In this edition of Weekly Focus Europe: Amazon Could Outsell Sainsbury's as a Challenger Supermarket; Appear Here Launches Space for Ideas: The Competition, Providing Free Flagship Space to 4 Entrepreneurs; January Blues for Retailers as HMV Becomes First Casualty of 2019; and Kelkoo Group Reveals Tom Ford Is Europe’s Most Popular Luxury Brand Amongst Online Shoppers.

Amazon Could Outsell Sainsbury's as a Challenger Supermarket

Research by behavioural science experts Decision Technology (Dectech) finds that Amazon could outsell Sainsbury's, if it entered the grocery market.

Dectech’s new report ‘Primed for Domination: The Threat of Amazon as a Challenger Brand’ finds that, controlling for other factors such as price, 13% of customers in the grocery market would choose Amazon – putting it ahead of Sainsbury’s (10%), but behind Morrisons (16%), Tesco (16%), and ASDA (17%).

The research finds that two factors holding Amazon to a mid-table position in the grocery market are the importance customers place on trust and the expertise of brands in this market.

But competitors would be well advised to stay wary of Amazon in the grocery market, despite these findings. Morrisons – already a brand partner of the online giant – is found to do well on the factors most influential in driving purchases in the grocery market. If Amazon pursued a similar strategy to the one it took with Whole Foods and acquired Morrisons, it could pose a major threat.

In other sectors, Dectech found that Amazon performed less well where customer use tends to be more ‘experiential’, such as the hotel and airline markets. Amongst eight competitors in the hotel sector, 10% of customers would choose Amazon, with only Z Hotels faring less favourably (8%). Similarly, just over 1-in-10 (11%) would choose Amazon if it entered the airline market. The findings indicate that consumers do not trust that Amazon would provide quality service in these markets, where there are already well-established budget offerings.

As part of its research, Dectech set up randomised control trials to gauge consumer expectations and find the threat posed to existing competitors by Amazon in seven new markets, including the mobile and grocery sectors.

Henry Stott, director of Decision Technology, said: “Our extensive, two-pronged research into the power of Amazon’s brand, and its potential for disruption, confirms that for the most part Amazon is as big a threat as people fear. If Amazon were to turbocharge its entrance into the grocery market, we could see significant disruption. An increasingly digitised shopping experience in the future could play into Amazon’s hands and give it an acute advantage in grabbing market share. 

"Yet Amazon won’t kill off competition in every sector. The e-commerce giant fares less well in offline markets, where customers often attach an emotional element to their experiences. We found that Amazon’s brand has its limits.

“Our report offers a number of recommendations to help firms stay competitive. Brands that can compete with Amazon on price should use in-store comparison tools to make sure customers know. Where they can offer unique products unavailable elsewhere to differentiate themselves from the competition, they should do so. And firms should look to curate unique, customer-centric purchasing experiences, like those offered by Apple’s Genius Bars, to help them escape Amazon’s looming shadow.”

Appear Here Launches Space for Ideas: The Competition, Providing Free Flagship Space to 4 Entrepreneurs

Appear Here, a leading marketplace for short-term retail space, announces the launch of its third Space for Ideas competition. Space for Ideas' mission is to discover and launch the next big retail idea, challenging entrepreneurs, emerging brands, and young designers everywhere to turn their ideas into reality.

Setting up a shop can be difficult. It’s not just about having an idea, it’s about having the right attitude to make it happen, which can be difficult and costly. Space for Ideas is Appear Here’s way of levelling the playing field and giving the best new ideas in retail the chance to flourish. By providing winners with a free store, design, and mentoring from industry experts, Appear Here is removing the excuses and calling out to designers, creatives, emerging brands, and entrepreneurs everywhere to think big in 2019, set yourself a goal, and make this year the year your idea becomes a reality.

The top four ideas will each receive a two-week flagship store space in one of the world’s top retail destinations: London, Paris, New York and, new for 2019, LA. Plus, they'll receive the mentorship, design advice, and budget to bring their ideas to life.

The competition comes amidst a stellar year from Appear Here that saw demand for space grow by 296% in the UK. Amidst accusations by some of the ‘death of the high street’, the Appear Here community has consistently bucked the trend, proving that there’s still a fundamental place on the high street for great ideas and small businesses. Appear Here has seen the far-reaching impact great ideas has on our high streets, our communities, and the people who define them. Space for Ideas offers four of the most exciting and innovative entrepreneurs, emerging brands, and designers the chance to help lead the change in the sector.

Featuring a judging panel that includes some of the most disruptive, innovative names in retail, fashion, technology, and media, Space for Ideas is a rallying call to our cities’ creative communities to get their ideas out there and be the engine room for innovation.  

