Asos On Target For £1 Billion

Online fashion retailer Asos is on target to achieve £1 billion in sales across its five main markets by 2015, it said this morning. 

Total group sales soared 33 per cent to £359.7 million in the six months to Feb 28. 

It said profit rose 11 per cent to £25.7 million, in line with forecasts. 

The group is investing in international growth, boosting growth, but has said young British consumers are under pressure. 

'Our International roll-out continues and our £1 billion sales ambition for the group is firmly in our sights,'  said chief executive Nick Robertson.

Tags: Asos, Asos.com. ecommerce, internet shopping, etail, web retailing, online shopping

Tesco Says 'Barely Scratched Surface' Of Mobile

Supermarket giant Tesco's newly appointed online boss has said the retail industry has only begun to seize the of the opportunities of mobile technology. 

Group multichannel director Robin Terrell, who arrived two months ago, spoke out yesterday for the first time in a blog on the supermarket's web site. 

He said: 'As an industry, we have barely scratched the surface.'

He said the break-through for mobile technology in retail came in 2010. 'Every year since 1999 was going to be the year of the mobile. In 2010 it probably was, but even then retailers were only thinking about how to sell from a mobile device.' 

'Subsequently, retailers have started to experiment with mobile and tablets as customer engagement devices. Some have started integrating loyalty schemes and trialled various methods for interaction in the physical environment, but as an industry, we have barely scratched the surface,' he said. 

Terrell was previously multichannel and international director at House of Fraser as  which has been credited among traditional retailers as having a forward thinking online strategy. He was managing director of John Lewis Direct for two years until 2010 and was at Amazon for six years. 

Although he stops short about being specific on Tesco's strategy, he goes on to say: 'Customers have a relationship with their mobile phones and tablets that is closer and more intimate than any other technology.' 

'It’s powerful technology too and through harnessing it we will be able to offer a truly personalised, location aware experience that will genuinely add value for customers. This will be through the whole journey from inspiration, discovery, research, the purchase decision and ultimately payment as well – across all channels. It will be transformational for all of retail, not just online – it will change the whole shopping experience,' he said. 

'Mobile is also challenging many traditional ways of thinking, for example, our whole design philosophy is changing so that instead of designing for traditional keyboard and mouse based interactions, we design for touch first. Beyond the UK, in many countries, customers will skip the PC era and go straight to mobile so this truly will transform the entire shopping experience worldwide.' he said.

Comment: The US Internet Sales Tax

Depending on which side of the fence you sit - and there are very few fence-sitters in this debate - the US internet sales tax is either incredibly simple or horrifically complex.

For store retailers battling against the likes of Amazon and politicians desperate to raise taxes the calculation is straightforward. In 2003 internet sales accounted for 1.6 per cent of total retail sales. By last year that figure was 5.2 per cent or $226 billion (£146 billion).

If the Marketplace Fairness Bill was to go ahead it would add a much needed $11.4 billion to the tax receipts overnight, estimates from a University of Tennessee suggest. Others suggest it could be more like $22 billion. It will also make Joe Public that little bit more likely to visit the store in the mall than to turn on his laptop.

The bill requires any business that makes $1 million or more a year in online sales to collect taxes and send them to the states where goods are delivered. Different states have different sales taxes and even different counties can have different specifications.

Ebay's chief executive John Donahoe said it will have a disproportionate effect on small businesses. It says the threshold should be raised to exempt online retail firms with of less than $10 million or fewer than 50 staff. 

In the UK the equivalent issue would be business rates. Although that is, on one level, possibly a gross oversimplification, there are many similarities. UK retailers pay disproportionately higher rates than their online counterparts. The imbalance is gaining political resonance among MPs and business groups representing retail stores – particularly small retailer lobby groups whose members are less likely to be ahead in the online game. The argument is: why in a digital age are business rates based on property, especially when that property itself is becoming a liability. Watch this space.

Back in the US, ABC news says that online sellers are legally obliged to be paying these taxes anyway but they rarely do. The political right, normally against new taxes, is therefore open to support the idea because this tax would not be ‘new’. 

In many states, consumers are expected to settle the bill when they file their state tax returns. But authorities complain that few internet shoppers comply with the requirement and online firms have hitherto shirked responsibility saying they should not pay taxes in states where they have no employees or physical presence. In 2008, Jeff Bezos of Amazon said of pressure to force web retailers to comply: ‘It’s not fair.'

On Thursday the Senate took its second vote in a week on the topic and passed it 63-30. However, it delayed the final vote until May 6 when they return from a week’s holiday.

