Home of Fraser: 5 issues that went unsuitable (News)


King William Street branch, London

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After shedding its battle to remain afloat, division retailer chain Home of Fraser has been snapped up by Mike Ashley’s Sports activities Direct.

The transfer got here inside hours of the retailer’s announcement that it was appointing directors.

However it’s unclear how a lot of the enterprise will survive.

It is a worrying time for Home of Fraser’s 17,500 workers, together with 11,500 concession employees.

So what went unsuitable for the retailer?

1. The web

New know-how has had a disruptive affect on the Excessive Road usually, with digital retailers akin to Amazon dealing a savage blow to conventional bricks-and-mortar retailers.

However Home of Fraser was gradual to know the extent of the change, failing to reply rapidly sufficient with its personal web supply.

Way back to 2004, the chain was being described by the Interactive Media in Retail Group, a commerce physique, as one of many “on-line laggards” that “didn’t embrace web buying and selling alternatives”.

It wasn’t till final yr that it introduced a significant improve of its on-line platform. By then, gross sales via the web had grown to 20% of its enterprise.

Nonetheless, the £25m that it spent on its digital revamp was simply half the quantity that on-line retailer Asos invested in know-how in the identical yr.

In the meantime, John Lewis outstripped them each with a whopping £500m funding in e-commerce.

2. No USP

Regardless of the rise of the web, conventional department shops aren’t robotically doomed. However folks do want a purpose to go to them, whether or not bodily or nearly.

Over time, Home of Fraser has wolfed up a number of smaller division retailer considerations, akin to Military & Navy, Dickins & Jones and DH Evans.

Within the course of, it did rather a lot to kill off the range of Excessive Streets up and down the UK, whereas failing to interchange these defunct manufacturers with a particular id of its personal.

In consequence, the typical Home of Fraser retailer was simply that – common. With no distinctive promoting level of its personal, it lacked the pulling energy it wanted to fend off rivals.

Worse nonetheless, a variety of the products bought inside weren’t even Home of Fraser’s: they had been being hawked by greater than 600 third-party concession house owners. The chain’s personal model was taking a again seat.

3. Too many shops

When it launched into its rescue plan, Home of Fraser had 59 department shops within the UK.

That is broadly comparable with John Lewis and rather a lot lower than Debenhams, however these two retailers have been extra profitable than Home of Fraser at reinventing themselves and staying related in a crowded market.

Retail analysts reckon the chain ought to have slimmed down its portfolio a very long time in the past. As a substitute, it spent years buying extra shops, typically with costly legacy lease preparations.

4. Administration and possession woes

The final 15 years have been a turbulent period for the group: it modified arms twice and have become a bid goal quite a few instances.

Amid all of the takeovers and fears of takeovers, it was by no means clear what Home of Fraser’s long-term technique was.

The uncertainty started in 2003, when Scottish billionaire Tom Hunter launched an unsuccessful hostile bid.

Different tried takeovers ensued till in 2006, it was bought to a consortium led by Iceland’s Baugur for £351m.

There was but extra takeover discuss in 2013, this time with French division retailer Galeries Lafayette.

A yr later, Home of Fraser was bought to Chinese language division retailer group Nanjing Xinjiekou, a part of Sanpower, in a deal valued at about £480m.

Extra not too long ago, there’s been a lot discuss of a “revolving door” syndrome blighting the chain’s administration.

When present chief government Alex Williamson was employed in July final yr after 9 years at sporting agency Goodwood, his lack of retail expertise raised eyebrows.

Mr Williamson’s predecessor, Nigel Oddy, had been within the job for lower than two years when he resigned in November 2016, leaving the agency rudderless simply earlier than the essential Christmas buying and selling interval.

5. No white knight

It was hoped that the corporate could be rescued by one other Chinese language firm, C.banner, proprietor of toy retailer Hamleys. However the deal fell via on the final minute, sealing Home of Fraser’s destiny.

Because it turned out, C.banner itself was not sturdy sufficient to avoid wasting the ageing Excessive Road stalwart.

The Hong Kong-listed agency had deliberate to fund the deal by issuing new shares. However when its share worth fell 70% in two months, it was pressured to drag the share inserting, which it mentioned had grow to be “impracticable and inadvisable”.

In consequence, there was nothing to cease Home of Fraser falling into administration, with Mike Ashley finally stepping in to purchase up the chain.

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