Flannels Oxford Street First Look Mike Ashley Sports DirectAs nearly as delayed as the Elizabeth Line, well, not quite, the new Flannels on the eastern side of Oxford Street has been the most anticipated addition to London’s busiest retail thoroughfare this year.

Sandwiched between Marks & Spencer’s Pantheon store and Matalan, this four storey, 18,000 sq ft store, selling designer clothes and accessorises, has been 3 years in the making. The entire building was purchased for £108 million in 2016 by a Sports Direct subsidiary and doubles as office space for its parent group. Part of Mike Ashley’s growing empire, it is the debut of Flannels in Central London.

Left - Veja display inside the new Oxford Street Flannels

This is Flannels' 44th store in the UK, after a lightning expansion, with a further 15 stores coming this year alone. In 2012, sportswear giant Sports Direct bought a majority 51% stake in Flannels and in September 2017 they acquired the brand in full and began investing in and opening stores. 

It is worth noting Sports Direct also own other premium fashion chains such as USC, Cruise and Van Mildert, but, it is Flannels which has been chosen to lead the designer crusade to “elevate” the company. Sports Direct currently has an obsession with moving from discounted sports to full price branded.

Mike Ashley said at a recent shareholder meeting regarding Flannels, “I think they are better than any other stores in the market. Now, I might have rose-tinted glasses but one of the reasons is because I have absolutely nothing to do with it. I just sign off the money. It has nothing to do with Mike Ashley.

“It’s not just a few show stores. When you have a pipeline it takes time. I’m telling you – this is for real. The reality is, I’m telling you it is real and the proof of the pudding will be when they start to roll out. It’s happening, it’s coming. It’s just not as fast as I would like it.

“I’m going to do the same with House of Fraser and get around to elevating. The modern-day consumer – that’s what they want. It could be Stone Island, it could be Nike and Adidas – it’s all about the branded world.

“Maybe I was late to the party, I accept that. Maybe my son-in-law should’ve gone out with my daughter when she was 12, but now we’re on it, nothing’s going to get us off it.”

Flannels Oxford Street First Look Mike Ashley Sports DirectOxford Street is their new flagship and is a physical testament to their ambitious intentions of becoming “the biggest global luxury retailer,”. This is what Sports Direct Group’s head of elevation, Mike Murray, Mike Ashley’s daughter’s boyfriend, told Drapers in March. He went on, “We’re in the early stages, but we have a clear vision for Flannels, we have ambition and we are willing to invest,”.

Right - Art on the second floor

The £10 million new store has been designed by Italian studio P con P, and you can see the Gucci influence in the rugs, over blown William Morris type screens, 1970s brass changing rooms and waiting areas and contrasting use of materials.

The store is split into women’s accessorises on ground, womenswear in the basement, men’s designer on first and men’s accessorise and sportswear on the second, though there wasn’t much difference between the latter two. The second-floor will also house the first ever UK retail space for US footwear brand Flight Club and the store offers services such as Click & Collect and personal styling.

One notable difference was the huge amount of staff, all dressed in black. I was told 50 members of staff currently work there. I visited on a late Tuesday afternoon and the only people seriously buying were a group of Asian tourists in the Gucci men’s section. They’d probably never heard of Flannels before.

I expected to see the usual chav labels such as Off-White and Burberry, which were there, but, interestingly, there were also brands such as Barena, Brioni, Alanui and JW Anderson. There was even a diamond necklace for nearly £60,000. I did ask how many they’d sold that week?!

Flannels Oxford Street First Look Mike Ashley Sports DirectCire Trudon candles, Acqua Di Parma fragrances and Ganni dresses were also spied, and while nothing particularly revolutionary, it is difficult to pick holes in.

“His whole plan for 100 Flannels stores is bonkers. Knock a nought off, mate!” says Eric Musgrave, former editor of Drapers and fashion industry consultant. “It will be a ghost town for 5 or 6 days a week. Wrong location. Too big. Offering nothing you can't get in the West End or Knightsbridge already.” he says.