Even with lobbying from firms and shoppers it seems unlikely that will swing back in such a short space of time, commentators say. 

Amazon, unlike its rival eBay, has now emerged as an unlikely supporter. Commentators suggest that, because Amazon has been busy building more and more same-day delivery centres in an increasing number of states, it can't avoid the tax in many places. So, despite benefiting for years as smaller rivals are doing now, it may as well take the rest down with it. Although shopkeepers and analysts say its tacit support springs from the strategy is not now based on price but service such as delivery speed. Either way, they add, it is too late to suppress its dominance of Amazon.com on the retail landscape.

Bill Hughes of the Retail Industry Leaders Association, which represents about 200 of North America's biggest retailers including Wal-Mart, Target, Sears, Home Depot and Best Buy, said: ‘The overwhelmingly bipartisan support for levelling the playing field is rare in today's political environment and paves the way for a level playing field once and for all.’

However, because it looks like a new, additional tax from the outside - and possibly to many American citizens happy to be saving money on their online shopping - its supporters fear it may hit trouble after it passes through the Senate and into the House of Representatives.

One of the main sponsors of the bill, Steve Womack, a Representative from Arkansas, told the Associated Press there was ‘a lot of political difficulty getting through the fog of it looking like a tax increase.’

One analyst speaking to the Financial Times earlier in the week gave the bill only a 30 per cent chance of success.   

But while lobby groups like the National Retail Federation and national bricks and mortar retailers like Wal-Mart support the bill, online retailers led by eBay say the bill would tie internet firms up in complicated regulation.

It is already being labelled as anti-free market and is seen by the online community as potentially stifling growth in an innovative sector.

Some online retailers, including craft hub Etsy.com, have warned that the complications for smaller firms found to be over the $1 million hurdle could be disastrous and that the bill needs much more consideration before it continues. Althea Erickson, director of public policy for Etsy, said the $1 million mark is below federal definitions of small business.

Sunday tip: How To Cut Returns - Part 1

Over the next few weeks we'll be looking at how to cut down on returns at your online shop before you’ve even agreed a sale.

Every site will have products returned. The important approach is to be clear about what you are selling and what agreement you and the customer are about to enter. Clearly this area is potentially more fraught for some businesses than others but there are general rules to follow that could help avoid too many headaches.

1. “Honesty is the best policy – when there is money in it.” (Mark Twain 1835-1910) 

Mark Twain may have been forced to file for bankruptcy because of bad business decisions. But he was right on this tweak to the original quote from Benjamin Franklin. Honesty, clarity, detail and a friendly returns policy are essential to online selling.

We all know how frustrating it can be to discover the small print only when you try to return a product. That rarely leaves you feel like buying more from the same company.

Make your terms abundantly clear and easy to understand. Boden.co.uk has a frank and generous returns policy that would leave most customers feeling warm inside. If you are proud of your policies, plaster them prominently over your site. If you are not particularly proud of them – maybe ask yourself if you have adopted the right terms and conditions.

Asos.com has broken a few boundaries and is understandably proud of the fact it a) offers free worldwide delivery (clearly displayed at the top of its homepage):

And b) offers a year’s free delivery for £9.95 (here, clearly displayed on the opposite, right hand corner of the home page if you didn't believe us):

2. Keep your shop window clean:

Imagine bad pictures and poor explanations are the same as a dirty sweet shop window. Not only can it be an immediate turn off but customers will end up making bad decisions because they may not be in full receipt of the facts.

When it comes to visual information simplicity and expediency is rarely a bonus to customers even if it saves the seller a few minutes of his own time.

Videos are becoming increasingly popular (here is a great example from knickerpicker.com) but if you can’t manage that make sure you include photographs from the front, back, top, bottom, left and right if you feel its adding anything. Your customer won’t mind and if they’re tempted will most likely look at them all. Apart from anything else it shows you are taking the job seriously and is less of a warning sign to browsers that there may be other problems down the line.

If there are details worthy of note, take close-up photographs. Plug sockets in the back of equipment – take photographs. If there are imperfections on unique products take photographs and let your customer decide.

Online fitting rooms have become increasingly popular too but we’ll be looking more at that in coming weeks.

3. Let them look in the box

List all the product details. Your shopper is not an expert on the product and its specifications and won’t necessarily know that it isn't compatible with other equipment or has special cleaning instructions. They may hate taking products to the dry cleaners.

4. You love your customers – but how much?

Don’t just copy other people’s potentially bad policy habits. What is ‘normal’ is easy for big corporations and lawyers to hide behind but is not necessarily the same as good business practice.

