Tuesday 9 February 2010

You always need more cushions: H&M extends its range to Homewares....

Retail Week reports today that H&M intends to extend its reach to Homewares with a range of living room, bedroom, bathroom and kitchen to be launched in the UK...

Although the retailer's sales grew by an impressive 15% last year, LFL sales had slowed, so this venture presents a new opportunity for growth in the coming year, and is likely to compete with the likes of fellow fashion retailers Next and Zara who have both enjoyed success selling home furnishings in addition to their fashion offering.

Whilst this may come as a little bit of a surprise to those who assumed that a value/volume retailer like H&M would want to concentrate on what it does best, I think we will see more of this in the year to come i.e. fashion retailers diversifying and broadening their product offering to incorporate homewares.

There has been a noticeable trend for more fashionability in home furnishings in recent times- gone are the days where bed linen and cushion choices offered limited choice and limited opportunity to channel one's inner 'interior designer'. These days we more commonly see fashion magazines and style supplements regularly featuring stylish modern homewares, and new home trends. Of course there are already a plethora of home style magazines featuring increasingly trend driven spreads, such as the 'boutique hotel' style beloved of those homemakers who bow at the throne of interior design deities such as Kelly Hoppen... And yet there is still a definite gap in the market for trendy credible home furnishing at high street prices.

So this market offers a great opportunity for fashion retailers to broaden their range, and thus their potential sales, whilst grabbing market share from less forward-thinking competitors, using their existing retail and fashion expertise in a slightly new way.

Fashion retailers succeed when they have an unbeatable eye for future trends, a keen design eye, an innate sense of appropriate pricing, and a speedy and efficient supply chain to bring the correct volume of  products to market quickly. Where they can already do that, cushions and bed linen will be a easy win...

Saturday 6 February 2010

North South Divide: Differential Pricing

The latest topic to be discussed in hushed tones around the retail industry?
Differential Pricing... Its success in Europe is causing retailers to once more ask themselves why they charge the same for a product regardess of where it is sold....

If retailers were able to differentiate on price based on location, such that your tshirt would cost more in London than it would in Manchester, they argue that this would allow them to optimise margin (well it costs more to run a shop in London..yada yada) and stock position- as products would be more appropriately priced for the region i.e. your t-shirt wouldn't be flying off shelves in Oxford St because it was cheap, and sitting on the same shelves in Leeds because it was a bit pricey.. Hmmm... I don't think so..

Despite the hopes of retailers (and the software suppliers trying to sell them price optimisation tools) Region or location based differential pricing will not fly in the UK. It is not customer facing and it places certain customers at a disadvantage simply because of the location of their nearest store, and especially in the current cut-throat climate, this is absolutely un-palatable. As a customer, I simply don't care about the local variations in operational costs- and I shouldn't have to.
A shopper in London is not automatically more wealthy than shoppers in other parts of the UK ( no sniggers please), so if they are asked to pay a higher price simply because they are closer to Westfield, where rents are higher, than the Trafford Centre, they are being discriminated against, and I can't think of a quicker way to lose a customer's trust, and yes, custom....

This is not to say that differential pricing based on channel is not possible and indeed for some sectors of the industry, probable. With regard to certain product categories, customers may be comfortable with paying a premium for the full shopping experience that buying that product in-store offers, with a cheaper price for an e-commerce channel to reflect the much lwoer over-heads of that business arm (although you will pay more for the delivery anyway). Yet in other product sectors, and probably for large national retailers also, even this is not seen as customer facing enough, and the importance of consistency across all platforms- product, pricing, brand message etc is crucial overall, to growing business and loyalty, regardless of additional margin opportunities that this may preclude.

Long and the short of it? Businesses considering this should think very carefully about what their customers will and won't find acceptable, and progress with caution indeed.

I suggest that retailers will have to find much smarter ways than this to optimise profit and stock without impacting negatively upon the all important retail experience..