Tag Archives: retail

Opinion | Channel hopping: Netflix becomes latest global brand to adopt direct to consumer

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With Netflix becoming the latest global brand to adopt a direct to consumer model for its portfolio of licensed merchandise, consumer products, and original series brand extensions, industry insights and intelligence expert and seasoned market analyst, Utku Tansel takes a look at the ever-strengthening trend of tapping into the consumer directly

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Netflix’s announcement to unveil an online shop for show-themed licensed merchandise has definitely raised some eyebrows. The entertainment giant’s new platform will sell limited-edition show tie-in apparel, merch, and other collectables. Among the items that will make a debut this month are streetwear and action figures inspired by anime series Yasuke and Eden, as well as apparel and decorative items based on Lupin in partnership with the Musée du Louvre.

There are also other exclusive products in the pipeline which will leverage the licensing power of its popular titles such as The Witcher and Stranger Things. Furthermore, there will be a new Netflix logo-wear from Japanese fashion house BEAMS.

As the escalated streaming wars take their toll on the company, Netflix.shop, which was developed and launched with the e-commerce site Shopify, should provide a brand new revenue source, and will witness an expansion of a product line that already offers through partners like Walmart, Amazon, H&M, Sephora, Target, and others.

Now available in the US, Netflix’s new online is set to expand abroad over the coming months.                   

With its recent move, Netflix’s aims to ride on the rising popularity of Direct-to-Consumer (DTC) which has been one of the emerging retailing models in recent years. The ongoing pandemic has accelerated this considerably, prompting many companies to shift their models.

2020 saw a number of brands increase their focus and investment in developing their DTC offerings. Spending more time at home has undoubtedly encouraged more consumers to embrace DTC particularly in grocery and clothing. In the fashion space, VF Corporation (The North Face, Timberland) acquired Supreme. It was reported that over 60 per cent of the company’s revenue comes from its online operations, and VF announced a cornerstone of its strategy will be expanding the brand’s Direct-to-Consumer offering.

Meanwhile, in the toy industry, Hasbro and Mattel expanded their DTC operations in order to meet the growing demand for e-commerce.

As I investigated in my “Retail and E-commerce: The Impact of COVID-19 in the UK” Opinion piece previously, the COVID-19 pandemic has transformed shopping behaviour completely making a profound effect on the retail industry.

While COVID-19 continues to cause significant disruption to bricks and mortar retail, DTC is in a good place to be one of the headline trends for 2021. It is the preferred choice for many businesses and brands already as they increasingly become more agile, more authentic and produce more personalised products en masse.

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Utku Tansel has 17 years of success in driving global thought leadership, project and content management, delivering strategic business intelligence and actionable insight to major international companies, retailers and financial institutions.

With a solid market research background, Utku regularly writes for leading industry publications including ToyNews and Licensing.biz focusing on the most recent trends and developments.

A sought-after speaker, he also presented at world-renowned industry events including Licensing International Mind Mix Executive Conference, Hong Kong Toys & Games Fair, PlayCon, World Congress of Play, and Walmart Global Toy Summit highlighting key findings from the latest global research studies.

Coastal and historic towns thrive amid “strongest sales growth of the pandemic” for UK high streets

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Pent up demand for in-store shopping, coupled with the reopening of hospitality and enduring appreciation of the return of non-essential retailers, has helped the UK’s retail scene to the strongest sales growth of the pandemic.

On a total sales basis, sales have increased 10 per cent in the four weeks covering May 2nd to 29th this year, against a decline of 2.7 per cent for the same period in 2019.

Meanwhile, footfall across the UK’s retail destinations has risen by 11.6 per cent week on week. High Streets witnessed increases of 17.4 per cent versus 8.7 per cent in shopping centres and just 2.3 per cent in retail parks.

However, it is UK holiday destinations such as coastal and historic towns that have witnessed the greatest increases, with a 37. 1 per cent rise in coastal areas, and 24.8 per cent rise in historic places.

Helen Dickinson OBE, chief executive, British Retail Consortium, said: “Retail sales were buoyant in May thanks to the reopening of hospitality, coupled with the afterglow of non-essential retail’s own return.