You know some of your customers are simply going to take advantage of your good nature. But there is no need to start a war with the others.

Schuh.co.uk are among an increasing number of retailers offering a 365 day returns policy. Again, its made abundantly clear and prominently displayed in the top right hand corner of their web site along with free delivery and 10 per cent student discount boasts.

6. You really really love your customers – the painful question of free returns

Free returns are one of the latest frontiers in online retailing. Be brave and consider it inevitable. 

Evidence suggests that making as easy as possible for your customer to shop breeds loyalty and free returns are part of that package. 

Deal with the issue with confidence and make it clear – in a friendly way – that you are not prepared to be taken for granted. Tags or stickers are a useful way of doing this in some cases (I like the example that House of Fraser gave of 'Hats must have the returns poilcy swing ticket still attached' and there are specific and very understandable conditions laid down for other product types in the drop down menu under 'returning specific products'.)

For many products the distance selling regulations oblige sellers to allow a 7-day ‘cooling off’ period. Ebay does a good job of summing this up to its sellers:

So, consider extending the seven days and making your fee returns policy a selling point.

Most big companies now offer a 28 day return period while the UK’s distance selling regulations commits you to a 7-day full cancellation period.

7. Strike pre-emptively – give me the FAQs

Self-explanatory but we thought New Look’s Frequently Asked Questions section was simple and effective using an extensive drop down menu. You decide whether you agree with its answers or not.

We’ll be continuing this series next weekend so keep a look out. We’ll also be looking at some of the more interesting aspects of returns, returns policies and customer service over the coming weeks.

Tags: Asos, Asos.com, New Look, Schuh, Schuh.co.uk, Boden, Boden.co.uk, knickerpicker.com, Ebay, Ebay.co.uk, ecommerce, internet shopping, etail, web retailing, online shopping, catalogue retail

Date Set For US Online Tax Vote

A crucial vote in the US Senate on laws to impose sales taxes on internet retailers will take place on May 6.

The discussions over the past few weeks have caused increasingly vigorous debate. Internet retailers at present escape state sales taxes which bricks and mortar retailers and their representatives say gives them an unfair advantage. 

The Marketplace Fairness Bill has passed through two votes in the Senate since Monday with the second gaining a 63-30 majority. USA Today reported that meant a swing of 13 votes would be needed in the next vote to stop the bill in its tracks.

The bill would require online retailers to collect taxes on behalf of the state to which the package is delivered. Internet firms and anti-tax lobbyists have complained the law would be too complex and too costly to implement while stores groups have applauded the move.

Sales tax rates across states vary and some states, such as California, have been more active in trying to implement controls to tax internet selling than others. Food and prescription drugs are often exempt or taxed at a lower rate. 

Internet sales in the US last year were up 16 per cent to $226 billion (£146 billion), according to the Commerce Department.

Tags: The Marketplace Fairness Bill, state tax laws, the US Senate, ecommerce, internet shopping, etail, web retailing, online shopping

Amazon Market Share Grab

Online retail giant Amazon has announced a jump in sales as it launched new digital products and seized market share online.

Sales in the three months to the end of March increased 22 per cent to $16.07 billion (£10.41 billion) despite a profits slide. 

Amazon said it is investing in new products such as new versions of the Kindle and new online services and products. The aggressive expansion meant profits fell 37 per cent to $82 million (£54 million) in the quarter compared to the same period a year before.  

The performance was still better than analysts expectations. Its gross profit margin, which is closely watched by investment analysts, increased to 26.6 per cent from 24 per cent a year before.

Amazon came under fire again last week after Tim Waterstone said in an interview that its tax affairs were 'disgraceful'.

Tags: Amazon, Kindle, Tim Waterstone, ecommerce, internet shopping, etail, web retailing, online shopping, catalogue retail

Comment: Primark Rejects Online Selling

A deluge of updates from major firms in the past few weeks have been more than enough to illustrate that traditional firms are finally shaping up in the face of the internet.

The likes of Next and John Lewis that were early to the game are now being followed by Debenhams and other major retailers that have begun to make huge inroads into the market.

With the exception of one, that is. Primark said this week that online wasn't part of its strategy and it would instead focus on bigger stores to get more products in front of shoppers. 

That contrasts with other retailers who are beginning to question their expansion plans and drawing up multichannel strategies. Tesco said it had accounted for a write-down of £800 million to account for land and property that would now not be developed because its expansion plans had shrunk. Others like B&Q have also said they plan to open fewer stores. 

