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17 Apr 2018

Retailers need to focus on profitable customers not unachievable targets

Retailers need to focus on profitable customers not unachievable targets
Extraodinary deflation in retail has meant that prices have not gone up in most segments over the last 15 years and retailers have to work a lot harder to make a profit, warned Gavin Aldred, Owner & Chairman, at World Retail Congress this morning.

“We live in an age of relatively good products at relatively good prices,” he said of the current retail environment but said that the climate is also familiar.

“We have been through this with Y2K and there is a lot of this around at the moment, a case of Emperor's new clothes,” he said, as he questioned the role of, for example, voice activation. “More and more there is a case of being left alone.”

He also raised concerns over the economies of free delivery: “It's insane to keep doing things that lose you money. It's impossible to do all the things we are supposed to need to do. There is hardly any barrier to entry, so companies can go online and nibble away at markets. We are moving away from needing to go to stores.”

Instead of pursuing unachievable targets, Aldred said: “Our future success is selling less for more, a reversal of the proposal over the past decade. There are 140 billion garments produced every year, 20 for every person. We are bombarded to buy more and more.”

He added: “We need to choose our customers very carefully. Look at the high level of returns, among some customers it's around 40%. Why do you want those customers? We also need a proper case for selling our products, otherwise we are just drug dealers.”

Aldred said that his business sold menswear only and had return rates of just 3%. “We also chose our customer through raising prices. We are open and transparent. It's simple, ethical costs money.”

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