Mintel’s Month in Retail highlights the stories that have made headlines in the European retail markets over the past four weeks, with exclusive analysis from Mintel’s expert retail team on potential implications.

UK: Retail sales rise 2.2% in January

All retail sales (excluding fuel) grew 2.2% in January 2017 compared to the previous year. Food store sales declined 1%, while sales via non-food retailers grew 2.9%. Non-store sales continued to enjoy the strongest growth, with sales 14.4% higher than they were in January 2016. Clothing sales experienced stronger growth than December 2016, with an increase of 1.4% (compared to 1.2% in December 2016), while electrical household appliances were up 2.9%. Furniture and lighting retail sales declined 6%, while audio and music retailers saw sales decline 3.5%.

“These figures indicate a positive month for the UK retail industry, although the BRC take a differing view with their total sales growth figure of 0.1% for January. Irrespective of this, there was always going to be a slowdown post-Christmas, so 2.2% growth is respectable, particularly against a strong January in 2016 following a poor Christmas. Value growth outpaced volume growth for the second month in a row indicating that prices are on the rise and being fed into the market. All in all, these figures are encouraging; we will need to see a few more months worth of data to get a better sense of how demand is holding up, but this is a good start to the year for the industry.”


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UK: Outlet village operator reports 6.7% sales rise

Hermes Investment Management, parent company of Clarks Village, Freeport Braintree and Junction 32 outlet shopping centres, has reported a 6.7% rise in sales alongside a 5.8% increase in footfall during 2016. The three centres combined, which offer a total of 262 stores and 20 cafes and restaurants, recorded 10.6m visitors during the year, with 1.1m in December alone – a 3.8% increase on the same period in 2015.

“Despite a relatively saturated market in the UK, retail sales through factory outlet schemes continue to grow. Mintel forecasts that the market will grow 6.9% in 2017. The leading operators have tapped into an appetite for discounted clothing, offering value for money. In terms of attractiveness to shoppers, retailers and investors, Clarks Village, Freeport Braintree and Junction 32 are all amongst the top 15 outlet centres in the UK. According to Mintel’s Factory Outlets UK 2016 report, 21% of consumers aged 16-24 visit a factory outlet every one to two months. This interest amongst young shoppers will further fuel growth in the future.”


France: L’Oreal considering selling The Body Shop

Reports suggest cosmetics company L’Oréal is considering selling The Body Shop 10 years after purchasing the ethical beauty chain. The reports came a day before L’Oréal announced its full year results and followed the third quarter trading statement in November which revealed that The Body Shop sales fell by 5.4%. Originally purchased for €650m, it is thought that L’Oréal could seek up to €1bn for The Body Shop.

“The press is presenting this story as if it is a distress sale. But that’s not true. The Body Shop has performed quite well within L’Oréal; however, it has underperformed the rest of the business. It is profitable and the latest quarterly results show sales are growing. The truth is that it was never a good fit for L’Oreal. There have been innovations and the business has not stood still, but new players in the market, notably Lush, show all the innovation and sheer retail theatre that The Body Shop no longer has.”


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France: Domoti to buy out 3 Suisses

The Domoti group has been in exclusive negotiations to purchase the online retailer 3 Suisses, including its French and Belgian sites. The deal remains subject to market authorities and, if approved, is expected to be completed in the first half of 2017. 3 Suisses, which sells clothing and homeware online, has been loss-making for several years in the face of strong competition from the likes of Amazon and Zalando.

Another of the former home shopping leaders has failed to adapt to the internet era. 3 Suisses business is a shadow of its former self with sales that are only a tenth of what it achieved in the pre-internet era. Many of these mail order companies who should have been best placed to profit from the development of online did not adapt to the new conditions, stuck with their former way of operating for too long and have paid the price.”


UK: B&Q set to trial new store format

DIY operator B&Q will debut a small format, urban store on Holloway Road in North London. Due to open in March 2017, the store will target the “home improver” with a scaled-back B&Q tool and hardware offer.

“As discussed in Mintel’s DIY Retailing 2016 report, big-box sheds are struggling to connect with the next generation of potential DIY’ers. The main driver for this has been the shift to renting among those aged 16-34, which is limiting the amount of home improvement works they can accomplish. Targeting the lighter-end through more city centre-based stores makes a good deal of sense. Our research also finds that more than half of those aged 16-34 would be interested in renting DIY tools or equipment, so it will be interesting to see if B&Q integrates any rental element to these new stores should the trial be successful. ”


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2016-09-28

UK: Sir Ken Morrison passes away

Sir Ken Morrison, who led supermarket Morrisons from a small grocery chain to a leading UK retailer, has passed away after a short illness. He first joined the grocery chain in 1952, becoming managing director, then chairman four years later. He held the latter role until his retirement in 2008.

“The end of an era. Sir Ken Morrison was one of the great innovators in food retailing in the post war era. He developed superstores with their own distinctive style, in particular with the market street format of counter service fresh foods. Morrisons was never the biggest superstore operator, but Ken Morrison concentrated on developing purpose-built stores. The chain was the most homogeneous, but also one of the most profitable, in spite of the fact that it supposedly didn’t have the buying power of some of its competitors.”


UK: Clarks set to review store portfolio

Footwear specialist Clarks is launching a review of its UK and Ireland store portfolio as part of a plan to modernise the business under new CEO Mike Shearwood. The move is part of a raft of new initiative that Clarks is implementing as it increases its focus on fashion, including a drastic shortening of product lead times.

“While Clarks remains the leading footwear specialist, it has continued to lose share as it faces increased competition in the market from more fashion focused footwear retailers, including Office and Schuh, as well as clothing retailers that have been expanding their shoe offer. Clarks’ customer base is biased towards over-45s and it is struggling to appeal to a wider audience as its offer is not perceived as trend-led enough. A focus on shortening lead times will mean it can respond more rapidly to the latest footwear trends and therefore attract more interest from younger, more fashion-conscious consumers.”


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