But Primark's decision is not such a difficult one to understand. Other value retailers have struggled to make the numbers stack up. Asda, for example, initially struggled to make sense of selling cheap clothes online. Andy Bond, chief executive until 2010 and who had previously ran its clothing brand George, doubted the logic but relented in 2008 and George at Asda launched its web site.

Primark: doesn't want a web site

Low-priced clothes are often lower margin. What's more, consumers in that market don't tend to buy in bulk so basket sizes are small. Charging is an option - which Asda now does on more or less all its online orders unless customers opt to pick up in store. But that then plays havoc with the low-end, Every Day Low Price proposition.

Other value retailers have suffered in the past year and it is easy to imagine that the online tidal wave being embraced by the middle market is a struggle for them to manage.

As for Primark, under pressure this week for a different reason following the collapse of a factory run by one of its suppliers, it is sticking to its guns. 

But a thought occurs. It is not long since the majority of high street clothing retailers dismissed the online revolution, some are only just catching up and others never did catch up.

Perhaps Primark feels it will never need to launch an online offer or perhaps it feels it can catch up quickly if it ever does. But these things do not happen overnight and there may come a time when its bullish comments this week rejecting online retail come back to haunt it. 

Tags: Next Directory, John Lewis department store, Debenhams, Asda, George at Asda, Primark, ecommerce, internet shopping, etail, web retailing, online shopping, catalogue retail

M&S to Open UK's Biggest Online Warehouse

Marks & Spencer will next month officially open the UK's biggest online distribution warehouse in the latest part of its strategy to boost internet sales.

The 900,000 square foot 'fully automated' warehouse in Castle Donnington in Leicestershire will employ 1,000 staff and is expected to distribute 2 million clothing and home products a week. The launch comes ahead of next year's crucial split with its internet partner Amazon which runs its website. 

Executives at Marks & Spencer, Britain's biggest clothing retailer, have complained the partnership has held back the pace of online growth.

The warehouse is equivalent to 11 Wembley-sized football pitches. The site has been chosen for its central location, has a freight rail terminal nearby and is also close to the East Midlands Airport, the UK's second biggest cargo airport.  

Marks & Spencer is expected to reveal over the next few weeks that online sales reached about £650 million in the year to the end of March. Total clothing and home sales are about £4.3 billion. Department store John Lewis said earlier this week that online sales reached £1 billion on a 52-week rolling basis against total sales of around £4 billion.

To reach that landmark, Marks & Spencer would need to increase sales by 25 per cent a year for the next two years. It has been opening foreign language web sites in countries such as France, Spain, Germany, Austria, Belgium and Holland. It has also said it will open company-owned stores to support the strategy when appropriate. Most of the firm's overseas stores are run by franchise partners.

The warehouse will comply with Marks & Spencer's Plan A sustainability strategy and it aims to recruit a proportion of staff with disabilities and health problems.

Tags: Marks & Spencer, Amazon, Castle Donnington, John Lewis, ecommerce, internet shopping, etail, web retailing, online shopping, catalogue retail

N Brown Web Sales Rise 15%

Catalogue giant N Brown said its internet sales rose 15 per cent after it invested in its web sites and offered some products exclusively on the internet.

The retailer, whose brands include Simply Be, Figleaves and Jacamo, said internet sales in the year to March 2 rose to £424 million and now account for 55 per cent of group sales. The percentage of online sales has increased by about 5 per cent a year for the past eight years, it said.

It added mobile friendly sites to all its businesses by the financial year-end after an 'explosion' of traffic via mobile devices. Mobile now accounts for 26 per cent of all online sessions and 23 per cent of value transacted. It said newer methods of recruitment such as 'pay per click' were bringing in an overall younger shopper. However, it also said there is evidence that older consumers are adapting to tablet computers at an increasing rate. That meant it may hasten its move from paper catalogues to digital in the coming years, the company said.

It also said its web sites had allowed it to be more flexible. The group launched 84,000 product options only available on its web sites and not featured in its catalogues. That contributed to about £42 million of revenue.

Simply Yours: owner N Brown targets
customers with fuller figures online

The Manchester-based firm has web sites in Germany, Ireland and the US. It traditionally targets older, over-50s shoppers but has more recently focused on its brands targeting younger internet-savvy consumers. It also sells clothes in larger sizes and its Simply Be business includes sizes from 14 to 32.

Total sales at the business grew 6 per cent to £784.7 million. N Brown has been launching web sites overseas and has opened stores to compliment its online and catalogue divisions 'to be truly multichannel,' it said. It is testing the strategy for its younger brands aimed at the consumers in their 30s and 40s. During the year it opened a further five Simply Be women's clothing stores and in three of those included space for a Jacamo range.

