Retail may be changing at byte speed, but two stellar successes demonstrated this week that some of the oldest rules in the book still apply.
Primark, which does not even sell online, reported that full-year sales will be ahead 5.5% year on year.
Although unhelpful weather means that group like-for-likes will slip 2%, it is doing well in its ferociously hard-fought domestic market in which many fashion retailers have suffered.
In the UK, sales should be 6% up on last year. Clothing market share – it is already the long-established leader in volume terms – has “significantly” increased and like-for-like growth will be about 1.5%.
John Bason, finance director of Primark parent Associated British Foods (ABF), cited a couple of reasons in particular when I asked him what Primark’s consistently strong performance was down to.
“Primark’s contrast with some retailers – which resisted investment until the need became urgent and by then had limited cash for the purpose – is stark”
The retailer is famous for its value, but Bason highlighted two additional characteristics.
First, if you want a return, you need to invest in the first place.
In a “typical” year, Primark invests between £50m and £100m in its existing store portfolio. Not in flagships or all-singing, all-dancing new formats on which the bank is being bet, but the rump estate that ordinary shoppers experience day in, day out.
The contrast with some retailers – which resisted investment until the need became urgent and by then had limited cash for the purpose – is stark.
Second, it offers a vast assortment of SKUs. In that respect, its shops have more in common with the endless aisles of pureplay or multichannel retailers that offer customers a cornucopia of product.
While it has strong fashion credentials, it’s not short of all the family basics – characteristics which have helped Primark establish itself as a sort of contemporary M&S.
In the end, it intimately knows its customers and what they want.
Meanwhile, JD Sports celebrated another record performance as sales and profits surged. Unlike Primark it does have a multichannel offer, but like the value apparel giant, a forensic focus on customers sets it apart.
While some retailers obsess about the ‘unprecedented’ shifts in shopping habits and how so-called ‘millennials’ have completely different retail expectations from previous generations, JD views developments through a weather eye.
In its results statement, executive chairman Peter Cowgill made a fascinating observation.
“JD isn’t blind to the rise of digital technology, but nor is it in thrall to every aspect of received wisdom”
He said: “Whilst we firmly expect online to further increase its share of overall sales in our core UK and Ireland markets, the often social nature of consumers’ shopping trips and impulsive nature of their buying decisions combined with the importance of cash to a high proportion of our demographic, means that we expect physical retail to retain most of its current level of importance.”
While others fret about this or that ‘game changing’ payments system or how young people ‘spend their lives on their screens’, JD prefers a cool, calm analysis grounded in how its shoppers really behave.
JD isn’t blind to the rise of digital technology, but nor is it in thrall to every aspect of received wisdom.
Who knows whether cash will ultimately hold its importance? No doubt, at some point, cards and digital wallets will replace readies for those young shoppers.
In categories such as convenience grocery, evidenced by Amazon Go and similar experiments, cashless, high-speed transactions are certainly increasingly appealing.
But equally there seems little doubt, judging on present and past form, that retailers as skilful as JD will see any shift coming that will affect them and respond accordingly.
Retail is being reinvented in all sorts of exciting ways – in response to shopper habits, in anticipation of them and in completely new, pioneering ways that cater for needs not previously imagined. That is to be welcomed.
But the success of Primark and JD shows that today’s realities as well as tomorrow’s possibilities mark out winners from losers. Retailers attuned to the former will be better able to adapt to the latter.