Matt Henderson (Rangespan)
Comments - Page 2
Great hire! Bertrand is top class.
Growing fast online but from small to less small. Given their profile and category breadth, HoF should be doing over £500m online.
Couple of weak areas:
(1) Product range is OK in clothing but benchmarked against online competitors it lacks authority in home, sports, electronics, appliances, toys and health/beauty.
(2) Their search is often slow and lacks subtlety with keywords (try searching for "samsung galaxy case") and lacks integration with white label sites for appliances and electronics.He could have voiced support for Clarke, and the message for patience, without throwing Leahy under the bus. Odd...
I'm just a sample of one, but Barker & Stonehouse may be pleased to know that even though I live in central London, I literally bought *all* my furniture from their Middlesbrough store and had it shipped down. No-one in the South East has the same strength of range in the upper-mid price points. It is basically better quality than JLP, but about the same price.
The headline says it all. If your business is flat, adding fixed costs is worry. Doing up the Oxford St store makes a lot of sense but they should cut elsewhere and repurpose that resource.
Some themes for the future:
- Gross margins will continue to decline for retailers of manufacturer branded product. Technology (offline or online) enables retailers to compete margins down and customers win.
- Ecommerce still has a long way to grow. Many categories at 4% penetration now are showing the trajectory of categories are at 20% and growing.
- More vertical integration. Retailers will seek refuge from price competition by increasing own-brand as proportion of business, and big brands (Nike, Samsung) want to control the end experience re. pricing and product adjacency.
- Smaller format and smaller network stores. Click-and-collect is nice, but I don't want to pay 20% higher prices so you can pay for 2000 sqft stores, and hundred of duplicate inventory locations.
- More high ticket items will be conveniently rentable or shareable, e.g. Zipcar
- More variety, and extremes. It is becoming more economical for manufacturers to make myriad options and customisations, dividing narrower and narrower customer niches. Wouldn't surprise me if, in a few years, you can buy Nike trainers anywhere between £15 and £500 (the continuum is already widening fast).I've always felt their use of RRP goes beyond fair trading. The shirts seem to always sell for about £25, miraculously "reduced" from £90, for quality that clearly cost £10 to manufacture. They're certainly not alone in this approach (Charles Tyrwhitt is another cracker, and don't get me started on OakFurnitureLand's "was £2000" pitch...).
MyProtein has got to be the jewell in their crown. That was such a great, bargain acquisition. When they float it will be interesting to see the sales numbers split out by website.
...they'd buy it because it will cost next to nothing, and a lot of own brand strategies use multiple brands to cover different price segments.
Personal referrals, human recommendations, endorsements, etc, are all good. Virtual kisses? Bollocks.
Argos should buy the brand and designer (but not the stores) and use it to beef up their own-label range. Dwell had some decent stuff, but needs a leaner, single-pool-of-inventory model.
Why I recently sold my ASOS shares (and you should too):
First I should say that I am a huge fan of ASOS. But it is overvalued. I first invested several years ago at about 400p and for a long time you could buy their shares at a P/E multiple of less than 25, even though they were growing at 40-50% YoY and their operation margin was stable.
BUT, fast forward a few years, and everyone wants a piece of them. At over 4000p, they're trading at a P/E of about 60. 45% growth is great, but it's not enough to justify a P/E of 60, unless there is also a prospect of significantly expanding operating margin. But ASOS's margin is already strong. Amazon trades at a crazy P/E, but it is conceivable that Amazon's operating margin could more than double in the long term (it is only about 2%).
Actually Amazon is twice as big as Tesco online in the UK and growing faster.
From Amazon's public data, they reported £4bn revenue in the UK, not including marketplace sales. Marketplace is about 40% of unit sales worldwide, so if that is also the case in the UK, you get to >£6bn sales value. And it is growing at over 20%+ YoY compared to Tesco's 10%.
And for non food, the gap is enormous.John Donahoe has led a great period at eBay. Pre-2008 their unstructured catalogue data and poor site search made shopping horribly messy and they bled growth opportunities to Amazon as a result. To his credit they have made huge strides in both areas, plus made a far-sighted investment developing the fashion categories.
And Donahoe's Amazon-baiting statement about not competing with retailers (which in several ways is untrue) has caught on perfectly.Makes a lot of sense. Their inspiration is clearly the approach taken by Quidsi in the US (with diapers.com, soap.com, wag.com, casa.com, etc)
I agree their service has shortcomings, but it's hard to argue that Royal Mail is not (a) widely used and (b) growing it's parcel delivery volume.
Ultimately there will be many providers of collection points, from aggregation of convenience stores to Post Offices, to lockers, etc.
These are all much more cost efficient ways of providing customers with a collection offer than as retailer owning it's own network of large stores (the experience isn't quite as good, but as ecommerce has proven, customers vote with their wallets).Finally the investment is aligning with the huge size of the prize. But for those embarking on >£100m platform investments, it's worth considering how in-house technology teams at places like Zalando and ASOS built similarly scalable platforms for half the price....
Mothercare is a great example of the virtues of franchising and/or licensing for international opportunities. If instead they had done everything in-house (like they do in the UK) they would have gotten higher gross margins on international product sales, but they would have been exposed to fixed overheads. In a tough environment, the fixed overheads can become an inflexible (and unprofitable) burden. Their international fees are lower risk, and funding the costly transition from an over-sized UK store network.
Wow, that's an expensive distribution centre, even for turn-key, at that scale.
One of the many interesting aspects of this deal is the way it seems inflexible over a very long term (25 yrs) but the fees are heavily weighted upfront. It may lead to a divergence of motivation several years into the relationship...This one is going to be better than a soap opera...
Commented on: 3 July 2013
Argos hires top EMI Music executive as new digital director