“My guess is that they will leave it as it is for two or three years, then reorganise it, making the Flannels area smaller and bringing in USC and SD. But, I believe Ashley owns the building, so he can run it as a vanity project.” says Musgrave.

Left - Display in collaboration with artist, Alec Monopoly

The simile I would use is, it’s like an Essex nightclub, which, if playing the right music, you’d have a good time in. And that’s what the clothes and buy is, the music.

Flannels Oxford Street First Look Mike Ashley Sports Direct(The security guards do look a bit like bouncers though, and one made me delete a picture I took on my phone of the new store *eyeroll*). 

There’s nothing to fault in the design and money spent, it feels premium and everything is nicely presented, but Flannels has a problem with the snobby stigma London has towards Mike Ashley. He needs to distance himself like he says above. 

People will need persuading to part with their cash here, unless it is product they can’t get anywhere else. Flannels needs to change perceptions so people are happy to be seen swinging a Flannels bag when they leave. It’s just not cool right now. They need to turn into leaders rather than just flogging the same old mega brands to punters. 

Right - That £60,000 necklace

They own the building here, so are here for the long haul, but it will be interesting to see how it develops and how long they stick to this initial format. Flannels recorded sales of £173.9 million in its latest financial year, up 12 per cent from 2018. It’s growing because it is rapidly expanding, it obviously wants to get to the point where is it more powerful than the brands, rather than the other way around currently. I can imagine many luxury brands, currently, being cautious about choosing them as a stockist, but watch this space as they grow.

Flannels Oxford Street First Look Mike Ashley Sports DirectFlannels will also struggle with some of the quality of the product, and disappointed consumers. Read Gucci Quality Is Rubbish - here - which isn’t their fault.

Left - Flannels Oxford Street exterior. Sports Direct own the entire building

Sports Direct want more elevation than the Wright brothers, but it’s going to be expensive and I can't help think that 100 stores is too many, especially when you’re trying to sell £900 Gucci hoodies. Even though this is on Oxford Street, it needs to become a destination. It feels like the kind of store going against the retail tide, but I certainly admire the ambition.

Below - Interior shot of the new Flannels Oxford Street store

 

 

 

 

Flannels Oxford Street First Look Mike Ashley Sports Direct

Published in Fashion

Mike Ashley pacman Jack Wills british high street house of fraserYou’re joking, not another one!! - said in a Bristolian accent - when news came in that Sports Direct’s, Mike Ashley had snapped up Jack Wills. Yet another brand to be gobbled up by the Pac-Man of the British high street.

Left - Jack Wills was just gobbled by the high street Pac-Man, Mike Ashley

The preppy retailer had been on the block after private equity owner, BlueGem Capital, lost interest. Things were obviously worse than was thought with Jack Wills being put into administration and immediately sold pre-pack to Sports Direct for £12.75 million. The deal includes all 100 UK and Ireland stores and stock, as well as a distribution centre, but not the international business.

This is just another brand in a long list of troubled retailers snapped up by Ashley in his buying spree over the last few years. While many of these retailers have been snapped up for bargain prices, inspired by his Sports Direct marketing no doubt, they were in trouble for a reason, and, there’s only so many brands you can give the attention and TLC they need to nurse them back to health.

Ashley has also been distracted with his failed bid for Debenhams and his shareholding being wiped out, and in his recent, disastrously handled, release of Sports Direct’s latest set of results he started to lament his purchase of House of Fraser. He’s realised that House of Fraser is a serious money pit. So, why does he want even more? Just because you can, doesn’t mean you should.

Every time a brand gets into trouble, Ashley is named as a potential suitor and it’s almost becoming a joke. It’s as though he’s some magic man that knows something we don’t and while we’ve been waiting, with some scepticism, on some of the ‘Harrods of the high street’ rhetoric to be followed through on, he needs to hurry up before it all becomes too late to repair.

