This Week in Retail – Pop-up to shop-up

Hi all,

Welcome back to another iteration of This Week in Retail. We have a great selection of stories ranging from contrasting fortunes in the world of high street fashion at the likes of Marks & Spencer and Jack Wills, to Amazon’s continued fashion agenda and its potential downfalls. We will also give readers an insight into the exciting world of pop-ups taking the luxury fashion world by storm.

To kick start this week, we look at two department stores which have seen volatile results over the past couple of years. John Lewis has seen its total weekly sales rising 1.3%, with fashion sales rising 7.2%. Conversely, Marks & Spencer has had troubles in its clothing division, resulting in clothing boss Jill McDonald “leaving the business” this week, with a large focus on its food retail operation, there is likely to be a lot of pressure on this dwindling part of the business. Its struggle in fashion retail is coupled with further woes on the high street for Jack Wills, who has appointed advisors to review the future of the business. The threat of sale looms over the company, potentially adding to the line of casualties in high street fashion retail following Arcadia shutting stores across the country. Retailers on the high street are struggling to keep pace with changing consumer expectations, rising costs and losing market share to both established and new competitors largely operating online. As such, Amazon has seemingly found its opportunity to stake its claim in the apparel sector. The e-commerce giant has been aiming to change its perception as simply a place to purchase commodities, through selling more fashionable clothes and using collaborations, influencers and emphasizing fashion deals on ‘Prime Day’.

It’s not all plain sailing in the world of e-commerce however. More competitors, with less barriers to entry than ever before, means a higher standard placed on consumer experience through these digital channels. Amazon may be ruling the game, but its browsing experience (particularly for beauty products) is leaving some frustrated. Through poor recommendations on products, inadequate organising and a lack of search filters, a generalist like Amazon can arguably struggle in the face of more specialised retailers. Even for historically brick-and-mortar brands looking to enter the world of e-commerce to stay relevant, there are still significant hurdles to success. Walmart purchased Jet.com in 2016, with an ambition of closing the gap between themselves and Amazon. This has led to success, with a 40% increase in US online sales and the company beginning to put pressure on their rivals. However, according to reports, there is growing tension at Walmart due to rumoured projections of losses greater than $1 billion for its US e-commerce division this year. Ultimately, this represents the complexity surrounding the modern retail environment – particularly for more traditional players. Digitalisation driven by technological disruption are not simple or easy to achieve, particularly with the pace of the change in the industry.

Whilst on the topic of disruption, pop-ups continue to revitalise retail through driving engagement – particularly in the luxury sector. Burberry has created a significant number of pop-ups recently, such as the SS 19 collection in Mykonos, and this combined with exceptional performance in China has allowed Ricardo Tisci’s new monogram to launch to monumental success. Virgil Abloh, now Creative Director of Louis Vuitton, has a penchant for using pop-ups to showcase the artistry and vision behind collections – notably in his past collaboration in Paris with Ikea through his Off-White brand. Bringing this to the forefront of luxury is the launch of Louis Vuitton’s latest collection in New York – featuring a store coated in hallucinatory, neon – green design with a unique experience for consumers. This is coupled with Moët Hennessy adopting a bold, colourful display in Frankfurt’s airport featuring personalised bottles. Is there an opportunity for fast fashion and high street retailers to adopt this more proactive approach to help change their fortunes? This could be through collaborations, for example we already saw H&M collaborating with likes of Balmain and Versace. By contrast, other brands have sought to make a statement – for example Vivienne Westwood’s pop up at Galeries Lafayette in Paris to tackle sustainability. Innovation could be the central driver to success in the future of the retail, as we saw in last week’s edition through the ‘Trending Store’ – stocking items popular on social media. Whatever the approach, it is clear traditional fashion retailers could take a page out of luxury fashion’s approach to battling the changing retail landscape.

Author

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Raj Ganatra

Associate Consultant

Luxury and Fashion Retail, Strategy and Innovation