman Sachs’ annual get-together for retail CEOs, I’d have said that
some power retailers were looking distinctly vulnerable.
Their internet strategies, with few exceptions, were lacklustre. The
dot-coms were capturing the headlines. Would they also capture market
share and become virtual members of the virtuous circle?
The e-tailers have made their mark, particularly in categories which are
information-intensive, where price and selection frequently change, and
where the onland shopping experience is ’unappealing’.
Moreover, the increased availability of automatic online comparison
shopping creates a very swift means of access to your preferred
But following this year’s New York presentations, it’s becoming clear
that the established onland retailers have begun to execute combined
online/onland strategies that reinforce merchandising strengths and
enhance the inherent power of their brands.
Marketing and merchandising, not technology, are seen as the key drivers
of internet retailing success.
Technology might be the platform, but it commoditises quickly.
So the power players are using online as a pre-selling opportunity both
to confirm their traditional customer values and to reach out to a wider
They are capitalising on situations where delayed gratification is
unacceptable, where a tactile element is an essential part of the retail
mix, and where bricks-and-mortar provide the social excitement that
’going shopping’ still offers.
And at least they have the logistics and distribution systems in place,
although adaptation is needed. Even onliners need access to this element
The way forward is still by no means easy.
What is crystal clear is that the major onland power players are
devising strategies for complementing rather than cannibalising or even
harming their brands.
And of course they are achieving net margins (double digit in some
cases), which must bring tears to the onliners as their losses continue
Nigel Whittaker is UK chairman of Edelman Public Relations Worldwide and
director of several on- and offline retailers. These remarks formed part
of his address to Edelman’s First International Summer School in London.