“Pent-up demand for the instore shopping experience, as well as the first signs of summer weather, helped retail to the strongest sales growth of the pandemic.

“There is a growing sense of consumer confidence, boosted not only by the widespread uptake of vaccinations and testing, but also retailers’ own significant investment in safety measures.”

Dickinson has explained that large cities remain the hardest hit by the pandemic, with many consumers continuing to work from home and increasingly choose to shop local. It has prompted new calls for a re-evaluation of the role of the high street.

She said: “Now is the time to consider what our future high streets and town centres will look like a decade from now. We must adapt to these changes, not only to build back better, but also to build forward.

“With vacancy rates still rising in many parts of the country, we must reimagine how we integrate residential and commercial property, allowing us to build stronger local communities that encompass leisure, retail, services, and homes.

“This will require retailers, property developers, and local government to work together and plan city centres that cater to these changing demands and truly innovate the high street model.”

A summer of cautious optimism

Elsewhere, it is the change in weather combined with the late May bank holiday that has seen shoppers take to the high streets and shops of some of the UK’s coastal areas and historic towns, as staycation holidaymakers fuel an ‘increase in footfall that surpassed that in any other type of UK high street.

According to Springboard insights director, Diane Wehrle, “the fact that the bank holiday occurred a week earlier than in the previous two years meant that footfall in both coastal and historic towns was actually higher last week than in the same week in 2019.

“Whilst the attraction of coastal and historic towns to visitors meant they benefitted the most last week, there was still a significant rise in footfall in central London and in other regional cities across the UK, while the most modest increases once again occurred in more local high streets.”

Paul Martin, UK head of retail, KPMG, said: “Retailers now face an interesting few months as they assess how they best entice their customers back to stores and what the right blend of offline and online will be as spending patterns settle in a post Covid world.

“With the prospect of the full lifting of Covid restrictions coming into force this month, there will be increased competition for share of wallet as consumers focus on those leisure and hospitality activities that have been denied to them due to lockdown.

“It is a summer of cautious optimism for many retailers, who will be hoping that the continued success of the vaccine roll-out and an improving economy will offer scope to spark a big surge in consumer spending.”

Games Workshop to give all staff £5000 share bonus amid another strong year of sales

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A boost in the hobby and hobby gaming sector over the past year and throughout the pandemic has led to another set of record results for the UK’s miniatures and tabletop gaming specialist, Games Workshop, who is set to hand £12 million worth of share bonuses to staff following the success of its current financial year.

The share bonuses will be paid on an equal basis to each member of staff, handing each around £5,000. It’s a significant increase on the bonus received by staff members in the previous year, when the UK firm paid profit share bonuses amounting to £2 million.

Games Workshop has detailed particularly strong sales in its current financial year, one that it expects will end at no less than £350 million in the year to May 30th 2021. This marks a leap of some £80 million on the year prior, fueled in large by increase demand and engagement with the hobby scene over the course of the pandemic, as well as an evolving and growing licensing arm now spanning some of the biggest entertainment franchises globally.

The hobby specialist is also expecting its full year pre-tax profit to come in at not less than £150 million, up from £89 million in the prior 12-month period. This will includes royalties receivable from licensing which are estimated to be around £15 million.

The Retail Bulletin reports that, when announcing the company’s half year results back in January, Games Workshop chief executive Kevin Rountree said the business had put in a “cracking” performance with sales rising to £186.8 million in the six months 29 November compared to £148.4 million in the corresponding period in the previous year.

In addition to its Games Workshop  website, the company operates the Warhammer chain of stores across the UK.

Pop culture retailer Geek Retreat marks Star Wars Day and its eighth anniversary with National Autistic Society donation

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The UK’s geek culture retailer, Geek Retreat, combined its Star Wars Day celebrations earlier this week with its eighth anniversary by donating eight per cent of its turnover generated on the day (Tuesday, May the Fourth) to the National Autistic Society.

Geek Retreat , which opened its first store on May 4th 2013 in Glasgow and now boasts 24 shops, is a gaming cafe, retailer, and events hub rolled into one. In a show of commitment to the hallowed day of the geek, the retailer enabled customers to celebrate Star Wars Day with special merchandise such as posters, clothing, figures, and memorabilia.

