British retail and e-tail are banking on a comeback.
After Prime Minister Boris Johnson rolled back work-from-home mandates on Jan. 20, and lifted “Plan B” restrictions last week as Covid cases declined, retail foot traffic picked up, with bigger improvements expected as people resume their office-going schedules in droves, according to Diane Wehrle, insights director for Springboard, a footfall-traffic firm. This would reverse a weekslong downward trend, illustrated by footfall dipping 6 percent for the week beginning Jan. 2-7 from the prior seven-day period, Springboard said.
Asos is betting on big near-term growth for its online-only fashion empire. The British employer of 3,600 recently documented its economic impact and outlook in a report created with Oxford Economics.
“Our economic footprint extends into other areas of the U.K. economy beyond retail, from our significant investment in transportation, warehousing, and logistics to our spend with technology and services partners and product suppliers,” Asos chief operating officer Mat Dunn said. Now, the Topman and Topshop owner plans to reach 7 billion pounds ($9.5 billion) in annual revenue over the next three to four years. This would increase its GDP contribution by 2 billion pounds ($2.7 billion) to 3.8 billion pounds ($5.1 billion), Oxford Economics estimated.
Asos aims to support up to 25,000 new jobs across the U.K. through this growth and reach 60,000 workers in the U.K. through employment, partnerships with suppliers and entrepreneurs, and internships, Dunn said.
Right now, the e-commerce firm spends more than 800 million pounds (about $1 billion) with U.K.-based suppliers, about 25 percent of which is spread among 40 of the country’s most underserved local authority areas. The company reserved 21 percent of its U.K. spend for upskilling in high-priority areas through its Levelling Up Fund. “In our 2020 financial year, U.K. suppliers accounted for about a third of all our procurement spend,” Dunn said, “with around a quarter spent in the most deprived parts of the country.”
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The 1,400 U.K. small-to-medium-size businesses from 55 countries featured on Asos.com process about 200,000 orders per year on the online marketplace. The company also employs 187 or interns.
“Our research demonstrates the significant contribution that a large and successful British company like Asos can make to the economy, especially the jobs market and the UK’s public finances, as the U.K. recovers from the deepest economic recession in living memory,” Pete Collings, director of economic impact consulting for Oxford Economics, said.
Meanwhile, Joules Group said higher freight costs, Brexit duties and taxes weighed on six-month net sales gains for the 26 weeks through Nov. 28. Shipping delays and customer cancelations clipped wholesale revenue, the apparel firm said. Gross margin for the six months inched up to 50.4 percent.
“Whilst the Group experienced strong levels of customer demand that resulted in good revenue growth against the prior two comparative periods, Group profitability in the first half was impacted by various factors, most notably the severe inflationary cost environment,” CEO Nick Jones said last week. “We have a clear plan of action to simplify the business, enhance efficiencies and mitigate the cost pressures that will enable the Group to convert the strong levels of customer demand into sustainable, profitable growth.
“Whilst we acknowledge that there are areas within the business where we need to simplify our operations and improve profitability, we remain very excited in our long-term growth prospects,” he added. “We have continued to see improvements in brand awareness and customer numbers, and we are confident that our broadened lifestyle proposition—which benefits from increased product and category diversification through Friends of Joules and Garden Trading—is more relevant than ever to consumers,” Jones said.