Newness is the talk of New York

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Goldman Sachs’ 18th Annual Global Retailing Conference in New York last week was held against a sombre backdrop of US economic indicators: consumer confidence lowering to near recession levels; disposable incomes and unemployment both stagnating; and a stock market in decline for the fourth consecutive month.

All these and more underscored the announcement made by President Obama, also last week, of a $447bn economic stimulus plan.

But shoppers are proving resilient. Consumer spending in July grew at the fastest rate for five months, and in August, despite tough times for some of the lower end department stores like JC Penney and Kohl’s (which both saw comp store sales decline by 1.9%) many of the big retailers across the sector (eg Costco, Macy’s and Target) reported healthy, mid-single-digit comp store gains for the month.

There were some key points of unanimity for many of the 57 companies presenting at the Conference. Much of the mood, unsurprisingly, was inward-looking and defensive: inventory management, share buy-backs, private labels, loyalty schemes and, most of all, execution.

From the very biggest to the smallest represented, the message was mostly the same: executing clearly understood and unwavering strategies, every day in every store, is the sine qua non of improving performance. For the most bullish of the stocks, the only potential downside was determined ‘execution risk’.

But the ‘same old, same old’ is far from the whole story. There is one crucial corollary: newness. “Newness sells better” said one leading CEO and few disagreed. This mainly concerns new product, of course, but new promotions and new pricing play key supporting roles – and, for some, new channels can do so as well.

Over a decade ago, Amancio Ortega, the then 100% shareholder of the phenomenon that is Inditex (the company from which he’s just announced his departure) opined that the internet was not an appropriate medium for the selling of fashion.

Last week, Zara formally launched its long-awaited online shopping channel in the US delivering to all 50 states. This, critically, will drive expansion way beyond its relatively paltry portfolio of just 49 American stores.

When it comes to newness, Francesca’s Collections, the new kid on the retail block, is breaking many new records. Goldman Sachs simply says it expects this business, over the next two years, “to grow sales faster than any retailer or restaurant we cover, with average annual growth of nearly 40%”.

With just under 300 ‘boutiques’ and a target to triple that estate, Francesca’s is a multiple that looks like an independent. Its offer (50% apparel, 20% jewellery and 30% accessories/gifts) encompasses broad ranges of limited quantities which are delivered to stores five days a week “to create a sense of scarcity and newness”.

Good retail news stories are only too scarce these days; it’s good to know that some are still being told.