It wasn’t until the House of Fraser crisis which emerged at the start of the summer that people really began to understand the exceptionally difficult times the retail sector is facing. However, the issues which brought House of Fraser into crisis are not new. Our retail insight report published in February 2018 included a case study on a major high street retailer and highlighted the range of challenges facing the sector as a whole (download the report here).
In June 2018, House of Fraser announced that it was preparing to close 31 of its 59 branches, including its flagship store on Oxford Street, London, in an effort to keep the business going. The decision to close stores comes as a result of poor sales results due to intense competition from other retailers, especially online brands such as Asos and Boohoo. House of Fraser was further challenged by rising store costs, especially rental costs for stores up and down the country including in London, Birmingham and Middlesbrough.
Since then, Mike Ashley’s £90m buyout seems to have secured some 17,000 jobs. However, the implications for the brand remain ambiguous; the buyout by the founder of Sports Direct adds more uncertainty to the brand relevance of House of Fraser in a world where consumers have seemingly endless choice. Public perceptions of House of Fraser’s brand quality have declined considerably; dropping to 28 out of 100 (among Millennials, it scored a -4). House of Fraser’s failure to keep up both on and offline only add to the challenge.
It seems House of Fraser needs an entire brand and product overhaul in order to reconnect with consumers. Though the Mike Ashley buyout could be a fantastic opportunity to reinvent a classic brand, House of Fraser needs to develop a new business model to differentiate itself from established budget brands such as Primark and former competitors such as Selfridges.
What cannot be emphasised enough is that House of Fraser is not alone; many retailers are facing significant challenges. For example, despite a slight rise in online sales in the first half of 2018 thanks to new product introductions and promotions, Debenhams has already issued three profit warnings this year, blaming a weak market and discounting from competitors. These are conditions that are not expected to change in the near future according to Sergio Bucher, Debenhams CEO.
Going forward, the retail sector needs to better manage the ongoing shift to online and be more responsive to continuously changing consumer demands. To achieve this, it is essential that retailers make use of their biggest asset, data. The retail sector has an abundance of data which, if processed and utilised effectively, can revolutionise the end-to-end consumer experience.
To find out how TKM can support your retail marketing and branding initiatives, please contact us at hello@tkm-consultants.com