Flotations (or lack of them), shearling boots, a supply chain crisis - 2010 was a year of highs and lows. We look back at some of the best, and worst, moments for the industry.
DEAL OR NO DEAL
To sell or not to sell? To float or not to float? Those were the questions that, largely, split the winners and losers of 2010. Last year ended with private equity firms circling Matalan after a stellar performance from the value chain, but as soon as 2010 began, potential suitors balked at the £1.5bn price tag, and by February a sale was off the cards. Matalan’s experience would be shared by other large-scale fashion businesses.
That month, New Look confirmed it was poised to float on the London Stock Exchange as it targeted international expansion, but within a few weeks, it too shelved its plans, blaming unfavourable market conditions. They were certainly favourable for Julian Dunkerton, who as chief executive confirmed SuperGroup’s stock market listing in March, which valued the young fashion business at £350m. Its share price has since rocketed and it now has a market cap of £1.28bn
Luxury goods group Richemont snapped up etailer Net-a-Porter, also for £350m, while Peacocks Group was understood to be considering a sale or refinancing. But after months of deliberation, its plans were called off in October - the same month in which Net-a-Porter acquired the assets of discount site Koodos, which was put into administration in October.
June was also split by winners and losers. Branded young fashion chain Republic was sold to private equity house TPG for a rumoured £300m, while discount department store TJ Hughes was said to have axed its sale process, which had a rumoured price tag of £70m.
At least those who failed to float or sell avoided the fate of the likes of menswear chain Suits You, which disappeared from the high street this autumn after its administrators Zolfo Copper said it was not “financially viable”. Footwear retailer Faith narrowly escaped the same fate, but luckily Debenhams stepped in to acquire the Faith name from administrator Mazars after the chain hit the buffers in April. The deal meant Faith kept trading in its department stores at least.
Indeed, 2010 was an interesting year for the footwear sector in general, with a fair few retailers hoisting up For Sale signs. Office was put up for sale in July with a £200m price tag, and Jones Bootmaker followed suit in August with a £50m tag. Neither had finalised a deal as Drapers went to press, though. And could Jimmy Choo be up for grabs in 2011? Only time will tell.
The biggest, industry-wide issues of 2010 were arguably the supply chain crisis and cotton price hikes, which look set to continue into next year.
With rising labour costs in China - pay went up 30% this year - businesses were forced to look elsewhere, notably Bangladesh. But factory workers there went on strike over wages, piling pressure on supply. Bangladesh’s oil and gas crises forced some factories to close, while the closure of air and sea ports in India due to political unrest worsened the situation.
The result was uncertainty in terms of deliveries and a forced increase in freight costs to transport stock by different means, including air freight, to the UK.
A case in point was young fashion brand Superdry- in November, a number of its stockists cancelled orders as a result of manufacturing hold-ups in China.
The Department of Agriculture forecast that cotton availability would drop to its lowest level in 14 years in 2010-11, and the cost of cotton rose past the $1 (64p) per pound mark for the first time in 15 years. Next chief executive Lord Wolfson said the retailer was experiencing “significant product cost price pressure”, and that selling prices to the consumer would be forced to rise between 5% and 8%.
That, combined with the VAT rise due in January, prompted retailers to call time on the price deflation, which has characterised the industry for the past decade. As Maureen Hinton, lead analyst at retail research firm Verdict Research, said back in May: “This is the beginning of a new era. It was unsustainable for prices to keep dropping and for shoppers to buy more and more product.”
The question remains whether price rises will push the UK back into recession.
SHEARLING AND MINIMALISM
Retailers had one man to thank this year for saving Christmas. Burberry chief creative officer Christopher Bailey’s autumn 10 catwalk show was responsible for providing retailers with some of their five best-sellers in 2010 - the shearling boot, aviator jacket and classic trench coat.
Phoebe Philo at Céline inspired women across the country to smarten up with pared-down, minimalist collections comprising camel coats, crisp white shirts and well-cut trousers.
Finding more routes to market was key for many retailers, with Selfridges (in February), H&M (pictured) and Zara all launching transactional websites, while Net-a-Porter announced the launch of its menswear spin-off Mr Porter for January 2011.
Web heavyweight eBay launched its Fashion Outlet in May and Google set up Boutiques.com, while in October, Argos was understood to be eyeing major fashion brands to muscle in on the fashion industry - a Drapers exclusive. The retailer has yet to confirm the venture, but it hasn’t denied it either… Meanwhile, Asos continued to drive innovation online with the launch of Asos Marketplace, which enables customers, indies, brands and designers to sell on the site. It also launched global, free delivery in November and same-day delivery in August.
THE NEW GOVERNMENT
The Lib-Tory coalition Government, which formed in May, was generally well received by industry leaders, who hailed Chancellor George Osborne’s June Budget as “encouraging” and “brave” and welcomed his plans to lower the National Insurance threshold and reduce corporation tax for large and small businesses.
Retailers were less concerned about a VAT rise, from 17.5% to 20% from January 4 next year, and more worried about a dip in consumer confidence after Osborne said in October that 490,000 public sector jobs (since adjusted to 330,000) would be axed by 2014-15.
The 10 most read stories from drapersonline.com
- The Sting confirms Piccadilly Circus store for UK debut
- Video footage of Céline’s Phoebe Philo taking home the top prize at the British Fashion Awards
- Up to 129 Ethel Austin stores set to close
- Debenhams to launch Easter Sale
- Ethel Austin files intention to appoint administrators
- Drapers Awards 2010 shortlist announced
- Alexander McQueen found dead
- Faith pre-pack administration deal expected
- Brands out of pocket after Bagga Menswear closes
- New Look signs London head office
The industry said goodbye to some of fashion’s greats in 2010
Peter Bromley, former chairman, Russell & Bromley; Sidney Burstein, founder, Browns; Bob Coote, sales director, Rhino Rugby; Joseph Ettedgui, founder, Joseph; Samuel ‘Sigi’ Faith, founder, Faith; Trudie Kelvin, mother of Ted Baker founder Ray Kelvin and instrumental in the creation of the brand and retailer; Malcolm McLaren, punk impresario; Alexander McQueen, designer; Nick Samuel, former chief executive, Hobbs; Catherine Walker, designer; Jonathan Wells, owner of indie Questa; Lord Leonard Wolfson, former chairman, Great Universal Stores
The royal wedding
Prince William’s engagement to Kate Middleton in November is expected to give London retailers a £24m boost to fashion sales over the royal wedding bank holiday weekend in April next year. Reiss and Whistles have already scored belting PR from the future Queen.
Whether in a flowing, floral print for spring or a sleek, block colour for autumn, women across the country donned the maxi dress.
From social networking sites (2010 was the year Twitter went mainstream) to new mobile phone technology, retailers jumped on the technology bandwagon.
US fast-fashion giant Forever 21 launched into the UK in November, while opportunities abroad for UK businesses - both bricks and mortar and online - boosted retailers’ expansion plans.
High street giant Topshop unveiled its last collection with model Kate Moss in November for autumn 10. Moss will just work on special projects for Topshop in future.
Richard Bradbury retires
River Island chief executive Richard Bradbury stepped down from the young fashion giant after more than 20 years, handing over the mantle to Ben Lewis, nephew of the retailer’s founder, Bernard Lewis. As a long-time supporter of young talent, Bradbury is expected to help out Graduate Fashion Week long into his retirement.
Marc Bolland at M&S
Marc Bolland took up his role as Marks & Spencer chief executive in May and in November delivered his vision for the retailer, but, apart from axing sub-brand Portfolio, his proposed shake-up was a bit of a damp squib.