The knock-back would have frustrated N Brown’s directors, who have argued throughout the credit crunch that their rigorous control of customer debt and shopper profile would insulate the business from the worst impacts of the financial crisis. They’ve been true to their word and reported record results while making bullish noises about prospects.
N Brown, which generates the bulk of its sales through clothing, doesn’t have the sex appeal of youthful fashion specialists such as Topshop or the cachet of department stores such as House of Fraser, but that is key to its success.
The retailer’s core customers are typically middle-aged and older women – a growing percentage of the population and mature sorts who typically pay off their balances in full, rather than incur interest charges on their purchases.
Although N Brown’s new customer recruitment programme has led to credit being extended in “marginal” cases, the retailer said it has seen “no significant changes” to the quality of its debtor book.
N Brown’s core customers have also proved willing to embrace the internet. Online sales rose 50 per cent last year and now account for 28 per cent of total sales. As well as typically being at higher values than sales through the retailer’s other channels, online sales’ growth has allowed operational efficiencies to be exploited.
A few months ago, the fear was that N Brown could be a big retail victim of the credit crunch. Experience has shown those worries to be misguided. The retailer seems increasingly like one of the safest havens in the ongoing retail storm.
Dunelm on the right track
In a similarly unassuming way to N Brown, value homewares retailer Dunelm has been motoring.
Its low-price offer and low-cost operating model are doing the job in straitened times, delivering like-for-like growth and gross margin gains.
Analysts point out that, despite its success, Dunelm has been trading at a discount to the sector. But the retailer’s appeal to money-conscious shoppers and opportunities for growth – it has only 76 superstores – put it in a strong position to outpace many of the bigger general merchandisers.
George MacDonald is deputy editor of Retail Week
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