Social media has become a running commentary of people saying how bad their local House of Fraser has become and how it is slowing turning into another branch of Sports Direct with its Lonsdale pants and Slazenger joggers.

Maybe a sign of intention, he paid £95 million - more than for the entire chain - for the freehold of the original House of Fraser in Glasgow promising to turn it into the ‘Harrods of the north’. (Harrods must be loving all this free publicity btw). There are plans to create a mini, higher end chain of stores - around 7, including Glasgow - within the House of Fraser group, called ‘Frasers’ with the remaining stores stocking more mainstream options.

Ashley said in the recent set of results, “On a scale out of 5, with 1 being very bad and 5 being very good, House of Fraser is a 1, albeit we are trying very hard to turn the business around this will not be quick and it will not be easy. Even though we do believe there could be a bright future for House of Fraser, and indeed have publicised our Frasers vision which we are very excited about, if we had the gift of hindsight we might have made a different decision in August 2018.

“We have continued to look under the bonnet as we integrate the business, we have found that the problems are nothing short of terminal in nature,” he said. “We are continuing to review the longer-term portfolio and would expect the number of retained stores to reduce in the next 12 months.”

He needs to start with the Glasgow store, which is already one of its premium branches, and show the industry and consumers what the plans for the roll out are.

As well as House of Fraser and Evans Cycles, he added online retailer, sofa.com, this year, and then said the overall retail industry is in “dire straits”.

Mike Ashley pacman Jack Wills british high street house of fraserIf this wasn’t a big enough headache, the Belgian tax authorities has just sent a payment demand for a whopping £605 million. Sports Direct has entered into a mediation process and the demand relates to the tax treatment of goods being moved intra-group throughout the EU via Belgium. Even if reduced, it’s likely to be a huge bill regardless.

As for the core Sports Direct business, profits slipped by 4.7% to £264.7 million according to the latest financial figures. The company said it will not be issuing any profit guidance for next year, but some guidance may be issued with the company’s half-year results.

They also said, “We remain very focused on delivering our elevated proposition. We will see some great milestones achieved in the year ahead, with the Flannels flagship store opening and we will commence the work to shape the Frasers Glasgow store into what we believe will be a fantastic shopping experience for our customers and showcase our intentions for the remaining portfolio of stores.”

Flannels is the bright spark within the group and the most believable part when it talks of ‘elevation’. Selling premium brands such as Valentino and Gucci and expanding rapidly, it would fit into this vision. As part of the Premium Lifestyle division, which also includes Cruise and van Mildert stores, it has grown from sales of £60.4m in FY17 to £173.9 in FY19.

Right - Inside the 'Harrods of the north' - Glasgow House of Fraser

The company told Drapers, Flannels had an ambition to open 15 to 20 stores per year until it reaches its target of 100. There are currently 43 shops with new openings in Chester, Newcastle, Watford, Sutton and York as well as the huge and much anticipated Oxford Street branch.
Sports Direct Group’s head of elevation Mike Murray said, “We are focusing on key cities that haven’t had exposure to luxury or a well-executed luxury environment. Our stores aren’t the typical size of 2,500 sq ft or 3,000 sq ft. We are focusing on big destination stores so it is worth people’s while coming.”

The new House of Frasers or ‘Frasers’ could just be an enlarged version of this, but there are only so many £800 designer hoodies they’ll be able to sell and will need incorporate more experiential services and novelties. The House of Fraser brand has been damaged and will take a lot of time and money if it’s to compete with the regional Selfridges and Harvey Nichols of the world.

The prediction is the entire brand will be binned and disappear along with the majority of the stores and the new Frasers brand will live on in a handful of larger cities. But, this is still going to take a lot of money.

