By Ian Smart
The strong showing by retail and consumer brands in the Top Track 250 is a welcome piece of good news from a browbeaten sector. With the turmoil on Britain’s high streets, it is perhaps unsurprising that the success of the Top Track companies has come from embracing other sales channels and overseas expansions.
Among the examples showcased within Top Track 250, are Boden, a clothing retailer that built its proposition around catalogues but has since expanded successfully online, and through concessions and dedicated shops. While shoe retailer, Kurt Geiger, has focussed its energies on expanding internationally, and now boasts 320 stores and concessions in 24 countries around the world, plus a recently announced strategic partnership to run all of Canadian footwear retailer Aldo’s concessions in the UK and Ireland.
Multi-channel offerings are now common across the retail and consumer sectors in the UK. But the internationalisation seen in the Top Track 250 isn’t reflected across the wider sector. Our research among 152 mid market companies in this sector found that they were lagging behind other sectors in doing business overseas, and that a significant 43% believed their leadership teams had been put off international expansion by Brexit.
The strategies of pursuing new sales channels and overseas markets have proved lucrative for the Top Track 250, but they won’t be right for all companies in the retail and consumer sector, and are not without their challenges.
An online proposition creates some significant logistical problems, notably in getting the goods the last few miles to the customer’s door within tight timeframe. In some cases, the cost per delivered item for an online proposition can turn out to be higher than selling it in store. And running an online model alongside high street stores creates two distribution models with all the associated complexities and costs.
To succeed online, speed and efficiency of operation are all important. You need to ensure that products can be reliably delivered and easily returned.
When it comes to internationalising, the lack of domestic brands prioritising foreign markets and the limited number of internationalised British brands still in private hands suggests that caution is needed. Foreign consumers may have very different tastes and there will be many challenges to moving abroad, which could take your management’s attention away from the detail of running the domestic business.
If you already have an online presence, one useful way to test the scale of opportunity in a new country is to localise your website and promote it. Real interest from the targeted country will allow you to move with more confidence and be useful leverage when negotiating with local companies.
Finding an in-country partner can help you understand the local market and build your brand and presence, but beware, one that is good with bricks and mortar may not be good online. We’d suggest consumer companies look for a partner with a portfolio of other brands, that can demonstrate success and has the infrastructure and empathy to support your individual brand.
As with any sector looking to internationalise, we would also stress the importance of understanding the end customer’s preferences in different markets and then assessing the optimum distribution channel for your business and its products to address those customer needs.
For consumer and retail companies aspiring to join the ranks of the Top Track 250, there is sadly no single strategy that will guarantee success. My advice is to have a clear view of what your brand stands for and be rigid and consistent with your customers offering them inspiring and innovative products and services, while remaining agile to changes in market sentiment. That’s partly rigid, partly innovative, partly agile and fully profitable.
If you would like to talk to our Growth 365 team about growing your business, please get in touch.