Retail sees ‘bricks and clicks’ as the way forward

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RETAILERS must fully integrate ‘bricks and clicks’ if they are to survive on Britain’s cut-throat high street, two of the UK’s biggest department store chains said.

Marc Bolland, chief executive of Marks & Spencer, said the leading clothing retailer is making progress at becoming a “multi-channel, international retailer”.

Andy Street, managing director of upmarket chain John Lewis, said its strategy is hinged on “omni-channel” retailing – integrating eight different sales channels.

Leading retailers yesterday met to debate the sector’s future at the British Retail Consortium’s annual symposium. Retailers are struggling amid the weakest consumer climate for years, while trying to find out how to integrate online sales with physical stores – dubbed ‘bricks and clicks’.

“It’s just the reality of life in three to five years’ time,” said Mr Bolland, former Morrisons CEO. “For our type of business, if we’re not international or multi-channel enough, we do not have a clear future.

“If you see people selling things in the back of a garage around the world, why are they able to do it in the back of a garage and I’m not about to do it with a 127-year-old institution?

“It’s something I said we cannot accept. We have to be more flexible.”

M&S, founded as a penny bazaar in Leeds in 1884, is trying to create a web platform which has the “back end of Amazon and front end of Net-a-porter” – combining functionality with high-end fashion. Mr Bolland said it should be ready within 18-24 months.

It is also testing in-store technology, where shoppers use interactive screens in-store to choose outfits.

The group is also launching local language shopping websites, which it hopes will mirror the success of its French website.

This is coupled with aggressive international expansion, and M&S should be opening 100 stores a year by the end of this year. “That’s not because we’re in a hurry, but because we’re ready for it,” said Mr Bolland. However, M&S will not “bet the house” on China, and will expand there slowly.

Employee-owned John Lewis now claims 25 per cent of its sales via the internet, which Mr Street said was both a “big advantage and a big disadvantage”.

He told the conference in London the chain faces an “inevitable fall in like-for-like sales in existing shops”, as more trade is done via the internet.

“Our answer has got to be bricks and clicks together,” said Mr Street. “We’re beginning to talk not just about multi-channel but omni-channel retailing.

“We’re talking about all of our front office and back office processes being integrated between the different channels.

“We reckon we have eight different channels, with the fastest being mobile. This year we will achieve nearly £1bn of online turnover.”

The 36-store chain owes much of its success to the “prudence” of previous directors who decided against rapid expansion, added Mr Street. He said the chain is unlikely to exceed 60 or 70 stores in the UK by 2020.

“The recession was kind. If we had not had that we would have built more in places that could not have sustained them.”

The chain currently has just one store in Yorkshire, in Sheffield, although it is opening a smaller-format store in York.

“There’s a polarisation between good and poor locations,” he said. “The best locations are getting better and the weaker locations are getting worse.

“The top 50 locations have an optimistic future. The next 50 are fighting to have that same optimistic future. The future is much gloomier for the locations below that 100.”

The chain typically has stores of around 150,000 square feet, but its new smaller stores will be around 70,000-100,000 sq ft. It plans up to nine of the smaller stores.

“We can bring John Lewis to second tier cities that we’ve not had an answer to in the past,” said Mr Street.

Mike Shearwood, chief executive of Aurora Fashion, the parent of Coast, Oasis and Warehouse, described the group’s merging of its e-commerce and brand retailing. “Our thinking evolved to become a bit more aspirational,” he said. “We’ve got to the point where our digital and physical channels are helping each other.”

The retailer now fulfils many online orders from its stores, and has a 90-minute delivery option. It has also launched payment in store by online system PayPal.

john.collingridge@ypn.co.uk