For British fashion retailers today, the only certainty seems to be uncertainty. In this climate of currency fluctuations, ever-tighter margins, and growing competition from pure-play brands, how can retailers grow and thrive online?
There’s no escaping the reality of the financial markets’ reaction to the EU referendum. In the wake of the referendum, the pound remains at an almost 31-year low, and currency fluctuations are having serious implications for manufacturing and buying costs.
The fall in the pound means that manufacturing and sourcing clothing overseas has become a lot pricier. And – with more than 70% of their stock purchased in US dollars – the likes of M&S [IRDX RMAS], New Look [IRDX RNEW], and Matalan [IRDX RMAT] are particularly vulnerable.
On top of this, retailers are bracing themselves for higher duties and taxes connected with importing from and selling to overseas markets.
Fashion retailer Next [IRDX RNXT] has already suggested that it will need to bump product prices by around 5% as a result, and others are likely to follow or take other measures to protect their margins.
Whilst Asos [IRDX RASO] has vowed not to raise its prices and to seek more cost-effective practices, John Lewis [IRDX RJLW] has set a £30 minimum order level for its free ‘click and collect’ service to help minimise operational costs.
Is digital strategy still a priority?
As fashion retailers grapple to understand the longer-term impact that Brexit could have on their businesses, some may be asking whether their digital investment should take a backseat.
The answer is ‘no’, because investing in digital and online strategy is what will help retailers differentiate through the experiences they provide. And with recent surveys suggesting that 63% of customers are planning to spend the same on fashion in 2017 as they did in 2016, demand from consumers is still high – and their expectations cannot be ignored.
Sector leader Asos has planned to double its capital expenditure to nearly £170 million in 2016 / 2017 in order to invest heavily in digital, technology and operational infrastructure. Meanwhile ‘affordable luxury’ brand Radley [IRDX RRAD] is an inspiring example of how to grow through global ecommerce expansion. Investment in its online business and international growth was the impetus behind a 4% revenue rise to £67.1 million in the year to 30 April 2016 and the retailer’s fourth consecutive Christmas with an increase in comparable sales.
Radley has proven that developing a digital strategy and investing in it pays off. Its online sales grew 20% in the year to 30 April 2016 with its products now shipping to 47 countries. Aiming to double its global…