This year’s judges panel includes fashion and commerce powerhouses Diane Von Furstenberg (founder of DVF); Natalie Massenet (founder of Net-a-Porter); Dylan Jones (Editor GQ); Neil Blumenthal (co-founder of Warby Parker); Jeff Raider (co-Founder of Harry's Inc. and CEO of Harry's Labs); and Ajaz Ahmed (founder of AKQA).

The greatest challenge many entrepreneurs face is finding affordable retail space and raising the funds to bring their ideas to life, so Space for Ideas gives emerging brands and young designers the leg up they need to get started.

January Blues for Retailers as HMV Becomes First Casualty of 2019

This week, major retailers are expected to reveal just how brutal Christmas has been for them in the slew of trading statements. HMV has already become the first casualty in what experts are predicting to be the worst Christmas since the recession of 2008.

Leading retailer Debenhams’ earnings are expected to fall by over 19% in 2019, whilst even bellwether Next expects to take a hit on annual profits. Debenhams, New Look, and Topshop took on aggressive discounting strategies of up to 75% in the run-up to Christmas; and although sales in November reached £7bn, £2.4bn worth of goods were returned. This has slashed profit margins considerably and the same pattern of returns is predicted to continue into the New Year.

More casualties and profit warnings are expected to follow in the footsteps of HMV and Greenwood. Christmas is usually the most important time of the year when retailers try to claw back 80% of annual revenue in this final quarter. With the retailing business model undergoing serious disruption, the pressure to maintain profitability throughout the year is greater now than ever before.

Roni Cohen, director of data science, Optimove, states: “Our data shows that discounting above 30% has a negative impact on customer retention. However, struggling retailers are continuing to employ broad-stroke discounting strategies to attract customers during the fiercely competitive Christmas sales period.

“While discounting during the holiday may attract new customers, brands must secure future engagement with these customers. Retailers should consider a personalised approach that promotes customer loyalty and increases customer lifetime value. Large volumes of sales do not always translate to profit, especially with the number of returns heavily impacting revenue figures.”

"Discounting strategies must be optimised to bring value to customers and increase retention. Using predictive analytics to engage with the customer at the right time, through their preferred channel, with offers that are relevant to each one, will convert one-time buyers into life-long customers.”

Kelkoo Group Reveals Tom Ford Is Europe’s Most Popular Luxury Brand Amongst Online Shoppers.

Fashion designer and American icon Tom Ford has been crowned as Europe’s most popular luxury brand, according to independent research conducted by Kelkoo, the largest pan-European e-commerce advertising and shopping comparison service.

The study reveals the most searched for luxury brands across Kelkoo’s shopping platform and analyses online spending habits across all major European retail markets, including the UK, France, Germany, Italy, and Spain. Tom Ford was amongst the top ten most popular luxury brands in each country, ranking third in 70% of these markets, cementing the American brand’s position as a key player across Europe.

In the UK, Prada tops the list as the most popular luxury brand, closely followed by Tom Ford and Versace for big-spending Brits. Fashion changes fast, however, as last year it was Chanel leading the way as Europe’s most popular e-commerce brand.

The in-depth research analysis searches through Kelkoo’s platforms across Europe – providing retailers with 289 million annual leads – the number of times customers connect directly with retailers’ online stores.

Richard Stables, CEO of Kelkoo, explains: “E-commerce is no longer just an option for high street shoppers; online marketplaces are increasingly a lucrative hunting ground for luxury purchases.

“Consumers demand convenience, whether they’re searching for bargain basement deals or luxury brands. This is where the online competition has the upper hand over stores, as they can deliver a much smoother and convenient customer experience.

“Retailers are becoming increasingly aware of the importance of online for their brands, instead of focusing on a purely in-store approach. Consumers are aware that they can secure world-class products at a reasonable cost online; however, an increased average basket size doesn’t mean that luxury shoppers aren’t also looking to save money.

“The retail landscape is evolving, due to new consumer demands also affecting the luxury market. Household names like House of Fraser, M&S, and Next have struggled to attract customers and endured financial turmoil; likewise, luxury retailers will also be in trouble if they fail to enhance their omnichannel and customer experience offering.”

Online shoppers favour 'home-grown' luxury brands

Kelkoo Group also examined how loyal shoppers are to brands on their doorstep, showing increased popularity in brands from their own country. For example, UK shoppers favour Stella McCartney, a brand that failed to make an impression in Europe, yet tipped into the UK’s top 10.

The research also revealed a similar trend across Europe with French designer Sonia Rykiel enjoying far greater popularity in its homeland – where it was the second most popular luxury brand. Gucci is by far the most popular luxury brand in Italy, but far less so in many other markets and just the ninth most popular in the UK (see tables below).