With the outlook for retail becoming distinctly more challenging as the UK prepares to untangle itself from the EU, now is the perfect time to highlight the retailers that have outpaced their peers and, crucially, should continue to thrive.
This is exactly what our exclusive report, produced in partnership with Retail Week, does. Our research reveals the UK's top 30 growth retailers and unearths the secrets to their success. We undertook a SWOT analysis – shorthand for strengths, weaknesses, opportunities and threats – of each of the top 10 retailers to analyse the key internal and external factors driving their success.
In the process we unearthed a real mix of retailers – both old and new – active in a range of diverse sectors. Regardless of their structural or operational differences, though, an overarching theme shines through: technology. From incubator labs to shoppable video ads, our growth stars show that by sensibly investing in tech that will shape their customers’ futures, they’re shaping their own future growth too.
Fast-growing retailers are often young businesses, as shown by the high ranking of outlets like Boux Avenue (founded in 2011), Green Man Gaming (2010), Made.com (2010) and Farfetch (2008).
But that’s not to say youth is the only crucial ingredient. Sometimes it requires a change of strategy for a business to be propelled forward. Childrensalon is a case in point. The luxury childrenswear retailer had traded for nearly half a century from a single store in Tunbridge Wells when it decided to launch a transactional website in 1999. At the time, the retailer did not realise the full potential of the online channel, nor did it imagine its offer would resonate so well with affluent shoppers from the Middle East and China. But these are exactly the reasons why it has undergone such a period of sustained sales growth over the past few years.
Given the major shift that has taken place towards ecommerce, it is not surprising that there is a heavy representation of online retailers. That doesn’t tell the whole story, however, as a number of businesses that started out online have now moved into bricks and mortar, having realised a multichannel presence has its own advantages.
Fashion platform Farfetch bought the London-based fashion boutique Browns in 2015 and has converted it into a ‘store of the future’, which it uses as an incubator lab for new retail technologies. Despite having been so successful with its online approach – sales through its website surpassed the £300million mark in 2015 – Farfetch’s founder and chief executive José Neves does not believe the future of luxury retail will be purely online, but rather “a seamless merge of a fantastic physical experience with powerful, yet subtle technology”.
Investing in growth often comes at the expense of profitability, and five of the 10 fastest growing retailers are currently still loss-making, including the entire top three. However, without exception, these are all retailers that are still in the early stages of their development and are currently still focused on raising their brand profile and gaining market share rather than boosting the bottom line. Losses are therefore to be expected and, generally, these businesses are given time to move into profit. After all, it took online grocer Ocado a decade and a half before it reported its first annual pre-tax profit a few years ago.
Our ranking of the top 30 growth retailers covers businesses that are privately owned and, in many instances, their growth continues to be driven by their inspirational founders. What’s especially striking is the level of innovation that has gone into some of the higher placed businesses.
The Farfetch portal was founded when Neves saw a gap in the market for an online platform that connects shoppers to independent fashion boutiques around the world. These businesses were often too small to invest in ecommerce capabilities, but thanks to Farfetch, they are able to compete on a level playing field with major luxury retailers such as Yoox Net-a-Porter. Digital games retailer Green Man Gaming also illustrates a high level of technological innovation. It was created by Paul Sulyok as an innovative platform that combines an online shopfront with a marketplace where gamers can sell off pre-owned digital video games. Sulyok has since added a social media network to the mix, which allows gamers to track in-game performances – and crucially, provides Green Man Gaming with plenty of valuable insight into its customer base.