Emerging retailers: Still flying high?

For those who gathered for Retail Week’s photo shoot on a humid summer’s day back in July 2009, it proved to be more than just an opportunity to talk about their burgeoning businesses. Several of them now meet up regularly to discuss challenges they face and share ideas.

“The interesting thing about that day was seeing how we all had our niches and we all played to our own strengths,” recalls White Stuff chief executive Sally Bailey. “Even though several are online brands, it was almost like looking at the new high street. Everyone concentrated on doing exactly what they do best, rather than exactly the same thing as the person next to you and battling with them all the time. There wasn’t – and isn’t – a sense of competition.”

Two years on

The common theme uniting these 10 growing retail brands back in 2009 was the fact that they were all bucking the trend and thriving amid a remarkably tough trading backdrop. So two years on, how are they faring? Encouragingly, all have grown their businesses, all have their heads above water and all are unfalteringly positive about their future prospects. So far, so good, but without doubt many are finding it tougher today than two years ago.

“There’s no question there’s been a massive slowdown,” says Sweaty Betty founder Simon Hill-Norton. Bailey says that White Stuff’s trading has generally been good over the last two years, but the low point is now. “There’s a constant talk of doom and gloom with nothing new on the horizon. Consumer confidence is very low. People just aren’t buying at the moment.”

Steamer Trading Cookshop managing director Ben Phillips agrees. While his business was still enjoying strong growth in the latter half of 2010, it’s since become progressively more difficult. “In the last couple of months there was finally the realisation that it’s going to get tougher,” he says. Argento founder Pete Boyle backs this up: “We had a successful 2010 up to October, but then things began to wobble and at the end of March they dropped off.”

Boyle has perhaps added woes to deal with because his business runs 10 franchised Pandora stores. The brand has had a disastrous start as a public company and in August warned that revenue growth for the year – expected to be 30% – would be nil and chief executive of the Danish chain Mikkel Olesen was swiftly dismissed.

Pandora was criticised for its high price points, but Boyle defends the brand: “Yes it made mistakes, but really the reality is that customers have stopped spending. In 2008 and 2009 they were still bucking that trend. I think when consumer confidence comes back, if the pricing is correct, then they will come back.”

Climate change

Nearly all of these retailers agree that the trading climate has worsened, but at the same time all have strategies that are proving successful in tackling the challenges they face and they have shown insight in predicting and reacting to changing consumer behaviour.

Aamir Ahmad, founder of furniture retailer Dwell, explains that it is far more difficult now to persuade shoppers to part with their money. And for nearly all of these brands, product – and adapting it where necessary – has proved critical to their survival. Ahmad says Dwell has invested in product development to try and counter the fact that “people have money but are reluctant to spend”. It’s paying off. Despite the well documented troubles the home specialists are facing, Dwell has continued to grow its store portfolio and workforce, and is enjoying positive like-for-likes for this year, with double-digit growth in like-for-likes online.

Oliver Tress, co-founder at lifestyle retailer Oliver Bonas, says its focus is on “differentiating the business”. It is moving more towards its own-label product, helped with the launch of its own Velvet Chair range, which is proving successful.

Sweaty Betty, meanwhile, took a risk with its product. Instead of reducing prices and focusing on entry-level ranges and best-sellers, it increased its prices slightly and focused more on design and quality. Hill-Norton says they banked on the fact that its largely affluent shoppers might shop less, but when they did they would spend more. Like-for-like sales for 2009/10 were flat, but in 2010/2011 they have grown by 10%.

Phillips agrees that success at Steamer Trading Cookshop over the last two years has not hinged on low prices. Granted, his stores are largely based in towns with a wealthy catchment area, but as he points out: “In a recession, the kitchen is a comfort. People are eating in more and people need to replace things. We stock a balance of nice-to-haves and need-to-haves that will last. A lot of the cheap product that comes from the Far East doesn’t last. It’s shown that what we sell is very resilient.”

Notonthehighstreet.com co-founder Sophie Cornish believes its business model – whereby independent retailers and suppliers sell their goods via the site – has been instrumental in its success. The retailer has enjoyed a huge surge in sales, which leapt from £6m for the year ending December 2009 to £15m for 2010. “We’re always new and fresh,” says Cornish. “The model naturally supports the experimentation and trialling of new product. We can keep things fresh for our customers without investing in inventory. That agility helps.” 

Service with a smile

All say that service and providing an exemplary offer has also been essential in their continued success. As Bailey says: “White Stuff has a really good team, good product offer and a very strong brand that we work at protecting at all times.”

Isabella Oliver co-founder Geoff van Sonsbeeck says that the online maternity specialist has invested “far more in the loyalty side of things”. He believes the fact that it is a pure-play retailer has helped: “You can be very specific in your approach to customers.”

My-wardrobe.com, meanwhile, succeeded in securing a £6m investment in 2010 from venture capital company Balderton, which it has used to develop its designer portfolio as well as marketing, explains buying and merchandising director Luisa de Paula. She adds that it has relaunched and repositioned its womenswear website, with a “new photography style, editorial tone and new prestige brands” such as 3.1 Phillip Lim and Marc by Marc Jacobs. While the economic climate has been tough, it has also helped it become “stronger as a business”, adds de Paula.

All have grand plans for the future, too. Isabella Oliver is looking at developing its offline strategy in the form of concessions and wholesale – with a potential for flagship stores – largely in its overseas markets. Next month White Stuff launches its first international store in Copenhagen and is keen to open in a dozen more European markets.

Argento is planning to drive its online business further since launching online in 2010, as well as export its product abroad. Steamer Trading Cookshop, meanwhile, is planning to launch a transactional site next year.

No one is riding the storm with ease, and these niche retailers are no exception. As Phillips says: “A low point has been waking up and realising that we are effectively entering the fourth year of recession. The days when we used to enjoy double digit like-for-likes seem a distant memory.”

There will be plenty more bumps in the road ahead all continue to concentrate on what they do best. They may be small, but providing they keep on offering distinct point of difference, they’re more than capable of riding it out with the big boys.