Jack Wills' move into the German fashion market could be a success
Jack Wills plans to open 12 international stores, with the first being in Sylt, Germany, broadening brand awareness and softening the impact of the devaluation of sterling. However, given its distinctive British branding, upper midmarket prices and problematic expansion in the US, will its entrance to the German market be successful?
Germany remains popular for retail investment
Opening its first mainland European store in Germany is a strategic move for Jack Wills. According to research by GlobalData, the German clothing market is forecast to grow by 2.8% in 2017 and with gaps in the market for more international fashion players, British retailers are attempting to maximise growth opportunities ahead of the competition. New Look and Topshop successfully opened German stores last year while Primark has continued its assault on the market and now trades from 20 stores. Furthermore, Jack Wills’ lifestyle competitor White Stuff is actively targeting the German market.
Last June White Stuff launched a local language website to accompany its two standalone stores and has since opened another eight standalone stores and has a presence in 10 branches of German department store Karstadt. This rapid rollout indicates early success for White Stuff, and should give Jack Wills confidence that its German expansion will be met with enthusiasm from domestic consumers, particularly given its quality credentials and classic style which are well suited to the German fashion market.
Germany’s ecommerce market remains underdeveloped, with only 8% of retail purchases made online in 2016, versus 14.9% in the UK according to Globaldata, with German multi-channel online retail sales forecast to grow by 8.3% over the next five years. This offers Jack Wills huge potential for online growth, particularly given its strong online sales from German shoppers via its UK platform, growing 75% in 2016. These sales were enhanced by its presence on ASOS which supported international brand awareness. In order to capitalise on this channel, the retailer must launch a local website to coincide with its store opening, as it has in the US and Hong Kong. This will allow it to build a brand presence more rapidly than physical expansion, gain vital information on local shopping habits, run promotions around German seasonal events and edit its product assortment, price points and outfit recommendations specifically for the German shopper.
Mistakes from US expansion must not be repeated
Selling internationally is not a new venture for Jack Wills. It opened its first American store in 2010 and peaked at over 10 stores. However, the retailer expanded too quickly with insufficient knowledge on the market. US sales struggled from 2013, with American shoppers refusing its high price branded basics, already served by established American retailers Hollister and Abercrombie & Fitch, and even Victoria’s Secret Pink fascia which competes on branded athleisure.
This, combined with a lack of investment and development in products specifically for the US shopper, resulted in store closures and it now has just five stores across the country. Some closed stores were located in holiday towns such as Newhaven and Newport, mirroring its UK expansion strategy which started by locating stores in small affluent holiday towns such as Salcombe. Although these locations are suitable for the brand during the peak summer season, they suffer poor footfall over the winter months given the local demographic outside of wealthy holiday visitors or second home owners. Jack Wills will need to be mindful of this potential issue, with its first German store located in Sylt, an exclusive luxury beach resort in North Germany. Jack Wills should attempt to capture holiday shoppers for return spend, for example by giving shoppers discount codes for its website when an item is purchased instore.
The retailer must reflect on lessons learnt from its problematic US expansion. It should take into consideration consumer data acquired from online demand and use this to optimise sales in terms of product selection and store locations. Additionally, the retailer should consider locating its next German store in an affluent town, with higher year-round footfall, or even following in the footsteps of White Stuff, growing its footprint by expanding into department stores. Finally, the retailer must adapt its offer for the German shopper, rather than simply replicating its UK store, as it did in the US. For example, despite Jack Wills pledging to move away from discounting in the UK, German shoppers are more discount-driven, so it needs to tailor an exclusive promotional plan for its German business.
Targeted marketing is essential
Like its UK operation, internationally the brand has relied on word of mouth viral marketing, rather than conventional advertising, for example in the US the retailer introduced ‘Seasonnaires’ in an attempt to raise its profile. ‘Seasonnaires’ are brand ambassadors, representing everything that is Jack Wills, spending their summer breaks traveling round the US and visiting the American stores, posting their experiences on social media. The retailer will need to introduce a similar campaign in Germany, enhanced by extensive social media campaigning, in order for young shoppers to firstly gain knowledge of the brand but also view it as aspirational.
For its Sylt store there is an opportunity to market the brand during the Mercedes-Benz Windsurf World Cup, held annually and fits the brand heritage and lifestyle image. Without this sentiment, shoppers will not be prepared to pay upper midmarket prices for an unknown brand.