Visitors throughout the day were also able to enjoy a special Jaffa the Hut milkshake, a blend of Jaffa Cakes and ice cream.

All of the brand’s stores commit to a COVID-19 secure environment, with strict social distancing and hygiene measures in place, to give customers extra piece of mind that they can visit in confidence.

Stephen Walsh, founder of Geek Retreat, commented: “Making sure that Geek Retreat provides an inclusive, welcoming, and social environment for our more vulnerable customers, like those on the autistic spectrum, or with mental health issues has always been extremely important to us.

“With this in mind, we are delighted to donate eight per cent of our turnover to the National Autistic Society to mark our eighth anniversary and the hugely popular Star Wars day.”

Kimberly Scoltock, head of philanthropy and partnerships at the National Autistic Society said: “Thank you so much to Geek Retreat for donating eight per cent of their turnover to our charity on this special day. This means even more at the moment, when we’re trying to weather the financial toll of coronavirus.

“We’re facing a significant funding gap and working hard to adapt how we work so we can continue helping tens of thousands of autistic children, adults and their families each year, and fighting for better support and services. Your brilliant and welcome support is helping us to fill this gap.”

Autism is a lifelong disability which affects how people communicate and interact with the world.

There are around 700,000 autistic people in the UK. Because it’s a spectrum, every autistic person is different and will have their own strengths and face varying challenges. Some autistic children and adults need 24-hour care and support, others may need clearer communication or a little longer to do things at school or work.

Next gen home and lifestyle platform Fy! partners with Mercis for official Miffy collection

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The next gen home, living, and lifestyle retail platform, Fy!, has detailed a new collaboration with Mercis BV to launch an official Miffy collection this week, spanning wall art, textiles, and tech accessories.

The collection will land on the platform on Wednesday, April 28th.

Molly Pusey, Fy! VP of supply, commented: “At Fy!, we’re passionate about building our global community of brands and artists. We’re thrilled to welcome Miffy and friends to our platform. The much loved illustrations have captured our hearts and are a fantastic addition to our current product offering. We hope our customer loves the nostalgic designs as much as we do.” 

Marja Kerkhof, managing director at Mercis, added: “We are very pleased to welcome Fy! to the Miffy family and love the designs of the products they will be offering. The vibrant colours are a true prelude to a lovely spring/summer season.” 

Fy! works directly with over 2,500 independent brands and artists to bring their unique home and living products to a new audience of mobile native shoppers. It has been developed with the 25 to 40 year old shopper in mind, tapping into what it believes is a market under-served by traditional retail. 

Opinion | Foundation of success: What can retailers learn from the LEGO approach?

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As global pandemics go, the onset of Coronavirus, while forcing many to navigate a treacherously rocky road to begin with, hasn’t fared too badly for the toy industry; a global business that has provided support and entertainment to families and children worldwide. Among some of the last year’s biggest successes was LEGO, who achieved a 13 per cent growth on sales over the course of 2020.

With an eye for analysis, Utku Tansel LLB, MBA, an industry analyst who has led global research programmes across the entire toys, games, and licensed consumer products spectrum, turns his attention to the Danish toy maker and how shifting focus onto new and emerging audiences has helped the art of LEGO building continue to go from strength to strength.

While the COVID-19 pandemic is forcing some retailers around the world to close, LEGO opened 134 new stores – of which 91 were in China – last year. The company plans to open a further 120 new shops in 2021, including 80 in China alone, expanding its total global store count to almost 800 in 2021.

This is part of LEGO’s business strategy towards – what it calls an ‘omnichannel network’ – operating in tandem with LEGO.com, whose online visits doubled over the last year. This ties with Mintel’s COVID-19 tracker showing that nearly half of British consumers are now doing more shopping online – a double digit increase since mid-April 2020.

LEGO’s sales in 2020 grew by a substantial 13 per cent, while operating profit rose by 19 per cent worldwide. Its retail strategy is definitely working.

