The tidal wave of Christmas retailer results in January 2018 clearly marked that spending on the high street is heading in two directions – towards discounters and premium lifestyle brands (such as Whistles, Ted Baker, and Reiss),  subsequently bypassing midmarket players.

Consumer appetite for lifestyle brands seems persistent but as midmarket department stores sales continue to suffer lifestyle brands must evolve and focus on different distribution channels, with a seamless online experience the priority.

A polarised market works in lifestyle brands favour

Premium lifestyle brands did exceptionally well over the festive season with Joules total sales rising 19.2%, Fat Face 12%, and Ted Baker’s retail sales up 9.0% – tough comparatives make these results all the more impressive. A distinct brand image, superior quality, unique designs and an immersive store experience are how brands justify high price points and tempt shoppers to trade up – especially when midmarket retailers such as Marks & Spencer and Next continue to disappoint. The willingness to trade up is amplified when shoppers make large investments, e.g. a statement coat or shop for gifts where something special is desired – hence why Christmas is especially crucial for these brands.

The premium lifestyle market also benefits from an affluent customer base that is less exposed to declines in disposable income. According to November 2017’s ASDA income tracker, the UK’s least wealthy shoppers have the most significant declines in weekly disposable income, while better-off shoppers remain more protected with the wealthiest two economic groups (out of five) seeing weekly disposable income increase.

Department stores are an increasingly dangerous channel

However, premium brands’ reliance on department stores is a risk. With numerous department stores losing sales, e.g. Debenhams and House of Fraser, concessions are in danger of becoming loss-making. Additionally, department stores, through consistent discounting and poor merchandising, can damage brand reputation. The decline of Michael Kors is a clear example of this where its merchandise was discounted throughout department stores and the brand became too accessible and therefore undesirable to shoppers.

Premium lifestyle brands need to prioritise wholesaling through fast-growing online sites such as ASOS and Investment in their own online platforms also needs to be a priority as some are yet to master a seamless and competitive multichannel experience. For example Joules, Whistles, and Sweaty Betty all fail to offer an express delivery option and the last of which states that customers should allow up to 10 days for standard delivery.