'We are in the process of evaluating the incrementality of these sales, the positive halo effect on online sales and the projected return on capital achievable. Assuming this evaluation is positive we will look to open a limited number of stores in high footfall locations,' the company said.

It invested £25 million during the year online and on new stores. As a result profit grew by only 2.6 per cent to £96.4 million. Dedicated websites for Marisota and Jacamo are being established in the US to complement its existing Simply Be and Figleaves businesses.

Brands also include Simply Yours, Fashion World, Marisota, High & Mighty, JD Williams, Fifty Plus, Premier Man, Julipa, Naturally Close and The Brilliant Gift Shop. It uses celebrities such as Freddie Flintoff, Claire Sweeney and Claire Richards to promote its brands.


Tags: N Brown, Simply Be, Figleaves, Marisota, Jacamo, High & Mighty, Fashion World,  Marisota, High & Mighty, JD Williams, Fifty Plus, Premier Man, Julipa, Naturally Close, The Brilliant Goft Shop, Freddie Flintoff, Claire Sweeney, Claire Richards, ecommerce, internet shopping, etail, web retailing, online shopping, catalogue retail

Asda Plans Same-Day Food 'Collect' Service

Britain’s second biggest supermarket Asda plans to let shoppers collect groceries on the same day as the order is placed.

It will become the first major supermarket in Britain to offer the service as it seeks to step ahead of its key rivals Sainsbury’s and Tesco. The idea will begin as a trial this month and is part of a £700 million investment drive in its digital strategy and store opening program.

Asda, owned by US retail giant Walmart, is also planning to introduce a non-grocery ‘click and collect’ service to all its 568 stores. The number of its sites offering the click and collect service for groceries will doube this year to 200.

It is also establishing collection points away from stores at sites such as Asda petrol stations, a business park in Reading and a park-and-ride facility in Nottingham. Meanwhile, Asda has launched a ‘drive through’ service in York that allows customers to remain in their car, alert staff using their mobile phones and wait for a member of staff to load shopping into their car. nIt has also considered introducing the service at other busy locations such as train stations. 

‘By focusing on their needs through accelerating our investment in the technology and infrastructure to make shopping more convenient, customers can shop for what they want, when they want it,’ said Asda chief executive Andy Clarke.

Last month Asda opened its third purpose built home shopping facility in Nottingham last month employing 600 staff. The 120,000 square foot ‘dark’ store is laid out in a similar way to a standard store but is not open to customers. It includes a team of bakers preparing bread from 4am, a home-baked pizza counter making products to order and extended delivery slots for customers in the area from 6am to 11pm.

Tags: Asda, Walmart, click and collect, online retail, ecommerce, internet shopping, etail, web retailing, superamrkets, Sainsbury's, Tesco

Online Tax in the Political Spotlight

More powers to impose greater tax online shopping in the US took a step closer to reality last night.

A bill designed to allow individual states to impose sales taxes on transactions even though the firms themselves may not have a physical presence in the area, according to an article in the Financial Times this morning.

The move has received support from traditional US retailers and it may attract the attention of politicians on this side of the channel currently examining the woes of the high street. A Department for Business Innovation and Skills Select Committee has invited comments from retailers and other interested parties to an inquiry into the retail sector and online shopping has been highlighted as a specific area of interest.

In one of its five key areas of concern the Committee said last month it wanted to examine the 'impact of online sales and direct sales on high street retailers'. The deadline for contributions passed last Monday, as reported here two weeks ago.

There have been growing calls in Britain from independent retailers for a 'level playing field' on tax and the issue is fast becoming central to the debate on the declining high street. They have complained that successive business rate tax hikes on shops have been crippling as sales suffer in the recession. 

In the US, the Marketplace Fairness Act moved towards a vote in the Senate after receiving cross-party support last night to overcome a procedural hurdle, the FT said. It will allow states to collect sale taxes from shoppers in their regions in the same way as from physical stores. 

It has met with opposition from online retailers led by eBay and anti-tax lobbyists. 

Tags: Department for Business, Innovation and Skills Select Committee, online shopping, internet tax, ecommerce, etail, online retail, Marketplace Fairness Act, eBay, independent retailers, high street shops

Dixons slims its web business

Electricals giant Dixons has sold its Swedish online business in an effort to concentrate its web division into a more focused operation.

It has agreed to sell Webhallen to Norway's Komplett AS for £14 million (SEK140 million) and will complete the transaction next month. Dixons' main businesses are Currys and PC World but has interests in most European countries. 

