Footwear Retailer Sees “Seismic Shift” To Online Sales; May Close 522 Stores
Footwear retail giant, Accent Group - who owns popular stores like DC Hype, Athlete’s Foot and Platypus - has said that the chain will move its focus from brick-and-mortar stores to become a digital-first organisation post-crisis, after witnessing a ‘seismic shift’ toward online sales.
Chief Executive at the Accent Group, Daniel Agostinelli, told Fairfax that he is planning on closing at least 50, and as many as 100 of Accent’s physical stores around the country as part of a “major repositioning” of the business after online sales skyrocketed in the midst of the coronavirus pandemic.
“More closures could be on the cards if discussions with landlords turned sour,” writes Dominic Powell.
Mr Agostinelli told journalists that “there’s been a seismic shift to behaviour, which we feel will be prolonged and instilled in the way people shop.”
“We will definitely be reviewing the whole structure [of the business], and we will be redeploying good people from our retail business to digital while increasing our digital capability overall.”
The move comes after the Accent Group witnessed a dramatic average increase in daily sales of $250,000 in early March. This increased to a high of $1.1 million in the final weeks of April. Agostinelli has said that online sales reached up to 45% of its sales, and expects this to stay around the 30% mark for the remainder of this year.
News of the announcement sent Accent’s share price up as much as 35% to $1.22 on the ASX. Currently, the operator of Platypus, Athlete’s Foot and Hype DC is worth a reported $570 million.
Craig Woolford, an analyst from Citi quoted by the SMH says that online penetration of most retailers sits anywhere between 5 and 10% of their sales, but this is expected to increase to 20% by 2022.
“Retail may undergo significant change with the COVID-19 disruptions accelerating structural changes that are already in place,” he said. “Online share of spending will be even higher and Amazon could become more influential in this market. Online penetration will accelerate meaningfully over the next 18 months, but should also persist,” he concluded.
Accent Group’s Chief Executive, Mr Agostinelli said that the group would retain its physical stores, but is pivoting to “lead with digital moving forward.” This would likely result in a number of borderline or unprofitable physical locations being shut by the Accent Group, in favour of serving that area via online sales due to “unsustainable or uneconomic rental deals.”
It’s being reported that “preliminary negotiations have been successful for over 100 stores and Accent Group said it will continue to pay rent in these cases. However, other stores have been unable to achieve resolutions, leading to Accent shutting 28 of its locations, with more closures likely.”
Accent is set to reopen a number of its stores with additional health and safety measures in place to reduce the chance of spreading the COVID-19 virus after it shut up shop on March 27. Accent has said that all stores will be re-opened by May 1.