British Retail Consortium Retail Symposium 2011
Speaking at the recent BRC Retail Symposium 2011 in London Philip Clarke, chief executive of Tesco, put forward a strong case for multi-channel being a key component of what he called an era of ‘new retailing’.
He believes the internet and the increasing use of smart-phones has “seeped into mankind’s behaviour” and that whereas the channel might have previously been in a silo this was no longer the case.
“By 2020 all under 21’s will see it as integral to their lives and successful retailers need to be multi-channel. The offer online must be at least as good as that on the high street,” says Clarke.
Although Tesco is the largest and most profitable online grocery firm in the world he says he regards multi-channel as the real “big opportunity where the stores support the online offer”. Integral to this is Click & Collect, which for non-food goods will be extended into 600 stores by the end of the year. Clothing will next month be added to this service and following a successful trial Clarke confirmed food will be the next category for Click & Collect.
The online grocery proposition is also being pushed out to other countries with Ireland and Korea soon to be followed by Prague and then Warsaw in 2012. Plans are also afoot for Shanghai, Bangkok, Budapest and Bratislava.
Back on home soil Clarke believes this ‘new retailing’ era of multi-channel “does not spell the end of high street stores” even though the larger stores within the group are more integral to the cross-channel model than its smaller high street formats. “People will always want to go to shops. There is absolutely a vital role for good food shops [on the high street] for those people unable to travel.”
He says he therefore looks forward to contributing to the wider debate on the future of the high street in the review headed up by Mary Portas. Andy Clarke, chief executive of Asda, echoes this view and suggests to her that it “might be a good idea to talk to some [of us] guys...it’s a reasonable place to start”.
However, he says the higher rents on high streets compared with out-of-town locations continues to work against town centres. Again, in-line with Tesco, he highlights the “reasonably stellar” growth being experienced online and that stores were playing a role in this because Click & Collect was a vital ingredient.
“Only 30 stores do not have this for clothes and general merchandise and it will be in 500 stores when we convert the [acquired] Netto shops,” he says. Such has been the success of this multi-channel strategy that Clarke reveals some of the UK team has been sent over to the US to help parent company Wal-Mart develop its cross-channel model.
Although Waitrose is also taking its online offer seriously – following the re-launch of its website in March, with delivery provided within the M25 – the core of the group’s strategy is around its stores estate.
Mark Price, managing director of Waitrose, revealed a raft of initiatives to delegates including increasing the number of new product lines hitting stores – over the past year this has reached 2,500 including a range from Heston Blumenthal – with a doubling in the number of people in its development area.
There has also been a push this year into convenience with 150 new ‘Good to Go’ lines, which fits well with the group’s objective of growing its base of convenience stores from a current 20 to 42 by the year-end as the ‘Little Waitrose’ concept is rolled-out. A healthy range ‘Love Life’ of 270 lines has also hit the company’s stores this year.
The marketing of these new products has also been upped, as part of an overall ‘up-weighting’ of marketing expenditure of 80 per cent, which has included the launch of a Waitrose newspaper.
Another area of focus is hospitality, with plans to have cafes in a third of Waitrose stores by the end of the year and an upgrade given to its existing units. “There is no doubt about the increasing importance of cafes even though it is questionable how you use in-store space,” suggests Price.
He also outlined the continued push by the company into strategic partnerships and highlights the existing arrangements with Boots and Welcome Break as well as the possibility of working with Shell on its forecourts.
One key element of the success of Waitrose over the past couple of years has been the introduction of its lower-priced Essentials range that Price says enabled existing customers to trade down and attracted new customers into its stores.
There has been no requirement to introduce such a value-led tier into Harrods as Michael Ward, chief executive of Harrods, gave an ebullient presentation to delegates highlighting the continued buoyancy of the luxury sector.
“Recent growth has been phenomenal, based on the affluent classes, but also on absolutely brilliant marketing. I’m very sceptical of the Gok Wan type programmes showing the high street versus luxury goods. The high street has no real chance. The continued search for aspiration will continue,” he suggests.
As a result he says he is “very bullish for luxury and Harrods”, especially as the current owners of the company have committed to increase capital expenditure on the flagship Knightsbridge store to record levels. The latest addition is a men’s shoe department with a private room dedicated to high-end purchases.
If any of this filters down to the high street it is that the more mainstream merchants have to up their game. Indira Thambiah, executive chairman of Multiyork Furniture, suggests it is no longer sensible to have a cookie-cutter approach to store openings.
“Every cluster of customers has different demands and for retailers with a small number of stores there is a need for differentiation from the bigger stores [groups] – and it won’t be on price,” she says.
Thambiah believes the differentiation should be more about community as there is a huge role to be played in bringing society back to the high street. However, she is critical of some independents who have failed the high street in the past: “We’ve had independents on the high street but they have not been good. If you are there then you need to be good.”
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