It has been reported this week that strong trading results at both Burberry and Primark point to recovery at both ends of the retail market. Obviously this is good news for the sector generally (although tempered by today's announcement that economic recovery is stalling with growth of only 0.2% this quarter vs originally forecast 0.4% - Double-dip recession fears )
But there are things we can deduce from the booming sales for these two retailers specifically. They are about as far away from each other as is humanly possibly in terms of product offering, pricing, target consumer and so on top and bottom of the market, but perhaps in a couple of ways they aren't so different after all. Clearly customers are still clothes shopping, but in a continuing uncertain market, with rising inflation, pay and job cuts etc, there is a need to be more savvy and spend our spare cash more carefully, which can be demonstrated with both retailers if we think about it.
Primark won the race to the bottom in terms of pricing, from the outset. With the range manufactured mostly in the Far East at very low cost, and a fast stock turn keeping in line with current fashion trends, Primark's USP is that they are incredibly cheap and you get a fair amount of trend for your buck. Yes the clothes are very disposable, but due to the price, and the fashionability, these tend not to be items we intend to hand down to our ancestors anyway. Primark also keep advertising costs minimal, because when you have a prominant high street presence (growing all the time) with a message that speaks for itself, and plenty of advocates, why bother?
And as such, when we want cheap fashionable clothes (which in a recession we inevitably do even more so than usual) we go to Primark.
On the other side of the coin, Burberry are doing particularly well in their outerwear, footwear and accessories categories. Yes luxury retailers are benefitting from a tourism boost due to exchange rates; but more importantly: Burberry have an incredibly strong brand. They have an untouchable reputation for quality: their popularity as a retailer for classic pieces is demonstrated by the performance of their outerwear, their macs and trench coats are a key part of the brand's heritage. Burberry also have a more recently acquired reputation for extremely desirable, fashionable classic garments (modelling their current range is the young celeb muse of the moment Emma Watson, I guess the Burberry check days are long forgotten), borne out by the popularity of their footwear and accessories: the lower price point/entry level product typically bought by fashion conscious and younger customers who can't afford £1000 on a dress yet still want to buy into the brand.
So they also have a USP- for those with a higher budget, Burberry is the go-to luxury brand for quality, style and sheer convetability. Those who want 'investment pieces' (which again, in a recession we do) shop at Burberry.
Finally, this suggests that there is still money to be made on the high street, we are still shopping (Keep Calm and Carry on and all that) but we are being more selective and going for brands with something unique to offer us... The inevitable next question is: where does this leave the mid-market brands? In a crowded sector of the market that has seen a number of recent casualties, these retailers will have to try extra hard to find the point of difference that will keep us coming back for more.
I wonder what that will be...
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