Webhallen mainly sells films, games and software from 10 stores and online. It is a subsidiary of Dixons struggling subsidiary Pixmania, an online conglomerate in which it acquired a majority stake seven years ago.

Dixons: focusing on web sites in key countries

In February, Dixons said it closed all its Pixmania stores and cut its online markets from 26 to 14 as it tries to turn the unprofitable business around. It closed about 30 stores across Spain, Portugal and Belgium and 10 shops in France although it said online operations would continue in those countries. 

The 12 online markets closed included Austria, Switzerland and countries across eastern Europe. 

The plan has also involved cutting back on peripheral Pixmania interests, including the sale of baby clothes and jewellery, to concentrate on consumer electronics. The strategy included buying the remaining minority stake in the Pixmania business last year to gain full control. 

Last month Dixons sold it public sector, business-to-business reselling division Equanet to Kelway eight years after buying the firm.

Dixons chief executive Sebastian James said the disposal of Webhallen was part of the groups 'material reorganisation'.

Tags: Dixons, Currys, PC World, Pixmania, Webhallen, Equanet, Kelway, Komplett AS, consumer electronics, ecommerce, internet shopping, etail, web retailing

John Lewis Online Sales Hit £1bn

Department store John Lewis has announced annual internet sales have exceeded £1 billion for the first time.  

The retailer said it has invested almost £40 million during a three year project to reorganise its internet division and offer. It said the strategy and increasing popularity of the site has meant it hit the £1 billion target a year early. 

Online director Mark Lewis, who joined the retailer in January from courtier service CollectPlus and formerly at eBay, said: 'Passing the £1 billion milestone an entire year ahead of schedule is a fantastic achievement for us and a reflection of how central online shopping has become for customers.'

It said the mark was exceeded on a 52-week rolling basis and represents gross sales, that is, including VAT. Total sales at the department store chain increased 13.5 per cent last year to £3.8 billion. Rival Debenhams said its multichannel sales in the year to September were £251 million on sales of £2.7 billion. Marks & Spencer's online sales are estimated to be about £650 in the year to March on total general merchandise sales of around £4.3 billion.

Tori diamond print dress from
Collection by John Lewis 

The web site now includes wish list function and the inclusion of a search history. John Lewis said mobile now counts for over 25 per cent of traffic to the site and it has also improved its mobile offer to mirror the design of the main site and plans to launch a new app later this year.

John Lewis IT director Paul Coby said: 'With sales at johnlewis.com up over 40 per cent in 2012 we are seeing an unprecedented pace of online growth and customers are making more demands on our website, than ever before.'

'The billion-pound success is a reflection of out strategy to put the customer at the hear of our online operations.Early testing at every stage of the build and inviting over 3 million customers to use our beta site before full launch has resulted in what we believe will be an outstanding experience and journey for customers,' he said.

Sunday Comment: Cracking Online Fashion’s Middle Market

Over the past two weeks we have seen updates from two of Britain’s biggest middle market clothing retailers: Debenhams and Marks & Spencer.

There were two conclusions to draw. Firstly, selling clothes on the high street has been a headache over recent months. But, more importantly, both companies seem to have materially set about the task of cracking the clothing sector's middle market online and are now making headway.

We’re going to be brutally honest here. The effort has been brewing for several years now but both need to acknowledge they were slow to respond and ask what that means for their ability to cope with future upheavals. 

Debenhams: online sales improving

The online threat, for only now is it becoming a realistic opportunity for both retailers, can only be described as a juggernaut heading towards Britain’s high streets and like proverbial rabbits too many retailers were caught in the headlights.

In 2007, Debenhams mentioned the word ‘internet’ just seven times in its annual report after floating on the stock market a year earlier (the word ‘online’ didn't feature at all). Clearly its private equity owners hadn't put a great deal of thought into the problem ahead of the stock market listing of the firm in 2006. By 2008, with profits on the wane and amid the worst financial crisis for decades, in the annual report published three months after the collapse of Lehman’s on December 10 the word ‘online’ had crept in 27 times. Against total sales of around £2.3 billion, internet sales were £42 million rising to £55 million in 2009. Still a slow burner but fear, it might appear, is a great catalyst for change.

It is difficult to gauge exactly why 2008 was the time high street boardrooms of Britain were suddenly dazzled by the online opportunity. Certainly store sales began to suffer amid the banking crisis and the possibilities of this new revenue stream had become all the more pressing. But the successes of internet pure-plays like Asos and the increasing talk among catalogue firms like Argos, N Brown and the former Littlewoods group Shop Direct about the online opportunity was becoming more prevalent. 

