Retail in Review (March & April): Fiscal Reflections, Tech Advancement, & Retail Growth 

From the chaos of the end of the financial year through to the excitement of new technology developments, the UK retail landscape continued to evolve over the past couple of months, witnessing significant tech adoption, unique AI implementations, and continued growth. While many brands capitalised on consumer resilience and drove profits, others explored innovative approaches to technology implementation to enhance customer retail experience.

In our latest Retail in Review blog, we explore some retail trends and how the UK retail environment has evolved over March and April.

Tech Buzz: AI & Apple Vision Pro in Retail

Retailers have remained steadfast in their commitment to artificial intelligence (AI) investment over the preceding year, and the last couple of months have shown no deviation from this trend. In fact, there seemed a noticeable drive among UK retailers to explore new ways AI can transform their operations and customer experience. 

• UK fashion and homeware retailer, Matalan, claimed to be the first UK retailer to adopt a Generative AI (GenAI) tool that improves online product descriptions to elevate the online shopping experience and drive sales.
• Similarly, Boohoo Group is gearing up to introduce AI-powered search and merchandising across its brands, including PrettyLittleThing, Boohoo, Boohoo Man, and Karen Millen. The ongoing trust and financial commitments retailers place in AI, despite economic challenges, point towards a future where the technology plays a dominant role in retail.

While AI in fashion retail is buzzing, the wider retail industry is also looking to take advantage of its capabilities. In the last couple of months a number of retail brands, spanning from technology to grocery, have embraced AI in unique ways.

• For example, Tesco implemented an AI-powered solution that reduced energy costs by 10% across eight distribution centres, underscoring AI’s versatility in retail.
• Meanwhile, Amazon’s UK boss John Boumphrey emphasised the pervasive impact of AI within the company, stating that “every single team at Amazon” is looking at how Gen AI could transform the business for customers, sellers and employees. Boumphrey heralded Gen AI as the “most transformational technology for the retail industry since the arrival of the internet”.
• Consequently, Amazon unveiled plans to invest £600 million in European robotics and AI initiatives over the next five years.

Amid the ongoing AI hype, Apple Vision Pro has also prompted retailers to explore its potential to benefit customer experiences in retail.

Wayfair is extending the pilot of Decorify to Apple Vision Pro to let users view and select Wayfair items in 3D directly in their spaces. Decorify uses a generative AI model to create shoppable, photorealistic images of products. Although Vision Pro is still in its early stages in retail, retailers’ inclination towards the gadget in the early days indicates a promising future for Vision Pro in retail.

Closing the Books in Style

As the fiscal year 2023-2024 drew to a close alongside the first quarter of 2024, several retailers disclosed their financial performances. While ASOS posted an 18% fall in half-year sales, a number of retailers reported notable gains. 

Next demonstrated robust growth in annual sales, with pre-tax profit reaching £918 million.

• Similarly, Decathlon maintained its annual sales at £13.4 billion, achieving a net profit of £804 million amid continuous inflationary challenges.
• The direct-to-consumer online wine retailer, Virgin Wines reported an increase in pre-tax profit to £1.1 million, compared to £0.1 million in the same period last year.
• Meanwhile, British discount chain B&M said it expected a 9.8% growth in full-year profit, towards the higher end of its projections, supported by a 10% revenue increase driven by new store launches. 
• Tesco delivered a strong performance for the full year, with group sales climbing 7.4% to reach £61.5 billion.

These notable enhancements in sales and profitability across multiple retailers underscore consumer resilience amidst a challenging economic environment, including the cost of living crisis.

Growth, Expansion and Retail Sales

Recently, there has been a notable rise in physical retail as consumers show a renewed interest in in-store shopping. In order to capitalise on this appetite, brands continued to improve their brick-and-mortar offerings.

• Zara made headlines with its announcement to extensively enlarge its flagship store at Liverpool ONE, envisioning a spacious 42,000-square-foot area.
• Meanwhile, H&M opened a new concept store at 72 King’s Road in Chelsea.
• Menswear retailer, Moss, launched a new store at Clarks Village in Somerset and London saw Bath & Body Works inaugurate a standalone store located directly facing Sephora at its White City venue.

Such expansions and openings not only speak to these retailers’ commitment to enhancing customer experience but also reflect broader industry confidence in physical stores’ potential for growth and innovation. 

Heading in the Right Direction

In this evolving retail landscape, whether continued technology adoption or unparalleled growth and profits despite an economically challenging year, developments throughout the last couple of months point towards a positive outlook for the industry. Retailers that continue to innovate and live up to consumer requirements are likely to thrive, gaining a competitive edge in the market.

Want to know how technology can help you meet evolving consumer needs, get in touch.