Mike Ashley is a retail predator. Much like a lion watching his prey out on the savannah, he waits until the wildebeest looks weak and separated from the herd and then bides his time. Pouncing only when it suits him and he’s certain of a tasty and easy meal.
This week he pounced and was rewarded with House of Fraser for £90m. He already had a 11% stake in HOF, bought in 2014, so he had an interest.
Left - Harrods of the High-Street?
This price was drastically down from the £480m the Chinese owners, Sanpower, paid for it. The brand is weak and damaged, but not dead, but it will need investment in order to survive. They didn’t seem to have a strategy and they didn’t define why you would go to House of Fraser over another store.
Ashley needs to work on making it clear why you’d return to House of Fraser. While John Lewis is offers mostly necessity, and can be bought online, Ashley would be better at targeting ‘treats’, relating to fashion and dressing up to seduce a higher spending customer to leave the house.
This needs to be the store for birthdays, for Christmas, for anniversaries, or anything that requires fancy packaging and that feel good, swinging bag feeling. Fewer visits, but more money out of people’s pockets. At the moment the nicest thing they sell is a Mulberry handbag, but they need more excitement to keep people interested.
Promising to turn the struggling chain into “the Harrods of the high street”, could be Ashley’s flippant words, but if he focuses on that idea, he could be onto something. You don’t go to Harrods for the mundane or ordinary. Admittedly, the prices will have to be different, but you can still package everything nicely and tie-in exclusive product and brands.
Reading about his ‘elevation’ and expansion plans for his other brands, recently, what’s left of House of Fraser will be in prime locations such as Bluewater, Westfield White City and Glasgow, if he decides to stick to closing the other 31 struggling stores, and would fit nicely into this expansion plan. He could easily use his premium Flannels brands to insert much higher end product, something House of Fraser always aspired to be, but never quite got there.
He’s realised that it’s important to have product and brands for each level of customer. The bargain end is fickle and requires huge volumes, while the growth in luxury brands offers lower volumes, but much higher profits. Flannels is expanding rapidly and this acquisition will help create a larger scale.
Flannels is opening new stores at Glasgow Fort shopping centre, Hull and Leicester as part of its ongoing expansion drive. The retailer announced, recently, it expects to open between 6 and 12 new Flannels stores before its financial year end next April 2019. In its premium lifestyle division, Sports Direct currently operates 21 Flannels stores, 10 Cruise stores and three Van Mildert stores, so its premium designer business is really growing. Even Oxford Street is getting a Flannels next year.
He could introduce his underwear brand, Agent Provocateur, into HOF stores and work on their strong existing brands like Biba.
It’s inevitable, if Debenhams continues to struggle, that he’ll merge the two, already owning 29.7% of Debenhams. He’s probably waiting for his moment to strike on this one too and get it at a knocked down price. The high street will plateau soon and even go back into a growth mode and, if in the right locations, in the right cities, House of Fraser will be smaller, but much stronger.
Value and price are related, obviously. A high price can offer great value, and vice versa, but many designer brands are very far from this. See more here - Greedy Margins & Brand Blindness
We’re in an age where the arrogance of brands has caused many to push their prices up while lowering their quality. It’s not good enough. So, it was a nice surprise to go into the new Fiorucci store on London’s Brewer Street and see quality product at reasonable prices.
Left - Tired of shopping? Have a lie down
I’d been meaning to take a look since it opened in September. Now owned by Janie and Stephen Schaffer, who had founded the high street chain Knickerbox together in 1986, Fiorucci was one of the coolest fashion names of the 1970s. This is the first store in its rebirth.
Right - The spiral staircase up to the 1st floor in the Fiorucci store on London's Brewer Street
Founded by Elio Fiorucci in 1967, after being inspired by London’s Carnaby Street and King’s Road, the first Fiorucci store opened in Milan’s Galleria Passarella. More stores followed. In 1974, a second location in Milan, a year later in London. Then, in 1976, East 59th Street in New York. The Manhattan store becomes known as “the daytime Studio 54”. It laid down the blueprints for the concept store as we know it today.
Until recently it was just a name check in Sister Sledge’s “He’s The Greatest Dancer” song. But with Halston gone, Gucci overloaded, it’s, now, all about Fiorucci.
We’ve seen many brands from the 1970s try, and, generally, fail to make a comeback. Ossie Clark never quite made it and Biba stuttered and became an in-house brand at House of Fraser. Many brands make the mistake of trying to carbon copy what was then rather than taking the best bits and thinking about a contemporary shop or experience.
The new owners of Fiorruci have done this really well. The shop has that disco, playground feeling yet still feels sophisticated and the product all seemed to be Made in Italy of decent weighted fabric and excellently priced - £80 for a T-shirt and £140 for a sweatshirt.
Left & Right - More images of the first Fiorucci store as part of the brand's rebirth
While £80 is a lot for a T-shirt to many, when you compare it to £250 for a Gucci one that is so thin you can see your hand through it, it seems great value. I’m not sure who is doing their manufacturing, but it looked like the reason why you buy Italian-made clothes.
At these prices it’s something you can get involved and have fun with. Young consumers will be able to afford it or at least save up to it. They are positioning the brand for the long term, looking for repeat custom and offering their consumers something decent for their money. I know if I see a guy in a Fiorucci T-shirt I’ll want to go over and speak to him. It’s cool.
Go check it out next time you’re in Soho.