But, and let’s be honest about this, £55 million online sales at Debenhams is barely more than a large store – and that was 2009. 

But last week its online performance appeared to be more in line with the balance of stores versus direct sales. Debenhams said its online sales rose 46.2 per cent to £194.4 million in the six months to March 2 which it pointed out beat total online market growth of around 13 per cent.

Multichannel sales in the period were 12.7 per cent of total sales – not far off estimates of 14 or 15 per cent for online versus total sales in the clothing industry as a whole. That compares to The group said its 'medium-term' annual target is £600 million - about a quarter of its current sales. 

Rival Marks & Spencer is a little behind the curve being set by Debenhams but beginning to make headway. Its ecommerce distribution centre in Castle Donnington, Leicestershire officially launches next month. It is currently separating from a deal made with Amazon.com years ago to prop up its online strategy and will launch its own web operation next year.

M&S: new beauty ranges. Beauty and accessories
products work better online

Two weeks ago it said online sales increased 22.9 per cent from January to March which chief executive Marc Bolland pointed out is an acceleration over the company’s previous quarter. We estimate that takes its full year sales to about £650 million. No doubt it will reveal more about its online plans in May when it posts full-year results.

The questions for large retailers are these. With technology changing so quickly are you comfortable that you will not be blindsided by further twists and turns in the online market?

Affiliate marketing is becoming a powerful force, for example, but is it being harnessed?

A broader question for new entrants is whether middle market clothing the place to be on the internet? The success of Next directory suggests it can be lucrative but the arrival of Debenhams and Marks & Spencer in a bigger way indicates the market will become more competitive.

What is more margins tend to be slimmer for middle market clothing than niche retailers and niche brands. Debenhams told the Financial Times last week that its margins online were fatter than on the high street. This is understandable given high street rents, bills and business rate taxes compared to distribution warehouses. On the other hand the statement begs so many more questions than it answers. For example, is Debenhams online site selling items that are naturally higher margin – the more attractive, in demand pieces that leap out of the screen? What percentage of online sales are accessories, bags and home wares – items that tend to be naturally higher margin than more risky fashions?

Perhaps all this stands as a warning to smaller retailers. The middle market on the face of it is beginning to look like a place for grown-ups. Large, mature retailers who can afford to deal in slim margins. Debenhams sales were £2.7 billion last year and pre-tax profit at £158 million. Marks & Spencer with sales of about £10 billion and profit oscillating between £600 million and £700 million is not a great deal better off. Can small retailers compete? Probably not directly but perhaps by identifying niche groups of customers whether than is geographically - targeting local customers, through better service, or with sites that give more information or better advice. 

Add to that competition from other high street businesses and catalogue firms such as N Brown and Shop Direct. It could be argued there is a serious crunch coming.

Tags: Marks & Spencer, Debenhams, Shop Direct, N Brown, online shopping, ecommerce, Asos, Next Directory, internet retailing, etail 

Shops Must Shut To Battle Online Threat, Says Oasis Fashion Boss

The owner of Oasis, Coast and Warehouse has unveiled plans to cut its store portfolio by a quarter to help cope with online competition.

Chief financial officer Richard Glanville said the Aurora Fashions group had approached landlords asking for cuts in rent costs on stores. But he said the group was prepared to pull out if deals could not be reached.

‘Fashion retailing is increasingly going online and times are extremely tough for bricks and mortar operators. We are reviewing our entire store portfolio and are in daily discussions with landlords. We want to reduce our store portfolio in the UK by 25 per cent over the coming years,’ Glanville said, according to a report.

Clothing trade press reports also said insurers have scaled back some credit cover on suppliers to the group.

In December the Aurora Fashions' chairman Derek Lovelock said total group sales in the year to February 2012 - the most recently  were ‘slightly positive’. Online sales increased 28 per cent in the period.

The group has split off its Karen Millen business into a separate business and is in the process of separating Coast.


Tags: Aurora Fashions, Oasis, Warehouse, Karen Millen, Coast, High Street, Derek Lovelock, Richard Glanville, ecommerce, online shopping, internet fashion, etail, online retail 

Online Fitting Room Gets £5 Million For Expansion

Virtual fitting room Fits.me has raised almost £5 million to support its expansion plans. 

The funds will be used to prepare for increased demand and international expansion in places such as France, Germany, other European countries and the US. 