The Sports Direct Group currently operates 367 stores in England, 37 in Scotland, 28 in Wales and 17 in Northern Ireland, along with 35 other fascias including USC. This represents a net reduction of 9 stores over the period as a result of 13 openings and 22 closures. Despite the net reduction in stores the total sales area has increased to approx. 5.6m sq. ft. so it is very exposed to the current state of the high-street.

Lord Stuart Rose has warned Mike Ashley over his ambitions for a retail ‘oligopoly’, saying, “My view in retail is to stay nimble, lean and mean. You need to be able to turn on a sixpence,” he said.

This shopaholic nature of brand buying and lack of investment in what he already owns is a confusing and dangerous combination. He needs to slim everything down, keep what’s working and be ruthless. (That last bit shouldn’t be a problem). 

We’re all hoping Ashley’s game plan, whatever it is, is successful because he now owns a huge slice of the British high street. FYI - Spud-U-Like is still available… #harrodsofthehighstreet

Read more ChicGeek expert comment - here

Published in Fashion
Tuesday, 16 April 2019 11:08

ChicGeek Comment Big Shops Flop?

big shops primark BirminghamThe simple narrative of big shops are dying, department stores are dinosaurs and physical retail is on its knees just doesn’t ring true. Primark is bucking the trend, and, to really the ram the point home, has just opened not only the world’s biggest Primark in Birmingham, but also officially the largest fashion retail store in the world according to the Guinness World Records. Move over Topshop!

Spread over 5 floors, and 160,100 sq ft in size, the new store boasts womenswear, menswear, kidswear and homeware, plus the largest ever Duck & Dry beauty studio, the first in-store barbers salon from Joe Mills, and 3 dining experiences, including a Disney Café. If it sold washing machines it would be classed as a department store.

Left - Primark's new Birmingham mega-sized store

While nobody seems to know what is going on at Debenhams, and Mike Ashley is hoovering up brands like a hyperactive Dyson - we’re still not sure what he is going to do with all these companies - Primark is an illustration of very large physical stores still opening and doing well.

With no e-tail presence, Primark is where all the other department stores’ physical customers have gone, not to mention Marks & Spencer’s and Next’s. Primark’s Adjusted Operating Profit was £843m in 2018, with revenue of £7.477b, up from £7.053b the year before.

According to local press, Birmingham Mail, “The new Primark megastore Birmingham has been jam packed for four days in a row. Crowds of people flooded into the 160,000 square foot shopopolis when Primark opened its doors 15 minutes early at 9.45am on Thursday, April 11. Ever since our live Primark updates began, the five-floor giant has been packed from the basement to the roof with shoppers - and diners - keen to see what all the fuss is about.”

Primark needs large stores to make its business model of pile-it-high-and-sell-it-cheap work. Only this week, another Primark opens in Milton Keynes. centre:mk see its new 75,000 sq ft store open in the heart of the shopping centre and is the largest new store to open in centre:mk in the last 25 years. Over 3 floors, Primark was the most requested brand by the centre’s 25 million visitors in exit surveys over a number of years.

Kevin Duffy, Centre Director at centre:mk, said “We are thrilled to announce that Primark will be open on the 16th April and joining our fantastic selection of fashion and beauty brands at centre:mk. This is a key moment for us – the new flagship store will be the single biggest store since we introduced Marks & Spencer to centre:mk nearly 25 years ago. Primark is a firm fashion favourite, and so we look forward to attracting more visitors by expanding the centre’s fashion retail mix.”

