Hidden in JD Sports Fashion’s impressive business statement was a commitment to continue investing in its infrastructure to enhance its online and in-store offerings.
An increasing emphasis on providing enhanced omnichannel service is a trend that has emerged in the retail space.
Take Primark, for example, which recently dove into the online space with its click-and-collect trial despite its previous insistence on being a solely brick-and-mortar player (even during the pandemic).
Susannah Streeter, a senior investment and markets analyst at Hargreaves Lansdown, attributes much of this to a change in consumer habits.
“Checking out the latest styles in the store before shopping at the register, or online late, is now the trend of the moment,” Streeter said.
New habits were born as a result of the pandemic, which highlighted the convenience of online shopping but also created pent-up demand for an in-store experience.
Meeting these consumer demands is one of the many benefits that a strong omnichannel offering creates for retailers like JD Sports.
Online shopping also opens up multiple avenues to target customers, whether on mobile via an app, online or in-store, extending shopping hours and creating a 24/7 store.
While the benefits are obvious, establishing a strong online presence comes with its costs.
Infrastructure such as warehouses must be set up, stocked and staffed, and delivery drivers must be paid a salary plus expenses, including fuel. An expensive and timely process.
JD Sports’ position as a global retailer, with markets in the US and Europe, means that it needs to develop these channels in various regions.
However, yesterday’s trading update suggests that boss Régis Schultz believes there is an opportunity.
Zainab Atiyyah, Third Bridge retail analyst, echoes that sentiment: “There’s a lot of room for improvement in their post-sales workflow and customer retention programs.”
John Stevenson, a retail analyst at Peel Hunt, says JD’s strong footing and CEO Schultz’s belief that more value can be extracted by improving its online offering suggests cash is on hand to scale those operations.
Given the costs and time associated with growing your online presence, buying from a competitor might be an option, eg ASOS, where the infrastructure is already in place.
ASOS is currently valued at £673m, so JD would certainly have the cash available for a purchase (JD Sport’s net cash balance as at 30 July 2022 was £1.01bn).
That being said, “the last thing JD is going to do is shop for fashion,” Stevenson replies.
“JD announced before Christmas that it was getting rid of some of its non-essential ancillary brands.”
“The message from that was pretty clear, which is that they are absolutely focused entirely and solely on sportswear.”
Source: news.google.com