The Boohoo Ascendency – What Can we Learn?
The Coronavirus crisis has taken it's fair share of victims in the world of retail, tolling the death knell for a whole slew of companies including Debenhams, Long Tall Sally, Cath Kidson, Warehouse and Oasis. And yet, recent news tells us all is not lost – Boohoo has stepped in and bought the online businesses of both Warehouse and Oasis for a bargain £5.25m. It's no surprise that e-commerce based retailers have been less hard hit than their high-street counterparts, but even so, the majority of e-tailers have reported losses during the crisis. Not so Boohoo. Despite a slight downturn when the crisis hit, sales shot back up in May and they closed the first quarter with a 45% sales increase on the previous year. So what is it that makes Boohoo so special?
Their secret it seems, is in their provisioning – the “Test and Repeat” model. Rather than making major forward orders and holding large amounts of stock in their warehouse, they instead purchase small product runs, test them on the site, and then restock quickly the products that work well, discarding those that don't. This has been vital during the Covid19 crisis as it allowed Boohoo to switch their product range from party and club styles to loungewear and athleisure within a matter of days, adapting to their audience's requirements without missing a beat. As the retail sector faces an uncertain future it's worth considering whether this business model may be the solution for retailers everywhere, whatever their size.
The difficulty is sourcing products quickly enough to make it work. There's no point in having a successful test-run of a certain product if, when the first batch sells out, your restock order from suppliers in China or India can take up to 2 months to arrive – by this point the bird will have well and truly flown. Boohoo combats this by stocking mainly UK based suppliers, and with imports affected by travel restrictions and breaks in the supply chain, sourcing products locally is without doubt the obvious solution (particularly with Brexit on the horizon). Some retailers may balk at the higher prices, but with lower risks and less dead stock, the benefits do seem to outweigh the increased costs.
The Coronavirus crisis has forced an entire industry to stop and think, literally. How can we change the way we work to face the challenges that have taken us all by surprise? Short-order provisioning may be a way for businesses to adapt to this new situation and respond to the rapid changes in consumer demand that are sure to continue over the coming months, however this is likely to be a step outside of the comfort-zone for many retailers who are used to ordering for a season months in advance. The good news is that there are simple options to help with the switch to the “Test and Repeat” model. TradeGala offers ready-to-ship stock from over 50 independent fashion brands covering womenswear, mesnwear, childrenswear, accessories, gifts and shoes. It's simple to register and you can go from initial order to receipt of goods in just a few days. Whether or not the recent changes signal the future of the fashion retail industry, as with any business, adaptation is survival. Is your retail business ready for the “new normal”?
Written by Amber Domenech Patey