Despite headlines focusing on the demise of the high street, the reality is that many UK consumer businesses are thriving.
It is clear that although consumers have changed the ways in which they choose to engage with consumer brands, businesses which have adapted quickly to meet their needs are succeeding. Unfortunately, those who have been too slow to change are struggling.
The headlines have tended to focus on the companies that haven’t fared so well and with good reason. Significant job losses and a changing face of the high street has a significant social impact. But if you stand back and look at the data, the situation for retail is actually one of growth.
The Office for National Statistics shows a year on year growth rate of 2.9% to August 2019 and within that online growth was at 16.1% . Given the strength of these numbers, inevitably there are going to be some clear winners.
The high street is suffering, but consumer businesses that have focused on the strength of their brand and embraced digital, or that have started out as digital brands are continuing to take market share. The UK, remains full of opportunities for retailers that have a strong proposition, put their consumer at the heart of their strategy and embrace digital channels.
These are some of the key messages retailers can take away from Fast Track’s latest Top Track 250 league table, which each year ranks Britain’s private mid-market growth companies according to the biggest sales. Retail and consumer businesses fared notably well in this year’s list, with many joining after expanding into new overseas markets, diversifying into digital channels and staying true to their brand.
Meeting customer needs
One entrant setting an example for how retailers can navigate the changing retail environment is Matchesfashion.com. Founded by a husband-and-wife team, the business sells items from over 450 luxury fashion brands from six physical stores and online via its ecommerce site, which delivers in 176 countries.
Funded by growth provided by Apax Partners in a transaction in 2017, this year Matchesfashion.com saw sales grow by 27% to £371.8 million. This comes after it launched local versions of its ecommerce site to cater for its growing international customer base, including in France and South Korea.
In total, 42 retailers and 30 consumer goods businesses made it into this year’s Top Track 250, which included the likes of footwear seller Dune London, key cutters Timpson and clothing retailer Charles Tyrwhitt. The strong showing from these businesses suggests that buoyancy is returning to retail and the consumer industry, despite the high street’s woes. Strong brands are re-focusing their operations and providing consumers with greater offerings.
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Success in retail is still about having a really authentic, strong brand that people relate to and trust. What makes a good retailer hasn’t changed, it’s just that the channels retailers must deliver through are now different.
Two more Top Track 250 entrants – clothing company Barbour and footwear business Dr Martens – are good examples of retailers that have stayed true to their original ethos while growing a new customer base from their authentic heritage. Indeed, 10 of this year’s Top Track 250 businesses are fashion retailers, most of which experienced a significant jump in the rankings over the last 12 months due to their brand strength.
Barbour and Dr Martens have been operating for a long time, yet both have kept the essence of where they came from. The most recent Dr Martens campaign, for example, specifically targets younger generations of consumers – millennials and generation Z – but still communicates the brand’s original message. Equally, Barbour has done really well at increasing its visibility in recent years without compromising on the quality of its clothing.
Both of these companies have emphasised their ‘made in Britain’ credentials. British brands continue to do well internationally, with consumers from the US to Asia associating authentic British brands with a quality offering, genuine heritage and a history that’s hard to replicate.
A focus on sustainability
In terms of investor appetite for retail businesses, another major growth area in 2019 has been sustainability. No matter the market you’re in, if your business can’t prove its practices are sustainable and ethical to investors, you’re becoming less and less likely to win their support.
Consumer businesses may now need to prove that they source products sustainably or that their proposition is fundamentally ethical, to achieve investment. In the case of many new businesses in the sector, sustainability has become an essential component of their brand. Increasingly, every aspect of business needs to be delivered in a measurably sustainable way, because both consumers and investors are demanding it. Sustainable brands are starting to attract far higher valuations as result.
Playing the long game
Whether you’re seeking investment or planning a campaign to win over new customers, what’s clear for retailers is that the industry’s rules have changed. While it used to be the brand that bagged the best location on the high street that made the most sales, now it’s more likely to be the brand with the best omni-channel offering – pivoting successfully between various digital channels and carefully considered physical stores.
For the retailers that do adopt these new rules, the UK consumer outlook remains very much alive and well.