Primark are expanding into Slovenia, this year, and continuing to grow in America. Primark currently has 9 US stores clustered in the north eastern corner, but plan to open a store in Florida in late 2019. While its expansion has been slow and steady, it was ranked in the top spot on a list of the 100 fastest-growing retailers in America by the National Retail Federation's Stores magazine, which used sales data from Kantar Consulting. In the US, specifically, Primark sales were up 103% year-on-year.

big shops primark Birmingham

Urban Outfitters is another brand looking to expand with larger stores. Planning to open 15-20 new stores annually for the next five years, the US-based retailer has 50 stores in Europe, including 28 in the UK and Ireland. Emma Wisden, European Managing Director, said the retailer has identified several key markets of interest within Europe that it is underexposed in, which it will be pursuing imminently. Speaking to Drapers, she said, “Urban Outfitters is in the fortunate position of being one of the ‘disruptor’ brands in fashion at the moment. We are opening stores, not closing them, unlike so many of our neighbours on the high street. Ecommerce is, of course, increasingly important, so it is crucial to constantly evolve omnichannel shopping. However, bricks-and-mortar retailing isn’t going anywhere soon.”

Right - Primark's Duck & Dry Beauty Studio in Birmingham

Urban Outfitters has increased its European store portfolio by more than 30% over the past 12 months with new stores in Vienna, Milan, Paris, Eilat and Düsseldorf.

These two retailers illustrate the polarisation of physical retail. Bad, boring retail is dead, and while people are attracted to Primark for the prices, by adding hairdressers and restaurants, they are giving people more reasons to visit and stay longer. Primark’s phenomenal success is allowing them to think beyond cheap clothes and their tie-ups with Harry Potter and Disney at pocket money prices is a guaranteed success. 

Urban Outfitters is clearly riding the retro, sportswear trend, but being a shop of discovery and fresh ideas and brands allows a chance for constant change if the buy is right.

Many retailers with large stores are finding it hard to balance business rates, rents and falling footfall, but Primark and Urban Outfitters are proving, clearly, that people still want to leave the house. 

Published in Fashion
Thursday, 14 March 2019 17:39

ChicGeek Comment Time To Buy?

Anya Hindmarch up for saleSome of Britain’s best known, mid-sized fashion brands are up for sale. French Connection, Pretty Green and Anya Hindmarch are all rumoured to be looking for new owners. Put LK Bennett into the mix, which recently when into administration, closing five stores and making 55 redundancies, and you have a slew of established British brands trying to forge the next chapter of their existence.

While Anya Hindmarch is more in the luxury pricing category, the others are all premium high-street; asking consumers to stump up more cash for their products in a mid-market squeezed between fast-fashion and ‘luxury’ brands. This is an area that has suffered the most over recent years. Hooked on sales and discounts, many of these brands operate an unsustainable retail network, flabby business model and have suffered due to the demise of the traditional department store.

Putting themselves up for sale is timely. If you’re a foreign investor, British companies have never been so cheap, due to the weakness in the pound and Brexit, but there’s also a watch and wait attitude for most of the retail market at the moment, with many companies, particular private equity, being burnt, over the last few years, and only investing in strong, bankable billion dollar brands.

Left - Anya Hindmarch bag with her quirky sticker designs, but does the brand need to make more conservative product?

French Connection has been on the block for a while now. A brand that reached its zenith in the late 90s, thanks to their provocative and attention seeking FCUK slogan, it had lost its way. It recently went into the black, thanks to an ambitious store closure programme. Recently reported, French Connection made a slim profit of £100,000 for the year to January 31, 2018, compared with a £2.1million loss the year before. Revenues edged up 0.2% to £135.3million but its same-store sales fell 6.8%. French Connection said it will continue to close stores, having shut down more than half of its sites in the past five years. Mike Ashley’s Sports Direct has a 26% stake in the business with founder Stephen Marks, who is also chairman and chief executive, owning almost 40% of it and they say talks were “ongoing” with several potential buyers.

French Connection has done the correct and drastic decision to close the majority of it stores and department store concessions. Truly international, it is not wholly reliant on the UK market, but needs to remind people of their USP and make people feel good about paying more. It needs to decide what the sustainable size of the business is.

Liam Gallagher’s menswear brand Pretty Green, which is named after a song by The Jam, has called in Moorfields Advisory to help look at options for the company. Founded in 2009, Pretty Green channels British Mod culture into branded basics, linking the brand to music heroes and a strong Made-in-England feeling for its more premium ranges. The company said that it was “not immune to the challenges currently facing the UK high street as customers migrate from purchasing in store to online.”

