Tesco (TSCO) is weighing up the sale of its Asian grocery empire, which could value its retail operations across Thailand and Malaysia at up to $9 billion. Tesco confirmed that it had begun a review of its businesses in the region “following inbound interest”, but insisted that the process was at an early stage. Analysts last night branded its Lotus division in Thailand a “trophy asset” and predicted that the price could reach “nosebleed territory” in the event of a sale. The announcement raises the prospect of another international retreat by Tesco, which has withdrawn from the United States, South Korea and Japan over the past decade.
Retail chiefs have lined up to claim that this year has been the toughest for the sector in living memory. A “perfect storm” of rising shop costs, the rapid shift to online shopping and general uncertainty has created crises for some of the biggest names on the high street, including Arcadia, Debenhams (DEB) and Mothercare (MTC). Yet there is a band of retail names defying the gloom by focusing squarely on what the customer wants and remembering that shopping was once a leisure activity. Unlike other retailers on Tottenham Court Road that have discount posters plastered across their windows to lure customers, Games Workshop Group (GAW) isn’t remotely bothered that most shoppers will never cross the thresholds of its stores. The miniature figurine retailer instead has made a success of appealing solely to niche hobbyists. Entering a shop is to step into the fantasy realm of Warhammer 40,000 or its updated “universe” Warhammer Age of Sigmar and its armies of goblins, dwarves and space wolves. Unlike many other retailers that have been hurt by the steep rise in wages, Games Workshop has a lean workforce, with 410 of its 517 stores having one shop assistant. The retailer, which sells a set of 16 miniature chaos space marines for £60, also protects its high margins because it designs and manufactures all of its products. In the past year Boohoo.com (BOO) has knocked ASOS (ASC) off its perch and, at £3.2 billion, is valued at £700 million more than its more established rival. The business is spending £90 million on marketing this year, recruiting celebrities such as Little Mix, the British girl band, for a snakeskin-inspired clothing range, while Pretty Little Thing, its younger label, produced its own song by Ashanti, the R&B singer. It also is hoping to give a new lease of life online to Karen Millen and Coast, the faded fashion brands that it bought out of administration in August. Associated British Foods (ABF), Primark, is increasing its sales despite not selling online. Instead, it ploughs money into opening new stores, such as its vast new site in Birmingham, which not only promises cut-price garments but also a day out for visitors at its Disney-themed café and a hairdressing salon. Joules Group (JOUL) started life as a wellie outfitter at agricultural fairs, but it has continued to increase sales, helped by its “total retail” model, which sells in market town stores, online and from international concessions. Nick Jones, its new boss, has attributed Joules’ secret sauce to the fact that the brand “doesn’t follow every fashion trend. Our customers can rely on consistency in our product, quality and price.” Next (NXT) has continued to ease ahead of the high street by using its background as a mail catalogue business to outfox others’ delivery networks. It also cuts deals with landlords that enable it still to invest in the business, unlike others that are strapped for cash. JD Sports Fashion (JD.) is the top performer this year, despite the lingering uncertainty around its takeover of Footasylum (FOOT), as it continues to flex its muscles in the so-called athleisurewear market. Much to the annoyance of , its great rival, JD Sports’ relationships with Adidas and Nike mean that it has early or exclusive access to all the latest trainers, which keep pulling in the punters. Despite a wobble in its German operations, B&M European Value Retail S.A. (DI) (BME) is pressing on with its expansion plan to have 950 UK stores as it lures cash-conscious shoppers with cheap, branded goods and an array of home furnishings. Dunelm Group (DNLM) has had a stellar year and it lifted profit expectations last week after overhauling its website to boost online sales. About two thirds of Dunelm’s products are exclusive to the retail chain and it has tapped into growing customer cautiousness by bringing out cheaper goods, such as £10 duvet sets. It has shunned Black Friday to protect its margins and Nick Wilkinson, its boss, has focused on improving Dunelm’s product, arguing that “as long as our product passes muster, then that’s great”. Away from the stock market, retailers that are doing well tend to be split into two camps: luxury and discount. The squeezed middle applies to retail, too. Aldi and Lidl continue to improve their sales, largely thanks to their rampant expansion plans. At the other end of the spectrum, Fortnum & Mason and Selfridges reached record sales this year, despite their store estates not altering in any meaningful way. It appears that shoppers, fed up with the gloom, are willing to spend a bit extra on having an enjoyable experience.
