John Lewis managing director Paula Nickolds shared her first thoughts on leading the business last week and was frank about the testing times she faces.
“I am taking on the job at a very challenging time for the industry,” she told Retail Week. “There is no map, you are creating a new model essentially.”
As a specialist pureplay, Asos’s model may not be applicable to all retailers. However, as online grows in importance across retail that distinction may matter less.
Much of what Asos is doing epitomises the direction of travel in retail and in that respect it provides a useful map which can guide others.
Leading into the future
The etailer posted surging sales and profits this week and some of the stats provided illustrate the pace of change made possible by technology, the resultant heightened expectations among young consumers – retail’s customers of the future – and the consequent peril to the traditional retail proposition.
“Asos made 600 technological improvements to its platform in the last six months alone”
A few examples: Asos launches 4,500 new styles per week and has 85,000 different products in stock at any point. How does a retailer whose model is primarily based around store supply match that?
Asos made 600 technological improvements to its platform in the last six months alone – double the number in the previous half-year. That’s testament both to its agility and to the effort needed to meet and exceed customer expectations.
Those customers increasingly shop on mobile devices, which accounted for 58% of all orders in the retailer’s first half.
And they demand near-instant gratification, whether through speedy delivery options or responses to enquiries – Asos replies to customer emails within an hour, social media messages within 15 minutes and phone calls within 30 seconds. That’s a pretty high bar.
“Retailers that cannot meet the exacting standards increasingly demanded by consumers may not have long for this world”
None of this means that the shop is dead, although retailers that cannot meet the exacting standards increasingly demanded by consumers may not have long for this world.
It does mean that successful multichannel retail must change to reflect new realities.
Nickolds said last week that she is determined to give customers “more of the John Lewis they love and perhaps a little bit of the John Lewis they haven’t even dreamt of yet.”
Other retail leaders should perhaps think more urgently along similar lines.
Roubles rolling in for retailers
As retailers seek international opportunity in the wake of the Brexit vote, Asos’s overseas performance might provide some pointers.
While the decline in the value of sterling is starting to hit British consumers in the pocket, it is increasing the purchasing power of some of their counterparts abroad.
Asos flagged Russia as a “stand out performer”. Sales there rocketed 200% in the first half.
Other retailers, such as shoe specialist LK Bennett, also sense opportunity there despite political uncertainty in a country subject to various Western sanctions after its annexation of Crimea in 2014.
Trading in Russia may bring particular challenges, but it could still prove fruitful for retailers – certainly online.