It currently has 14 standalone UK stores and numerous concessions within House of Fraser department stores. The brand lost £500,000 when House of Fraser feel into administration in August 2018. “The growing overall demand for the brand, coupled with a strong online customer base, position the company well to navigate these changes and we are therefore considering all options,” they said with regards to a sale. In the 16 months to January 2018, turnover at Pretty Green rose to £38.2 million and pre-tax losses narrowed to £1.5 million following a £5.6 million loss the year before. Private equity company, Rockpool, invested £11m into Pretty Green in 2017 for a minority stake.

Pretty Green up for sale Liam Gallagher

Pretty Green has a very distinctive British look, and, while it has its core Mod audience, it needs to develop and reintroduce itself into the larger men’s market. It has to define what it sells and make men more aware of this. Its small retail network will probably be trimmed further and it’s good they are starting to narrow their losses, but they need to tap into that rich vein of cult British style that Fred Perry and Dr Martens do so well. This cool also translates internationally. Any investor would probably want Liam Gallagher to have a more prominent role at the brand and increase his visibility in it.

Right - Liam Gallagher in Pretty Green

The British luxury goods brand, Anya Hindmarch, has been put up for sale. Mayhoola, the Qatari royal family’s investment fund, which also owns Pal Zileri, Balmain and Valentino, has decided to sell the brand it started buying into in 2012. The fund has grown its stake from 39.9% in 2012 – Mayhoola bought a controlling stake in the company for £27million - to at least 75% by the middle of last year.

Founded in 1987, Anya Hindmarch has become known for her quirky and colourful designs. The brand lost £28.2 million and reported a 10 percent decline in revenue to £37.2 million for the year in 2017, the latest year for publicly available accounts. The selling decision is said to be “mutual”.

Anya Hindmarch has plenty of fun ideas, but, they, as a brand, just need to establish who the customer is. It has a lot of potential, but, unusually for a leather goods company, it needs to focus on more conservative product. Sometimes it’s hard to find a plain, elegant black bag, which means they are missing out on a huge amount of sales. The prices are premium, so the high-fashion, seasonal and quirky fashion product has a limited audience, while more classic and trans-seasonal product would sell well too. 

Their £40 stickers were a surprise hit, but, as an example, their candle range has a strange disconnect between customers. I don’t think many of the older women carrying the bags want cartoon eyes and rainbow decorated candles on their coffee tables. It needs to balance the fun with the sophisticated.

This brand would sit well with Burberry - there are rumours they are looking to buy something - or maybe a Mulberry, and drill down into that affordable luxury market more. I think they will have plenty of interest, possibly from the Americans - Tapestry, Capri Holdings - growing their brand portfolios.

If retailers can survive 2019, there is a strong chance they’ll be okay. Investors will want to see that losses are stabilising, or reducing, and there is a clear strategy for the future. Skeleton retail networks, offering enough brand awareness while pushing people online with good product will be the future for these brands. Being less reliant on the department store model and taking your quality product direct to consumers will be the only way to make these brands profitable. You need a point of difference to make people pay more and a feeling they can’t get what you offer anywhere else. The days of chucking huge amounts of money at growing brands is over and private equity will opt for more realistic, tidy returns rather than huge growth.

These brands have that problem of being too big to be nimble and streamlined, while not big or glamourous enough to catch the eye of the big investors to take it somewhere big. Mike Ashley can’t buy everything. Or can he?!

Read more of TheChicGeek's expert comment here

Published in Fashion
Monday, 17 December 2018 13:12

ChicGeek Comment November Pain

ASOS profits down black fridayThe darling of British online retail, ASOS, today, issued a statement saying it saw “significant deterioration” in trading in the run-up to Christmas. Blaming the weather and a high level of discounting and promotional activity across the market, it said it lead it to increase its own special offers, which typically eat into profit margins. 