Fits.me says it can boost sales for online clothing retailers by giving customer more confidence to buy and reducing losses by cutting return rates. It works by taking a series of photographs of each item on a robotic mannequin that changes shape to represent different body shapes. These are entered into a database and selected to represent body measurements provided by visitors to the site. 

It says the appropriate fit of clothes depends on the customers own tastes and the software allows them to better judge whether an item is suitable without trying it on. 

Fits.me Lets Online Shoppers Decide
How Their Clothes Should Fit

'While large swathes of retailing already takes place online, there are sectors for which the real online growth has yet to come. Apparel is chief among those sectors, primarily because buying clothes is such a subjective process – most obviously when it comes to 'fit',' said Manu Mäkelä at Conor Venture Partners, one of the new investors.

Other investors included previous shareholder SmartCap, Fostergate Holdings Limited and The Entrepreneur's Fund.

The company reckons the software increases customer conversion rates of up to 62 per cent compared to shoppers using a traditional size chart and a reduction in returns for reasons of fit of up to 77 per cent. It also estimates that online clothing sales are currently about 14-15 per cent of the total retail market. 

The investment follows early stage funds of £2.25 million raised in 2009 and 2010.

Fits.me clients include Adidas, Barbour, Boden, Ermenegildo Zegna, Hawes & Curtis, Henri Lloyd, Hugo Boss, John Smedley, LKBennett, Mexx, Nicole Farhi, Otto, Pretty Green, Superdry, Avenue32 and Thomas Pink. 


Tags: Fits.me, Conor Venture Partners, SmartCap, Fostergate Holdings Limited, The Entrepreneur's Fund, Adidas, Barbour, Boden, Ermenegildo Zegna, Hawes & Curtis, Henri Lloyd, Hugo Boss, John Smedley, LKBennett, Mexx, Nicole Farhi, Otto, Pretty Green, Superdry, Avenue32, Thomas Pink, ecommerce, online shopping, clothing, fashion, internet

Debenhams online sales surge 46%

British department store Debenhams said its online sales surged three times faster than the market rate in the six months to March 2. 

Sales rose 46.2 per cent to £194.4 million beating market growth of around 13 per cent. The department store said it used online market data from research firm Kantar to compare to its own. 

Multi-channel sales in the period were 12.7 per cent of total sales. That compares to 9.3 per cent in the full-year to September and 6.8 per cent in the year to September 2011. The group said its 'medium-term' target is £600 million - about a quarter of its current sales. 

The Office of National Statistics will release detailed data today on the UK retail sector and sales via the internet. 

Debenhams said in the statement: 'We are working to improve the efficiency of our online activities. The ability to offer next day delivery to home in time for Christmas 2013 will enable us to grow sales and recover more of our delivery costs.'

Purple snake print swimsuit by Debenhams
designer Matthew Williamson £42

Debenhams said the majority of its ecommerce fulfillment is now in-house following the ending of the Ventura contract at the end of March 2013. 

The retailer said it is now the eleventh biggest online retailer in the UK by traffic volume. 

Total sales at the store increased 3.6 per cent to £1.26 billion. Group like-for-like sales increased 3.1 per cent. However, it said pre-tax profit fell 5.4 per cent to £120.3 as it struggled against cold weather and snow in January. Debenhams issued a profit warning last month.

Tags: Debenhams, Office of National Statistics, ecommerce, department store, online shopping, internet sales, Kantar

Amazon launches site for the over 50s

Amazon has launched a US site for the over 50s selling health, beauty, fitness, well-being, travel and entertainment products. 

The site launched this week and aims to continue what the US has proved to be very good at but fewer firms - on or offline - this side of the Atlantic have done.

Many UK retailers overlook the over 50s market, which accounts for a third of internet users in the US. Some of the success of John Lewis and Waitrose in recent years has been attributed to their appeal to older shoppers while others, such as Marks & Spencer, have been accused of failing to keep pace with the aging population. 

Amazon 50 Plus Active & Healthy Living can be found through Amazon.com's main store and offers ranges from vitamins and incontinence underwear to travel accessories and Kindle books. 

It allows North American users to automatically re-order goods such as vitamins using Subscribe & Save feature and includes coupons that can be 'cut out' by clicking on them to enable them to be automatically deducted at the checkout. Product tips and advice are also included. 

An Amazon spokesman said it offers hundreds of thousand of items from 'vitamins and blood pressure monitors to skin care items and books on traveling the world'. 

Amazon's over 50s site: for US customers 

Tags: Amazon, Marks & Spencer, John Lewis, Waitrose, Amazon 50 Plus Active & Healthy Living, over 50s, online shopping, well-being, ecommerce, health and beauty, Kindle