Merging online and offline

 

In terms of new product launches, the LEGO Super Mario set from 2020, which uniquely blends physical bricks with online games, has been one of LEGO’s most successful theme launches. The product line featured an interactive LEGO Mario figure that collects coins in real life game levels created with LEGO bricks. The figure has LCD screens in its eyes, mouth and belly to display a wide range of instant reactions to movement, colour and action bricks.

Meanwhile, and collaborating with Universal Music Group, the innovative company continues with this strategy in 2021 with the LEGO Vidiyo release –  which taps into kids’ creativity through music and play. Through LEGO Vidiyo, children can direct, produce, star in, and share their own music videos, using chart-topping tracks from Universal Music’s extensive variety of global artists. Its playful music video maker experience combines physical and digital play as special effect ‘BeatBits’ and music inspired minifigures integrate and come to life through AR in a vibrant new app.

Mintel Trend Extend My Brand investigates how brands are expanding into new categories and demographics to find new business as well as intrigue consumers. Brands are advised to assess the opportunity to use their company’s established image, visibility, and strong brand following to launch new product lines – which LEGO has been utilising very successfully in recent years. They are encouraged to explore new categories and price points that may cater to an extended clientele while still aligning with the brand’s identity.

Brick by brick, LEGO, which dominates the construction category globally, has been expanding its presence in toys targeting beyond its core business. In 2020, the company entered the arts and crafts category with the introduction of LEGO DOTS – a concept which offers kids a creative canvas for self-expression. Based on multiple shapes and colourful tiles, the line featured bracelets and items for home décor.

Targeting stressed-out adults

Aiming at adults, LEGO also released its 2nd 2D tile building theme, LEGO Arts, in 2020 featuring Andy Warhol’s Marilyn Monroe, The Beatles, Marvel Studios Iron Man, and Star Wars The Sith. Mintel Traditional Toys and Games, US, May 2020 report highlights that consumers need toys and games to bring more than just fun and brands can connect with adults by appealing to their need for wellness.

With products for adults that can tout stress relief and relaxation, each LEGO Art design is accompanied by a bespoke soundtrack. These soundtracks dive deep into the inspiration behind each wall art set helping adults unwind and fully immerse themselves in the building experience. Our consumer research (US, March 2020) confirms that there is a large market for toys and games for adults, since half of consumers who have purchased toys and games in the previous 12 months have done so for an adult.

 

Providing a unique retail theatre experience             

LEGO stores are a great example of retail theatre with plenty of life sized models and figurines as well as play stations. Their outlets are seen as a destination in their own right by consumers. Mintel Trend Experience Is All highlights that most consumers still put a premium on the advantages of shopping in-store, which includes the ability to try products in person and to be helped by customer service associates.

This trend is not about countering online sales, but rather turning shops into enjoyable experiences that promote purchases – either in-store or remotely. Retailers are reminded that shops are windows and adverts as much as places to purchase stock and they need to extend the time people spend there as well as the frequency of their visits.

So, what’s next?

Post-pandemic (or when the restrictions are eased), LEGO should be able to continue to build on its success. As I also investigated in my West End Farewells? – Regent Street’s Hamleys has met a modern cross-roads Opinion piece in ToyNews recently, for consumers, a shopping day out will continue to be a leisure activity and it will increasingly be a choice rather than a necessity.

Overall,the retail landscape will be leaner, the battle for consumer attention will be fierce and when the economy recovers, consumers will remain value conscious. In city centres, particularly, newer and better retailers are coming in which will undoubtedly help with the footfall into the high street, moving forward.

There is a huge opportunity and good retailers will continue to do well. LEGO is in a very good position to capitalise on these.

Utku Tansel has 17 years of success in driving global thought leadership, project and content management, delivering strategic business intelligence and insight to major international companies. He can be contacted via LinkedIn

John Lewis confirms eight stores will not reopen after lockdown lifts in April

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The department store chain, John Lewis has confirmed plans to not reopen eight of its 42 UK stores when the current lockdown lifts on April 12th this year. The move will put more than 1,400 jobs at risk.

The retailer’s stores in Aberdeen, Sheffield, Peterborough, and York will remain closed, as well as four of its smaller ‘At Home’ stores in Tunbridge Wells, Ashford, Basingstoke, and Chester. The planned closures will threaten the future of a total of 1,465 roles with the firm.

