Since I started to write this update, news has come out that the lockdown has been extended in Ireland to 5th March. This is another harsh blow for the economy, retailers and, well, all of us really. My previous newsletter had some useful information on supports and looking after yourself, so if you’d like a reminder of those you can see it here.
However, the business deals keep on happening regardless, so I’ve been taking a look at the larger retail landscape.
The big international retail stories this week are of Debenhams being bought by Boohoo, and of Asos “bagging the best bits” of Arcadia. So are these good or bad news stories? It depends on who you are. I’m going to focus on the Debenhams story for now.
Good news for Boohoo
It’s a great deal. For £55M thay have acquired all the intellectual property assets, including customer data, related business information and some brands such as Maine, Principles and Faith from the administrators of Debenhams. With these new assets, Boohoo plans to turn itself into a marketplace taking on Amazon and Zalando, and extending its range beyond fashion to beauty, homeware and sportswear. Cheap at half the price!
Bad news for Debenhams stores and employees
It’s a terrible deal. All stores in the UK will close (the Irish Stores having already closed last year). This historic company’s origins are in Wigmore Street, London, in a drapers shop founded by William Clark in 1778. Debenhams will leave a big space in many High Streets and the loss of 12,000 jobs. My heart goes out to many ex-colleagues as they try to navigate the current and post-pandemic jobs market.
Bad news for Mike Ashley
It’s an inevitable deal. Mike Ashley has lost out to cash rich Boohoo. It’s the final blow to his Frasers Group’s aspirations to buy Debenhams – after losing £150M in share value after Debenhams first foray with administration in 2019. He could still pick up a few properties at a good price for his own growing retail brand empire, but it’s small consolation for this larger than life character.
Bad news for the retail landscape
It’s a bad deal and yet another blow to many shopping streets and centres after many high profile names have disappeared from them in the recent past. It’s now widely accepted that the pandemic has only hastened the huge shift in how we live, work and particularly shop. I spotted an article last week by Mervyn Ellis of PNB Paribas calling for an urgent review of the planning laws. Relaxing restrictive planning rules would allow multiple uses of premises. This could facilitate a quicker occupancy of vacant premises by eager entrepreneurs instead of a change of use planning application that can take up to 6 months to secure.
Good news for independent family run businesses
It’s potentially a good deal for small independent businesses. At first glance the Debenhams/Boohoo deal might seem irrelevant to your local family retail business. However, it may present some new opportunities. Historically, family run businesses have survived financial crises in various forms better than larger conglomerates. Witness the huge growth in shopping local in this current crisis. The demise of many big retailers is a symptom rather than a cause of the current shift in shopping habits. And one that small retailers can take advantage of. With the movement to “build back better” and consumers’ growing awareness of the impact of their purchases on the planet, there is great opportunity for small, agile businesses to jump in and fill the gap.
As a glass half full kind of person I think that, on balance, there is more good news than bad news in this story. But you have to look past the screaming media headlines and photographs of shuttered store fronts to find it. Online is here to stay but so are bricks and mortar stores. It’s not a simple case of one substituting the other – there will always be a demand for both. Like all demands, it may fluctuate over time depending on external circumstances. But the success of each retail business model is integral to the success of the other.
That the retail landscape is changing is the understatement of the year (so far!). It will need some creative thinking on the part of retailers, landlords and governments to come up with solutions to provide what customers are looking for in a post pandemic world. Perhaps the policymakers could think more like a family-run business rather than a corporation answerable to shareholders. Family-run businesses think long-term, they want to leave something to the next generation and the ones that follow. Corporations and politicians are too accustomed to thinking short-term, in quarters and election cycles. They need to move away from thinking of next day delivery at any cost, to delivering more sustainable solutions for future generations.
If you, or someone you know, are contemplating a career change (by choice or necessity) you might consider the upcoming Career Boot Camp being run by recruitment and retail experts, Denise Brady and Kate Rooney.
And if you’d like some advice on how to make your retail business more sustainable (in all senses of the word!) book a free call with me.