Mel's Musings: 7 August

    By Mel Galliwade, Mel Galliwade is a user researcher and culture lead attached to our London office.

    Mel Galliwade

    The conscious consumer is not only concerned about food waste, as clothing is on their mind. I think the only place to start this week’s Retail Roundup is with Mike Ashley. The announcement of Sports Direct’s annual results last week was very eventful, with several delays and a colourful analysis from Ashley claiming that unions have tried to “destroy the business”, CEOs and CFOs should be “drug tested”, and financial takeover advisors are chancers. The results then revealed a ‘surprise’ £614m tax bill from the Belgian authorities. The fact that no financial predictions were provided for next year may be indicative of confidence levels in previous acquisitions, such as House of Fraser. However, Ashley’s enthusiasm and confidence in his business can’t be faulted.

    Despite this financial turbulence, yesterday it was announced that Sports Direct bought Jack Wills for £12.8 million. Although the broader distribution network is something that Jack Wills may benefit from, it begs the question of whether this is one too many ill-fitting strings that Mike Ashley has tried to add to his retail bow. Amidst the chaos that he seems to surround himself with, he has hidden the strategic method to his acquisition madness very well. Either that, or there will be a surprise twist just around the corner…

    Moving on to a retailer with a transparent strategy, Co-op revealed two big technology plans this week to future-proof itself in an ever-changing retail market. It announced the first stage of its retail business transformation. The new Cloud-based supplier collaboration portal called ‘Co-opConnect’ aims to improve ranging, stock holding, availability and forecasting accuracy. With the market’s current emphasis on reducing food waste and the Co-op positioning itself as a front-runner grocer in this space, I expect one of Co-opConnect’s primary business objectives is to reduce food waste through the improvement of forecasting accuracy. If this proves to be a success after its first 300 SKU pilot, I’m sure we’ll begin to see other retailers looking to take the lessons learned and implement something similar.

    We have impressively seen the Co-op achieve this trial while maintaining their focus on customer convenience by introducing a pay-in-aisle mobile app. This allows customers to scan and pay for products wherever they are in the store. It will undoubtedly increase customer satisfaction through providing the basic but essential things a positive shopping experience is based on; speed, ease and convenience. But these benefits will need to be considered in tandem with the wider security implications and measurements the Co-op will need to put in place to minimise theft. This may have been a reason as to why Tesco didn’t take their 2018 colleague in-aisle payment trial any further. However, considering that Co-op is trialling this directly in stores indicates that they either have a mitigation plan in place or think of this risk as minimal and therefore not a concern.

    It would also appear that the conscious consumer is not only concerned about food waste, as clothing is on their mind. This is something especially popular with millennials and gen z who are astutely aware of their environmental impact. This has seen a rise in the rental economy, of which Urban Outfitters is the latest retailer to jump on board. Last week, they launched clothing rental company Nuuly. This will allow its subscribers, paying $88 per month, to rent clothes from brands included in URBNs portfolio including Urban Outfitters, Anthropologie and Free People.

    I think this is a sensible move from the predominantly millennial and gen z focused clothing retailer as they have created the opportunity to expand their customer base through enabling outfit rentals for one-off occasions such as parties, weddings or celebrations. This strategy reflects the success of the rental economy that companies such as Rent the Runway have already proven. It also sets them as a leader in changing the face of ‘fast fashion’ by enabling customers behavioural change. I’m intrigued to see how this plays out and what the demand will be like for an ever-changing rental wardrobe from the typical URBN group consumer.

    If you’re interested in hearing more about the retail unicorn Rent the Runway, give a listen to our latest BJSS: On Retail podcast here, where we discuss what made it such a success amongst other unicorns of 2018.