Breakingviews

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

Register now for FREE unlimited access to reuters.com

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)

On Twitter http://twitter.com/breakingviews

Register now for FREE unlimited access to reuters.com

Capital Calls - More concise insights on global finance:

Cevian poops Thyssenkrupp’s hydrogen party read more

Eni IPO offers test case for oil transition plans read more

Billionaires leave $160 bln hole in Biden’s plan read more

Austria’s lockdown is looking infectious read more

Magnit owner switch changes little for minorities read more

Register now for FREE unlimited access to reuters.com
Editing by Ed Cropley and Oliver Taslic

Breakingviews
Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at https://www.breakingviews.com/trial and follow us on Twitter @Breakingviews and at www.breakingviews.com. All opinions expressed are those of the authors.

More from Reuters