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UK Retail Briefing - April 2018

ANALYST COMMENT – THE RETAIL SECTOR IN TURMOIL
Failing retailers
2017 was not a bad year
Figure 1: Retail sales growth, 2017
Failures – some common reasons
Toys R Us – format redundant
Maplin – who wants it?
Conviviality – hubris
Kleeneze – who?
Furniture – Easy come, easy go
Fashion – so much more demanding in the internet era
Why Now – and what does it say about the high street?
Online still the fastest growing element in retailing
The multi-channel option – long term makes most sense
Competition – so much more than stores vs online
Rabbits in the headlights
The siren call of diversification
When will online peak?  The example of booksellers
Prospects for the high street
Short term prospects 2018 and into 2019 – not too bad at all
Figure 2: Consumer confidence, Jan 2014- Feb 2018
UK RETAIL SALES
Key points
Retail sales
Figure 3: Retail sales trends, 2017/18
Figure 4: UK retail sales y/y growth, BRC vs ONS, 2016-2018
John Lewis
Figure 5: John Lewis Department Stores: Year-on-Year Growth, 2016-2018
Inflation
Figure 6: Annual percentage change in the consumer price index for selected product groups, 2017-18
Inflation and wages
Figure 7: Real wages growth: Wages growth vs inflation, Jan 2014- Jan 2018
Confidence
Figure 8: Mintel Financial confidence tracker, January 2015 – February 2018
Looking forward
SECTOR FOCUS – ONLINE RETAILING
Online growth peaked in 2016
Figure 9: All online retail sales, annual growth by month, non-seasonally adjusted, Jan 2016 –Feb 2018
Online share of sales peaks at Black Friday
Figure 10: Online share of all retail sales, monthly, Jan 2016-Feb 2018
Share of online sales more equally split
Figure 11: Share of online sales, store-based vs. pureplay retailers, 2009-17
Improved delivery options
Amazon dominates online
Figure 12: Top ten online retailers, market shares, by value, 2015- 2016
Amazons foray into fashion
LAUNCH ACTIVITY AND INNOVATIONS
UK: Co-op teams up with Live Nation for festival rollout
UK: Dunelm trials DIY offering in-store
UK: eBay introduces Shop the Celebrity Look image search
UK: Sainsbury’s trials overhaul of Nectar loyalty scheme
HEADLINES FOR THE MONTH
Food and Drink
Clothing and footwear
Home and household goods
Online
Other Retailing
Economy
NEWS ANALYSIS – FOOD AND DRINK
UK: Aldi commits to making all own-label packaging sustainable by 2022
UK: Bestway buys Bargain Booze as part of £7.25 million deal
UK: Co-op
… to change own-brand water to 50% recycled bottles
… returns to profit as food sales rise in 2017
UK: Conviviality
… expected to appoint administrators
… appoints administrators
… files for administration
… issues profit warning
… sells wholesale arm to Magners cider owner
UK: Marks & Spencer appoints CEO of Steinhoff UK to head up food business
UK: Morrisons sales and profits rise in 2017
UK: Ocado retail revenue rises in Q1
UK: Sainsbury’s
… reportedly looking at Mothercare takeover
… to sell Tu clothing range on Argos with next day delivery
UK: Simply Cook expands to supermarkets
UK: Tesco expands plant-based range
NEWS ANALYSIS – CLOTHING AND FOOTWEAR
UK: Farfetch signs deal with Harvey Nichols ahead of IPO
UK: French Connection
… retail revenue falls
… to sell Toast brand
UK: H&M launches wedding range
UK: Jigsaw seals £20 million rescue deal
UK: Missguided to expand into the Middle East
UK: Moss Bros
… issues full year profit warning
… profits fall due to stock shortage and poor December results
UK: Mothercare
… drafts in KPMG for restructuring as lenders agree to defer financial covenant testing
… eyes CVA as a way to close stores
UK: New Look creditors approve CVA plans to reduce rent and cut stores
UK: Next sales and profits fall after “self-inflicting” errors
UK: Select seeks CVA to cut store numbers and rent
UK: Superdry co-founder steps down
UK: Ted Baker bucks high street trend with sales and profits growth
UK: Zara to introduce augmented reality on window display
UK: JD Sports to acquire The Finish Line for $558 million
NEWS ANALYSIS – HOME AND HOUSEHOLD GOODS 
 CARPET RETAILING
UK: Carpetright
… considering CVA as part of turnaround plan
… secures emergency loan as it considers CVA
UK: ScS sales and profits gradually rise in H1
 DIY RETAILING
UK: Bunnings UK seeks buyer as bankers are bought onboard
UK: Screwfix new marketing campaign sees charity renovated
UK: Topps Tiles sales edge up in challenging H1
 ELECTRICAL RETAILING
UK: AO full year results to be in line with forecasts
UK: GAME retail profit halves in H1
UK: Grainger Games sees it suppliers credit limits cut
UK: Maplin
… job losses continue as administrators fail to find a buyer
… sale looks unlikely as rivals look at stores
 FURNITURE RETAILING
UK: DFS profits fall 58% in H1
UK: Dreams profits and sales grow for fourth consecutive year
UK: eve Sleep sales up 132% in 2017
UK: Made appoints new CFO as it raises £40 million in equity funding
NEWS ANALYSIS – ONLINE
UK: ASOS to launch own-brand homewares range
UK: Ocado
… retail revenue rises in Q1
… reveals low food waste levels
UK: Shop Direct adopts new technologies to improve customer experience
NEWS ANALYSIS – OTHER RETAIL
 BOOK AND STATIONERY RETAILING
UK: Card Factory profits down over 2017
 DEPARTMENT STORES
UK: Debenhams partners with Swoon Editions
UK: ‘Department store for kids’ coming to Liverpool
UK: Harrods staff face sales commission cut of 25%
UK: House of Fraser to receive £15 million funding from owner
UK: Stacey Cartwright to leave Harvey Nichols
 HEALTH & BEAUTY RETAILING
UK: Superdrug
… to release mini-documentaries for Pride 2018
… to launch vegan pop-up shop
 SPORTS AND LEISURE
UK: Halfords CFO leaves for Dixons Carphone
 TOYS AND GAMES RETAILING
UK: The Entertainer introduces Quiet Hour
UK: Tiger founder to launch new kids and toys chain
UK: Toys R Us to close all stores as it fails to find buyer
 NON-FOOD DISCOUNTERS
UK: Poundstretcher credit insurers cut cover
NEWS ANALYSIS – ECONOMY
UK: Easter high street footfall declines as shopping centres and retail parks increase
UK: February retail sales rise in value and volume
UK: Food inflation falls to 12 month low
UK: Government proposes plastic bottle and can deposit scheme
UK: March retail sales up despite poor weather
UK: Weather hits footfall in February

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