November 2018 is set to go down as one of the worst retail months in recent memory. Mike Ashley, the Sports Direct boss, was recently quoted as saying, “November was the worst on record, unbelievably bad”. He said “No one could have budgeted for that. Retailers just cannot take that kind of November. It will literally smash them to pieces.”

Left - ASOS' HQ - Black cats for Black Friday?

While ASOS only saw a slowing in sales growth - it now expects sales growth of 15% for the year to August 2019, down from 20% to 25% - it also shows the chill running through the entire retail sector.

A perfect storm of lower footfall, Black Friday discounts, Brexit shaking consumer confidence and a highly competitive market in general, is making things very dicey for the retail sector. Retailer, Stuart Rose, formerly of Marks & Spencer, told ITV News, “I sense this is a very slow Christmas … You have the uncertainty of Brexit, people are uncertain about what the future is going to look like next year. [Consumers] have their hands in their pockets. Car sales? Down. House sales? Down. Big ticket sales? Down. I suspect there will be some uncomfortable trading statements in the early part of January.”

Even the juggernaut of Primark is reporting a slowdown. It has warned of “challenging” trading conditions. John Bason, the finance director of Primark’s parent Associated British Foods (ABF), said “I think it is a call on quite mild weather during November and I think it’s affected footfall.” This is important to Primark because it doesn’t sell online. Bason told Reuters that while sales at stores open more than one year were “just positive” in September and October, they had turned negative in November. 

On a brighter note, overall consumer spending rose 3.3% year on year in November, but it was the lowest growth since March, despite the boost from Black Friday, according to Barclaycard. Clothing spending contracted by 2.9%, the biggest fall since October 2017, while spending on household appliances was down by 14%.

One thing interesting to note is ASOS mentioning its slowdown in Europe. It said trading conditions across Germany and France, which account for 60% of the retailer’s EU sales, have become significantly more challenging, which means this is a wider problem than Brexit. ASOS said “The current backdrop of economic uncertainty across many of our major markets together with a weakening in consumer confidence has led to the weakest growth in online clothing sales in recent years. We have recalibrated our expectations for the current year accordingly.”

Primark Birmingham profits down black friday

So, let’s look at this weather. According to the Met Office, “November began with relatively cold quiet weather, but from the 3rd to 14th it was mild with a predominance of southerly winds. It was cold with easterly winds from the 19th to 26th, with frequent rain or showers for the east and south-west. It turned very mild, wet and windy in all parts of the country from the 27th onwards. The provisional UK mean temperature was 7.3 °C.” This up and down weather isn’t particularly unusual for November and we had two decent cold spells to help shift more seasonal, colder weather stock. The weather is always an easy excuse for retailers reporting bad figures.

Right - Primark is opening its largest store in the world in Birmingham this month

Black Friday, though, is wiping out profit margins for retailers with consumers expecting huge discounts and it’s stopping people from hitting the high-street. UK retail endured the biggest drop in footfall for the month of November since 2009. It also marked the 12th consecutive month of footfall decline. Discounts were made for online; no pushing and shoving to then leave disappointed. If they’ve got it, it’s in the basket, and you probably don’t buy anything else while you’re there unlike if you’d gone to the high-street or a shopping centre.

Laura Ashley just announced it was closing a further 40 stores and, last week, Bonmarché issued a profit warning and Blue Inc fell into administration.

Many retailers will be praying for a good Christmas, but to make up these sales in the three weeks to Christmas will be tough, especially with so many factors working against them. Primark and ASOS are strong retailers and will weather this storm, but many will not. To continue the weather metaphors, this could be the hardest frost to hit the retail sector in many years and anybody small or not hardy enough will be dead before the winter is out.

Published in Fashion

Mike Ashley House of Fraser Harrods of the high street

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. 

Published in Fashion