Clothesource Report Shows Retail Sales Aren’t Falling or Moving Online: Management’s Let Itself Get Misguided
According to a new Clothesource report, “The Emperors’ Clothes” retail sales aren’t falling, and they’re not leaving physical stores. Both the UK’s Office of National Statistics and the US Bureau of the Census report higher retail sales than ever – with sales in physical stores still growing every year. Retailers just need to rely on their own customer understanding, recapture their self-confidence, and rediscover their traditional frugality.
Among recent front-page stories have been Sears in the US hinting it’s about to go under and profits at Britain’s John Lewis falling 99%. But the well run clothing retailers are prospering. Primark goes from strength to strength: the biggest clothing specialists on either side of the Atlantic (Inditex and TJX) have just upped their sales and profit forecasts.
So it’s not about consumer purchasing :
The main problem lies with management, says Clothesource CEO Mike Flanagan in a new report “The Emperors’ Clothes” . They’ve lost touch with their customers: “Clothes stores keep aiming at millennials – broke, indebted and in precarious jobs – when most clothes spending comes from the middle-aged” he adds. “They’re selling fashion when their customers just want stylish clothes that fit properly .”
“Retail used to be synonymous with frugality. But they’ve spent huge sums on an orgy of new store openings.They’re returning too much to shareholders or over-paying senior managers. They’re hiring consultants for IT projects that’ll never work but inevitably cost twice what they expected – and accountants expert at everything but reliable audits. They try to save money in the wrong places: cutting store staff has slashed selling skills and the squeeze on suppliers means clothes shops aren’t getting the new ideas they need.”
But what about the internet? Online is perfect (and sometimes cheaper) for selling some goods. But for selling clothing, broker Credit Suisse’s Simon Irwin agrees with Flanagan: “not being online is an advantage.” Online share is tiny at the most successful clothing retailers: zero at Primark, just 1% at TJX and 10% at Inditex.
However they use the internet, retailers need to rely on their own customer understanding, recapture their self-confidence, and rediscover their traditional frugality to avoid being the next front page story.
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