Boden is banking on international expansion and growing its UK store estate to offset its falling profits, but will the bet pay off?
The fashion retailer, which reported a £8.1m fall in its full-year profits to £23.9m this week, has outlined an ambitious strategy to drive its business forward.
As the retailer plans two more UK stores and a launch into the lucrative but notoriously hard to crack Chinese market, we take a closer look at the current state of its business.
Strengths
Online scruples – Boden’s launch in the early 1990s meant it was well placed to capitalise on the rapid penetration of online shopping.
The company has been at the forefront of innovation in this area, having been one of the first to introduce suggestions for putting outfits together, as well as incorporating product ratings and customer reviews.
It constantly improves the customer experience by making continual functionality improvements and tests and tweaks its web presentation for different markets.
US success – The fashion retailer has form in successfully launching into foreign markets.
Capitalising on the current appeal of ‘classic British fashion’, Boden has achieved considerable success in the US.
Experience of establishing itself in this challenging market is now proving useful in creating a significant continental European business.
Weaknesses
Indecision on retail stores – UK sales have been under pressure for the past few years amid mounting criticism that Boden had lost touch with its customer base during the recession.
The company has had a series of half-hearted experiments with retail outlets in the UK, although its presence failed to develop beyond a couple and in 2015 was restricted to the original store in west London.
Fulfilment – Compared with the likes of Next and Asos, fulfilment options at Boden look weak, with relatively long lead times and fairly hefty delivery charges.
Opportunities
More online exclusives – Going forward, management is looking to drive up margins by increasing the number of online-exclusive products within the offer. These ranges do not incur catalogue mailing costs.
However, this needs to be balanced by the fact that the catalogue drives sales. Online-exclusive products were selling at around half the rate of merchandise featured in Boden’s 2014 catalogues.
Rapid international development – Lack of growth in the more mature domestic market is being offset by rapid international expansion. The appointment of Penny Herriman, former chief executive of digital agency Isobar, as its first global brand director in 2013 was a clear indicator of intent.
The US is proving particularly lucrative, and will soon overtake the UK as the group’s most important market.
The retailer will expand its international business via Alibaba’s Tmall platform this year.
Threats
Erosion of USP – Initiatives to widen Boden’s brand appeal in the domestic market could alienate the original upmarket customer base. There is a risk that it becomes too associated with promotional discounting, the offer could lose some of its exclusivity.
Increasing competition – The lifestyle fashion sector has become increasingly competitive in the UK, and a number of its competitors such as White Stuff and Joules now also have a growing presence on the high street.
- This is an excerpt from Boden’s profile on Retail Week Prospect, an intelligence service offering insight and analysis on the UK’s most innovative retailers
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