The latest development echoes of similar actions taken by the department store chain when its kept eight other stores permanently closed after the first lockdown last year. As of April 12th this year, John Lewis’ estate of department stores will stand at 34.

John Lewis has pointed towards the ‘significant shift towards online shopping in recent years’ as the reasoning behind the latest closures, adding that the decision followed “substantial research to identify and cater for new customer shopping habits in different parts of the country.” According to the team, the eight stores were already “financially challenged prior to the pandemic.”

In a statement, the company said that it believes the online shopping trend “will not materially reverse” and that the performance of these eight stores “can be substantially improved.”

Previously, the group has voiced its expectations that at least three fifths of revenues will be generated online, even when shops are trading normally again.

“Having fewer bigger stores allows us to invest significantly to improve our remaining ones,” said the company. It will also test new, smaller, local shops along with stores within its Waitrose supermarkets.

British lifestyle brand Joules to open stores across all of the UK and Ireland’s Center Parcs

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The British lifestyle brand, Joules, has struck up a partnership with the short break specialist, Center Parcs to open a slate of six stores at all of the Parcs’ villages across the UK and Ireland this spring.

The roll-out will commence with the opening of a Joules store at Center Parcs Woburn Forest in Bedfordshire on April 12th, the expected date for the nation’s non-essential retail reopening.

The partnership aligns closely with Joules’ lifestyle brand positioning and provides more opportunity for both new and existing customers to engage with the Joules brand and its distinctive products.

The agreement has been founded upon the two companies’ shared values of enjoying the outdoors whatever the weather, as well as the importance of time well spent with friends and family. Both brands play important roles in supporting their customers’ outdoor lifestyles and share a respect for forests and woodlands.

The Joules Center Parcs stores will offer menswear, womenswear and childrenswear collections to provide guests with all they could need for the perfect staycation, from gilets and jumpers to Joules’ outdoors-inspired Right as Rain collection.

Guests will also be able to benefit from Joules’ click-and-collect service which enables them to shop online and conveniently collect during their break. The stores will include experiential areas to host activities for the whole family (when government guidelines allow), including a tree den installation at Woburn Forest with tables for arts, crafts and workshops for all the family.

Nick Jones, CEO at Joules, said: “We’re thrilled to be bringing the Joules brand to Center Parcs from this Spring. The partnership between two outdoor loving, family-focused lifestyle brands has significant potential and supports Joules long-term strategy to develop its brand presence in line with its customers’ evolving lifestyles and increase its customer base.”

Martin Dalby, CEO Center Parcs, added: “We are delighted to have formed a retail partnership with Joules and I know the shops will be popular once open across our villages. Joules celebrates families spending time outdoors just like we do, so the similarity in our brands and the level of quality we both deliver mean they are a perfect fit.”

WHP Global takes controlling stake in Tru Kids with expansion plans for Toys R Us, Babies R Us

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The New York brand acquisition and management firm, WHP Global has taken a controlling interest in Tru Kids Inc, the parent company to Toys R Us, Babies R Us, Geoffrey the Giraffe brands, and more than 20 established consumer toy and baby brands.

Under the acquisition, WHP will now manage the global TRU business, spanning brick and mortar and digital retail spaces, as it acts to direct its strategic expansion.

WHP has now become a significant shareholder in the Toys R Us and Babies R Us brands which combined generate over $2 billion in global retail sales a year through almost 900 branded stores and ecommerce sites across more than 25 countries.

The move follows a year in which the toy sector has seen a growth across its biggest markets, including the US where, despite the struggles of the pandemic, the industry grew 16 per cent.

WHP is now one among a group of institutional investors in the Tru Kids Inc company, joined by funds managed by Solus Alternative Assets Management and funds managed by the Private Equity Group of Ares Management Corporation.

Yehuda Shmidman, chairman and CEO at WHP, said: “Our investment in Toys”R”Us reflects our belief and passion for the brand. We are thrilled to be taking the reins of the world’s leading toy brand at a time when the category is up 16 per cent and consumer demand for toys is at an all-time high.

