Physical retailers strike back at online mob

2 minute read

People walk along Camden High Street in London, Britain, September 19, 2020. REUTERS/Henry Nicholls

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LONDON, Nov 23 (Reuters Breakingviews) - Bricks-and-mortar retailers are fighting back hard against their online rivals. That was the message from Britain’s AO World (AO.L), which on Tuesday issued its second profit warning in two months. The electricals retailer, most of whose sales are online, said supply-chain issues, product shortages and rising costs meant the all-important pre-Christmas trading period was weaker than anticipated only eight weeks ago. It’s little wonder its shares fell 19%.

The 500 million pound firm admitted that traditional retailers in Germany were “waking up” to online selling, driving up the cost of AO’s digital marketing. Online-only fashion retailers like Boohoo (BOOH.L) and ASOS (ASOS.L) provide further evidence of a counter-revolution – their shares have halved this year. Zara owner Inditex (ITX.MC), which has nearly 7,000 actual shops, is up 20%. Rival H&M (HMb.ST), whose stores pulled in 72% of its revenue last year, is flat. Even in the event of more lockdowns, AO and its ilk will have stiffer online competition. (By Aimee Donnellan)

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Editing by Ed Cropley and Oliver Taslic

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