As the dust from the European Union referendum starts to settle, retailers are turning their thoughts to what comes next.
Everybody knows there could be turbulence but, more to the point, retailers are wondering how to turn challenge into opportunity.
Sainsbury’s this week provided one pointer as it struck a deal to ramp up its business with Chinese ecommerce giant Alibaba by doubling the number of products it sells on the latter’s Tmall marketplace.
Other retailers such as Marks & Spencer also sell on Tmall, and the site could help smooth the way into the lucrative Chinese market for more.
While China has had its economic ups and downs of late, incremental growth in consumption is forecast by Boston Consulting to be bigger than the whole German retail market over the next five years.
“The local expertise of Alibaba should help JS in its mission to increase sales in China. The grocer’s goods will be promoted through a ’super brand day’ as part of Tmall’s 8.8 ’shopping festival’ next Monday”
China is a tempting prospect as long as the retail offer is right. Sainsbury’s chief financial officer John Rogers said Chinese consumers are demanding “high quality international products”.
That sits well with Sainsbury’s quality and provenance strengths, and other British retailers are similarly well-placed.
The local expertise of Alibaba should help JS in its mission to increase sales in China. The grocer’s goods will be promoted through a “super brand day” as part of Tmall’s 8.8 “shopping festival” next Monday.
Alibaba has a track record of creating promotional extravaganzas. It was responsible for turning Singles’ Day into a spectacularly successful online red-letter day that last year notched up more than £10bn of spend by Chinese shoppers over 24 hours.
It will be worth watching how Sainsbury’s Chinese “super brand day” plays out. If it goes well, it will be an auspicious sign of international retail opportunity and a tonic to Brexit anxiety.
An ongoing reputational risk to retail
As online shopping grows, retailers are battling to come up with ever-more convenient delivery options for shoppers.
To do that, they frequently work with fulfilment partners who themselves may work with ‘self-employed’ drivers.
The latter relationship, representative of the so-called gig economy that relies on independent contractors, is the latest business area that looks as if it may face an inquiry by MPs following their investigations into Sports Direct and BHS.
That could spell problems for retailers because, in the same way that they are blamed for service let-downs by third-party providers, they are likely increasingly to be held accountable for the practices of companies working on their behalf.
Sports Direct was a case in point. Companies that supplied staff for the Shirebrook warehouse – in particular Transline – were accused of some appalling practices.
Reputation, so often vital to a retailer’s appeal, is easily damaged. Retailers should ensure that those they work with adhere to the highest standards or they may be next to be caught up in a reputational storm.