As some value retailers struggle to survive, Matalan is hoping to win a bigger slice of the market with a £20m store makeover will help it win a bigger share of the market.
Amid a sea of value chains going into administration, middle-market players scaling back plans for refits and a general economic downturn, one retailer has been quietly, yet confidently, riding the storm.
Last week Matalan spoke out for the first time since it was taken private in 2006, revealing plans for a £20 million refurbishment programme of its 197-store portfolio. Of the total, 15 shops have already been revamped, with the rest due to be completed within a year. Only 50 stores – Matalan’s highest-density shops – will be denied the full treatment, but even they will receive elements of the makeover.
The new concept was trialled last year in Warrington, Cheshire, and completed in full this spring. It may not be revolutionary, but its is certainly a million miles away from Matalan’s original concept of high-density, ceiling-high fixtures and restricted navigation across the shop floor.
At the Warrington store, fixtures are limited to two levels, aisles are cut across the shop for better navigation, mannequins adorn the departments and a shop-in-shop strategy has been implemented to better showcase Matalan’s sub-brands.
The result is a spacious, easy-to-navigate store, with better segmentation of Matalan’s offer, which varies across womenswear, menswear and kidswear, and from young fashion to premium ranges.
Matalan store development director Gill Moore says visual merchandising is usually one of the first areas to suffer in an economic downturn but warns of the consequences of cutting back on spend. “At Matalan, store development has received big investments because customers now expect more from their shopping environment,” she says. “While others are making cuts we’re investing more.”
Among the ‘others’ are Marks & Spencer and Debenhams, which have cut back expansion and refurbishment plans due to the downturn in consumer spending. Given the turmoil that the market is currently facing, Matalan’s £20m investment certainly makes a statement. But with a total of five million sq ft of space and about 170 shops awaiting refurbishment, how far is £20m going to get Matalan?
“A £20m investment over an estate of 200 stores is only £100,000 per store, which is probably only £5 per square foot. That kind of spend only gives you general decoration, point of sale and a few mannequins. It will not go far in tackling the bigger issue of tired, badly lit stores with too much stock and very little inspiration,” says David Dalziel, creative director of design consultancy Dalziel & Pow, which was behind Primark’s new-look stores on London’s Oxford Street and Liverpool. “That being said, Matalan is doing the right thing investing in stores at a time when others are panicking and grinding to a halt. Today, budgets can go further and those who are spending money on stores will get good value for money.”
Dalziel adds that Matalan has focused on the right principles – navigation, segmentation, visual merchandising and increased display lighting. At the Warrington store, Matalan has introduced a designated denim and knitwear area; given womenswear prime position; and placed kidswear within the womenswear department to better target the mums’ market. Quirky and educational PoS material explaining the different styles and fits of jeans and how a suit is made up add interest, while freestanding table displays highlight co-ordinated outfits.
“We now have a model that’s working for us and allows us to define who we are,” says Moore. “We’re a family retailer that offers value and an interpretation of fashion for our customers.”
Matalan will support its store refurbs with the launch of Visual Academy, a training scheme to develop the visual merchandising skills of about 1,000 managers.
However, Dalziel believes that Matalan hasn’t gone far enough. “From the look of the Warrington store, the new concept is only having a superficial effect on the overall experience. It still feels like what it is: a big box, full of stuff with little point of difference,” he explains. “I don’t get the feeling that this reaches the heights of Primark at its best, or even the recent Bhs developments – and that has to be the benchmark.”
Mariann Wenckheim, director at design consultancy 2020, agrees that Matalan’s new concept lacks originality and that the retailer is still relying on its low price points. “The concept is directly comparable to Primark and George at Asda, yet the name of the game in today’s market is differentiation,” she explains. “It works for Primark because Primark is a business that models itself on getting the right product, which it does brilliantly. But Matalan isn’t famous like Primark. I think £20m will take Matalan to a level playing field and the new concept is a heck of an improvement on what it used to be, but I feel like I’m at Asda.”
Wenckheim suggests that what Matalan needs is a “story” behind its retail environment and points to Abercrombie & Fitch as an example. On a recent visit to the retailer, Wenckheim said the sole responsibility of four “merchandisers” was to spray perfume on the clothing to remind customers of the Abercrombie & Fitch experience. “That’s a story. Matalan has no story, just product.”
Dalziel also has concerns about Matalan’s proposition as an out-of-town retailer. “I can’t really understand the reasons to go to Matalan,” he says. “The geographic location of the vast majority of its estate is ‘destination,’ that is, in the middle of nowhere. Until it achieves a high street presence to match its competitors I can’t see it growing its market share significantly.”
With the turmoil at Ethel Austin, Interna穯nale, Select and MK One, an extra £500m worth of sales are potentially up for grabs according to research firm Verdict Research, which estimated that the four retailers have a combined 5.7% share of the £8.6 billion value sector. Value players such as Peacocks, Primark, Matalan and New Look could certainly get their hands on some of this share.
Angus Monro, former chief executive of Matalan and non-executive chairman of recruitment firm Flint Hyde, believes that Matalan is in the running for a slice of this extra cash, and has given the value chain “full marks” for its new concept.
“It’s absolutely the right thing for Matalan to do and it will get more market share,” he says. “The business looks in good order, the stores are more spacious and less congested while still busy, and menswear, kidswear and homewares all look good.”
Matalan will launch menswear sub-brand 24:7 by Jeff Banks for autumn 08. The label – the menswear equivalent of the Et Vous womenswear sub-brand – will have its own dedicated shopfits, offering fine-gauge knits priced about 25% above Matalan’s mainline.
Its kids’ footwear offer has tripled for spring 08 and a new teen sub-brand has been added called Candy Couture. Matalan will also launch a Disney-licensed nursery range and its second own-label nursery collection.
Matalan is facing the consumer downturn head-on, unafraid to put its money where its mouth is – even if Dalziel and Wenckheim believe its £20m investment to be too small.
According to Monro, it’s the best thing the retailer can do. “It’s a form of defensive modernisation,” he explains. “When the market stabilises, Matalan will come out well at the other end.”