Finding your tribe, the multichannel way

Columnists

There’s a lot of gloom among high street retail chains at the moment. Marks and Spencer are closing stores and consolidating their ageing estate, and Debenhams are sinking irretrievably, despite efforts to throw them a line.

The public are becoming more familiar than they should with the phrase “company voluntary arrangement”, as firms desperately try to stave off creditors and maintain at least a thready pulse. It’s enough to make retailers reach for a collective stiff drink.

There is, however, a glimmer of light in the darkened sky. JD Sports, Britain’s biggest sportswear retailer, has announced that it has been firmly in the black for 2018/19, thanks to growing demand, and strong sales from newly opened stores. The company’s shares have risen in value by an astonishing 77% this year, and the secret seems to lie in demographics.

Generational battles

Retail these days is obsessed with analysing and sub-dividing customers by age, gender, ethnicity, location and a hundred other metrics. The most modish of these is the generational one; after the baby boomers of the post-War era, you have Generation Xers, my crowd born to a society in the 1960s and 1970s beginning to suffer from affluenza; then the millennials, who mingle and overlap with, but are not identical to, Generation Z. There is a belief in advertising that if you can just target the right age group, focus your efforts on the right tribe, then untold success will be yours.

I don’t believe in panaceas. I talk a great deal about disruption, innovation and interconnectivity, and they’re all vital parts of the overall picture of a healthy retail environment, but they’re just that: parts. Necessary, but not sufficient. Nevertheless, I’m always ready to give credit where it’s due and call out success when I see it, and JD Sports seem to have hit that target, the retail sweet spot of an audience completely in tune with their product. Millennials and Gen Zers are increasingly attracted to gym wear – whether for the gym or not – and “athleisure” products are riding high, acceptable now not only for exercise but at work, school or social occasions too. See a market and feed it: the fundamental truth of retail, and JD Sports have hit the mark.

But they aren’t just grabbing a passing opportunity – they’re playing a cleverer game than that. They’ve also announced that they’re overhauling their corporate governance structures and engaging with shareholders on the toxic subject of executive remuneration. Dull, you might think, and all about the hidden wiring, but actually it’s about acknowledging social responsibility and presenting a fair and ethical face to the buying public – and that’s a strong win with the younger millennial market (think of the good causes that Ben and Jerry’s, the Vermont ice creamery, support, or, conversely, the huge image repair that Shell has had to undertake after its involvement in political skulduggery in Nigeria).

JD Sports

JD also has a strong internet presence, and that complements its bricks-and-mortar stores in a perfect illustration of the strength and rewards of multichannel retailing. As I’ve been saying for some years now, the high street success story of the future will need to balance online sales with over-the-counter commerce, and integrating these two seamlessly, so that the customer barely notices the join, is a difficult but essential task. JD Sports are getting it right, and its competitors can see the return.

JD Sports is hardly the only high street store marketing sportswear and athletic accessories. There are two or three major chains, but, despite targeting the same audience, dealing with the same circumstances, and having access to the same tools, they’re treading water at best while JD Sports are powering ahead.

Casual observers often find this contrast difficult to understand. Why should one firm prosper while another, apparently very similar, finds the current retail environment such hard going? I like to think of this as a retail version of MasterChef. Everyone has access to the same ingredients, and everyone has the same objective. But some people are good and some aren’t. It’s about skill, and a healthy dose of luck.

JD Sports are riding high. I hope I’ve done a little bit to explain why and how. But nothing lasts forever: competitors will analyse their success the same way that I’ve done, and they’ll respond. The competition is on. But, as so often in the retail market, that leaves one clear winner: the consumer. I’ll take that for the moment.

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