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Winners in retail 2018

Tuesday 4 December 2018 Data Insight & AnalyticsRetail ConsultancyShopping Behaviour

Helen Brewster's picture
By Helen Brewster

Stories of retail success have been few and far between this year, instead the news has been dominated by CVAs and the struggles of well-known household brands such as M&S and House of Fraser. However, hidden amongst all the doom and gloom, there are examples of brands which have prospered within what has been a very challenging year for UK retail. With Christmas around the corner, CACI take a look at brands which have been successful and how they have done this.

 

Dr. Martens

There are many who feel that traditional brands such as John Lewis and M&S have become out of touch with their consumers, not adapting to consumer trends fast enough to stay ahead of the game. Dr Martens is a good example of a brand which has used heritage to work to its favour, with the brand recently posting a 20 percent increase in group revenue and opening 25 new stores worldwide. The iconic footwear brand is entwined with British culture, but why has 2018 proved to be such a successful year? Its resurgence is no doubt due in part to brand familiarity and feelings of nostalgia it evokes for so many, with the popular trends seen in the 80s and 90s seeing a resurgence. Their work with designers including the Japanese brand Neighbourhood and instigating collaborations with places like the Tate Modern, means they have adapted to stay current and appealing to new groups, whilst staying aligned to their current shoppers.

 

Brand collaboration

Designer collaborations with mass retailers are by no means new, they have always been a way to gain greater market exposure and create a buzz around the brand. In a market where consumers are inundated with choice, brands are having to fight harder than ever to capture their attention. These collaborations add an element of newness and excitement, enabling brands to stay current, although their success is dependent on both brands being able to benefit from the existing market of the other. A good example of this is the collaboration between Louis Vuitton and Supreme, which allowed a luxury brand to tap into the millennial market, the demographic which every brand is trying to keep up with.

 

Mixed Use Schemes

Uniqueness is another key element of success, and this can be translated in retail through independent retailers who are offering something different to larger chains. British Land, who acquired Woolwich High Street this year have said the regeneration of the area will be a mixed used scheme that will favour independent retailers over big-name brands. This is a UK wide trend we have seen grow over the last few years. Pop up stores are a way for retailers to offer a unique shopping experience creating a sense of exclusivity with their ‘here today, gone tomorrow’ type concept.

Across the UK we are increasingly starting to see more mixed-use schemes being developed, these schemes incorporate retail alongside other elements such as residential and commercial offices. These schemes are able to take more of a risk with the retail mix because of income from the office and residential space, allowing for a more original mix. They are proving to be a popular location for brands, mainly because there is a guaranteed stream of custom from both residents and workers. They are also able to imbed themselves into a community and build a connection with consumers. Kings Cross is just one of many examples of an effective mixed use scheme, with the opening of Coal Drops Yard allowing big name brands and independent boutiques to work side by side.

 

Health and Beauty

Whilst many fashion retailers may have struggled, the health and beauty industry has prospered over the last few years. 2018 in particular has seen brands like Glossier and Fenty take on the likes of consumer favourites Lancôme and Estée Lauder. Many of these brands have a strong legacy in the beauty industry, so how are these new start-up brands managing to shake things up? Their products are customer focused and focus on authenticity and inclusiveness rather than expertise, but most importantly experience is at the forefront of their strategy, rather than simply being transactional. This trend has been picked up by retail destinations across the UK, with the presence of health and beauty stores and services increasing.

Based on our spend forecast, annual spend per person on health and beauty is set to see a 19% increase over the next four years, reaching a market size of £40 billion by 2022. Meadowhall shopping centre in Sheffield is just one example of a retail destination to capitalise on this growing trend. They now offer a range of beauty services such as Barber Barber and iBrow & Beauty, alongside opening a Therapie Clinic which will offer consumers a wide range of non-surgical, skin and body treatments. Similarly, the Next store within Manchester Arndale has leased space to local grooming brand Mad Guyz Barbershop.

Annual spend per person on health and beauty is set to see a 19% increase over the next four years, reaching a market size of £40 billion by 2022.

Dishoom, Padella and Hoppers

It is not only retail brands which have struggled this year, mid-market restaurants such as Byron Burger and Jamie’s Italian are amongst those who have announced plans to close several sites. This is no doubt heavily influenced by the unusually hot British summer and events including the World Cup and Royal Wedding which triggered increased spend on food and drink. Nowadays with the convenience element of Just Eat and Deliveroo, and an increasing number of restaurant brands launching products into supermarkets, consumers are increasingly able to have a dining out experience in the comfort of their own homes. Successful restaurants must offer something different, new and most importantly worthwhile for people to venture out for. Brands such as Dishoom, Padella and Hoppers have all triumphed, with people willing to queue hours for a spot. Those that fail have often over extended, lost sight of their customer or failed to adapt in a rapid market.

Catering spend during the summer of 2018 was at the highest it has been in 5 years.

So what is their key to success? As with retailers, these restaurants have put the customer at the heart of what they do and most importantly they are distinctive, unlike many of the mid-market restaurants. Independent or smaller chain restaurants are associated with better and more personalised service and often better quality food. Alongside this, Instagram has had a substantial impact on the way we eat. We now live amongst the ‘Instagram generation’, where consumers not only expect great food and great service but they also expect great photos, something which rewards innovation and uniqueness.

 

Hawker House, Flat Iron Square and Dinerama

Pop-up spaces are a way to drive experience amongst consumers. Hawker House, Flat Iron Square and Dinerama are all examples of this. Using this approach is a creative way for retail centres to engage with consumers as it provides a unique experience. Feast Canteen at Kings Mall Hammersmith is an example of how a retail centre has incorporated this concept, offering five pop up restaurants and rotating them to give shoppers a new culinary experience regularly. This approach is beneficial for both the landlords and caterers. For the caterers the short lease means that they pay less rent, and there is lower commitment and less risk overall. For landlords, although it may be a slightly risky approach, these pop-up spaces offer something unique and give shoppers another reason to return.

 

Final word

The troubles experienced by restaurants and retailers this year are not a result of fickle consumers, but rather that brands are not reflecting their needs. The retailers that have championed in 2018 are those that have put the consumer first.

CACI can help you better understand your customers so you too can share the success like the brands that have won in 2018. Get in touch with our team of experts today.

 

Stories of retail success have been few and far between this year. However, hidden amongst all the doom and gloom, there are examples of brands which have prospered in what has been a very challenging year for UK retail.

Winners in retail 2018