Fashion retailers continue to struggle with omnichannel

27 August 2015 Consultancy.uk

TopShop, Wallis and Miss Selfridge are, according to consultancy Kurt Salmon, the best performing fashion retailers when it comes to omnichannel. Across the industry, fashion retailers still struggle to adapt to the growingly important blended online-offline landscape, running the risk that they miss out on potential sales.

Every year, Kurt Salmon, a management consultancy that specialises in retail and consumer products, conducts research into the state of the (European) retail market. As part of its research series it also looks into omnichannel performance, with this year’s edition assessing the omnichannel maturity of more than 100 fashion businesses in the UK, France and Germany. Maturity was defined based on performance across four dimensions - online, mobile, social and cross-channel.

Brits lead the way
The results of the study reveal that when it comes to omnichannel, the British outperform their German and French counterparts. Yet while the UK can dub itself the best overall performer – mainly driven by online and mobile activity – it still lags behind France and Germany in the area of online visibility of store stock. Less than 30% of UK businesses are able to provide stock-checking functionality from their e-commerce sites. “Shoppers want near instant gratification. Retailers could achieve this if they provided a single view of their stock and were able to advise a customer about whether it’s worth venturing in store to try and buy a garment,” comments Sarah Davis, head of Kurt Salmon’s UK digital practice.

Kurt Salmon - Omnichannel

Another area where the UK under-performs is with the delivery of omnichannel loyalty programmes. Just over a third of the retailers surveyed were able to support the same loyalty scheme across multiple channels, a finding that is in synch with a recent, albeit broader, study by Capgemini Consulting. According to Capgemini’s data, retailers have failed to grow their customer loyalty programmes with the times, and as a result nearly 90% of consumers have a negative sentiment toward customer loyalty programmes.

Challenges
Despite the growing importance of merging e-commerce with the traditional bricks-and-mortar space, fashions retailers still struggle with implementation. “Cross-channel execution is still presenting the greatest challenge in all markets. Retailers are not sufficiently integrating their bricks-and-mortar assets into the omnichannel shopping journey,” says Davis. A missed opportunity she highlights, adding that this is “increasingly leaving consumers struggling to get hold of the products and shopping experiences they want”, resulting in lost sales.

TopShop

Consistency between e-commerce and in-store displays, imagery, promotions and services is proving the hardest to achieve. Only five of the UK retailers successfully communicated the order, delivery and collections services they offered within their stores and only 13 equipped their sales staff with the tools needed to provide a personalised, seamless omnichannel customer engagement.

From a company perspective, TopShop, Wallis and Miss Selfridge perform the best of all investigated fashion retailers, yet as with last year’s results, no one organisation excelled in all areas. The UK had two top performers: Jack Wills (online) and Selfridges (social), while Germany’s Marc O’Polo achieved top score for mobile and France’s Etam for cross channel.

Research conducted by Kurt Salmon in December last year showed that only 5% of UK retailers are onmi-channel proof.

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Consumer goods start-ups grow interest from venture capital

23 April 2019 Consultancy.uk

Funding the latest consumer goods start-up has been a real money-spinner for venture capitalist firms, with a number of $1 billion companies – or unicorns – having emerged in the space in recent years. New analysis has explored the resulting corporate consumer products activity in the acquisitions space.

Consumer products have enjoyed years of strong growth as new markets opened in developing Asia. China in particular has enjoyed strong growth across a range of consumer good types as the country’s middle class expanded. Private equity firms have been keen to pick up targets in the space as they expand their portfolios to include additional local capacity as well as customers in new markets.

As a result, a study from Bain & Company has found that interest from PE firms in the consumer product space grew sharply in 2018, hitting 6.1% of all invested capital for the year, and making it the third most sought-after category. It is now only behind financial services (23.9%) and advanced manufacturing and services (13.9%).

Corporate venture capital investment

The ‘M&A in Disruption: 2018 in Review’ research found that growth in the segment reflects key changes in the segment as a whole. This is particularly true of insurgent brands, which often leverage local expertise in order to take on international giants in domestic markets.

Short change

The market changes have led to shifts in motivations for consumer goods company investments from PE firms. The number of strategic investments stood at 50% in 2015 compared to deals that increased scope. This has shifted significantly, with 34% of deals focused on strategic outcomes in 2018 compared to 66% for scope. The move towards scope reflects companies seeking out fast-growing products that enable stronger revenue growth streams.

Acceleration in scope-oriented M&A in consumer products

However, there were other motivations for deal activity in the space. Activist investors have put pressure on companies to expand their portfolios in recent years, with the trend expanding from just US targets to Europe.

Further trends

The other key shift in the space regards outbound deal activity. The study found that outbound deal activity has increased significantly in the Americas (up 363%) with total deal volume up only slightly (15%). Key deals included Coca-Cola and Costa, Procter & Gamble and Merck’s consumer health unit, and PepsiCo and SodaStream. In the Asia-Pacific region, outbound deal activity rose 195% while total deal activity fell sharply, by -36%. The EMEA region saw both a sharp decline in outbound deal activity, at -68%, as well as lower overall deal activity, which fell by 32%.

Cross-regional deal making

Deal-making in the current environment is increasingly fraught with uncertainties, as business models change on the back of new technologies, new consumer sentiments and wider market changes from new entrants. As such, acquisitions are increasingly useful as possible hedges on changes in market direction. As such, companies are increasingly pressed to take a future-back position, making sure to incorporate a vision of how the company needs to look in five years into acquisition strategy.

The firm notes that certain acquisitions which enhance a remembrance of a nobler mission, revive a sense of entrepreneurialism and engage directly with consumers may be necessary qualities in acquisitions that transform a company to fit market expectations in the coming decade. While going forward, focus on innovation, partnering with retail winners, reducing cost base and constantly reallocating scare resources will be necessary to protect market share in areas where insurgent local and strategic competitors are active.

Related: Private equity asset growth top priority for 2018.