What are the main lessons to learn from 2012’s retail winners and losers?

2012 has been a difficult year and the trading environment continues to be uncertain. But while it’s been a tough few months, some retailers have performed well.

AlixPartners retail team vice-president Yulia O’Mahony says there are some clear lessons to be learnt from the year.

Firstly, operating in the wrong category is no excuse for failure. It’s possible to do well wherever you trade. “In nearly all categories there are winners and losers, for instance, Hotel Chocolat and Thorntons,” says O’Mahony.

But while all categories have their strong performers, there is continued polarisation across retail. Many mid-market retailers are floundering, while both value retailers such as Poundland and luxury retailers such as Burberry are doing well.

Not only this, O’Mahony says, but getting the basics right is crucial. “Understanding the customer and providing the right product in the right environment creates the winners,” she says. Elsewhere, technology is now less of a back-office service and more about the customer experience. Everything from data mining to clever store technology is now the norm.

And the fast pace of change that technology contributes to means complacency is inadvisable.

Previous winners such as Tesco have faltered this year, while others that had struggled, such as Jessops, fought back. Longer-term trends such as the growth of omnichannel and constrained discretionary spend have continued, while general retail competence remains the clear differentiator.

O’Mahony says: “Managing cash and working capital tightly, focusing labour on customer-facing activities, maximising the availability of the right products, dealing with supply chain cost inflation and adapting to new spending patterns are all crucial.”

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