“This is a natural fit for WHP, as we can leverage our global network and digital platform to help grow Toys”R”Us and Babies”R”Us around the world.”

Shmidman has extensive experience with the brands, having served as Vice Chairman of TRU since 2019.

For more than 70 years, Toys R Us it has been a destination for children and parents looking for toys. Founded by Charles Lazarus, Toys”R”Us became a globally-recognized household name.

Babies”R”Us was introduced several years after the Toys”R”Us brand was founded, and is recognised as having the largest baby registry across the USA.

In addition, there are more than 20 related consumer brands in the portfolio, including Journey Girls, Fastlane, True Heroes, You & Me, Just Like Home, and Imaginarium.

Including TRU and its fashion brands, WHP manages over $3 billion in retail sales across its portfolio of brands. WHP is backed by a $350 million equity commitment from funds managed by Oaktree Capital Management, L.P. with a leverage facility provided to WHP by funds and accounts managed by BlackRock.

Spring budget | Retail restart support, extended furlough, and £300m more for the Culture Recovery Fund

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A restart programme to support retailers reopening next month and a £300 million culture recovery fund have been announced in a budget described as the Government’s “use of the full fiscal firepower of the country,” by Chancellor Rishi Sunak this afternoon.

Among the first issues addressed by Sunak as he outline the plans for the 2021 budget – billed as a ‘budget of our time’ – as England makes its preparations to ease out of lockdown, was the return to business for the country’s non-essential retailers.

Under a Restart Programme described by Sunak, non-essential retailers who will be on track to have suffered a 17 week closure through the country’s third lockdown, will be offered a £6,000 grant to help them get them moving forward again.

The support will be part of a £5 billion scheme for businesses across the country, adding to the total direct cash support system for business to now total £25bn over the course of the pandemic.

For hospitality and leisure businesses, the grant has been increased to £18,000 in accordance to the staggered re-opening and social restrictions that will be enforced as they return to operation. Business rates for such businesses will remain 100 per cent suspended for these businesses for the next three months, at which point rates will be discounted by two thirds for the remaining nine months of the year.

Meanwhile, the Culture Recovery Fund which provides financial support for music venues, independent cinemas, museums, galleries, theatres, and heritage sites as they weather the financial storm of the pandemic, will receive a boost of £300 million.

The first recipients of support from a fun that now totals £1.87bn were detail in October last year, with over 1,385 theatres, museums, and cultural organisations across England benefitting from a £257 million share of the fund.

The Prime Minister’s roadmap out of lockdown has also raised hopes around the return of the live music scene, with June 21st earmarked as the date of full relaxation on any and all coronavirus restrictions.

Elsewhere, a final key point to have arisen in Sunak’s afternoon budget address was the introduction of a increase to corporation tax from 2023 to 25 per cent. The tax will be applied to profits of the businesses in excess of £250,000. Companies with profits of less than £50,000 will remain at 19 per cent corporation tax.

“It’s a tax rise on company profits, but only on the larger more profitable companies, and only in two years’ time,” said Sunak.

The Chancellor also went on to confirm that the furlough scheme will be extended until the end of September with employees set to continue to receive 80 per cent of their wages until the scheme ends, but with firms asked to contribute 10 per cent in July, and 20 per cent in August and September as it begins to wind down.

Chris Brook-Carter, chief executive of retail industry charity retailTRUST, said: “Retail will have an absolutely vital role to play in tackling issues like youth employment and social mobility as we move out of this crisis so decisions taken now will not only protect vital jobs and businesses, but the social, economic and cultural importance of the sector to the UK. 

“People working in retail have been hit hard financially, emotionally and physically during the entire course of the pandemic. They have had to cope with extremely difficult changes in their working conditions, livelihoods have been placed on hold during the lockdown periods, and, very sadly, tens of thousands of people have been left with no jobs to return to due to the pandemic’s devastating impact on shops and businesses up and down the country. This has led to record demand for retailTRUST’s services.

“It is essential that the government and businesses now work together to safeguard our colleagues’ long-term interests and their wellbeing. And as a sector, we all have a responsibility to come together and make the most of initiatives which will help to protect, support and create roles.”