Two years ago, 45-store Allders collapsed. But now the refocused business is ready to grow again
Two years after entrepreneur Harold Tillman rescued Allders from administration, the 145-year-old department store business is looking to expand its horizons once more.
The business was cut back from 45 stores to a single flagship in Croydon, Surrey, in 2005 after falling sales and constant discounting. But the company has now been revamped under Tillman and chief executive Andrew MacKenzie.
Most of its former suppliers, some of which lost money when the firm went bust, have returned to Allders, signalling confidence in the management team. With a more concession-led clothing offer and a full-price strategy, the business is now on the hunt for new locations.
Tillman is understood to be in talks to pick up at least some of department store business Owen Owen’s four stores, after it went into administration in February. The stores include Lewis’s in Liverpool, Robbs of Hexham in Northumberland and Joplings in Sunderland. The Esslemont & Macintosh store in Aberdeen is expected to close.
One possibility is that the business will expand in a bid to capture more of the 50-plus age group - a demographic with rising spending power. Allders says its core market is the 35-plus age group. But the increasing power of the grey pound has not been lost on the likes of Marks & Spencer and Debenhams, which are working to attract older shoppers. Meanwhile, John Lewis, which has traditionally focused less on young fashion, is one of the best-performing department store groups.
Although MacKenzie denies a deal has been done to buy the Owen Owen stores, he says the company would always consider appropriate opportunities. One source says the business is investigating a number of expansion routes.
Suppliers, property agents and other retailers say a move for Owen Owen’s stores would be logical. It would also ease pressure on Allders’ Croydon store in the Whitgift shopping centre, which, at 319,000 sq ft, is one of the largest shops in the UK. The store is under threat from landlord Minerva, which is considering plans to redevelop the centre and move in another department store.
A source close to the former Allders team says growth makes sense. “Before it went into administration, Allders was developing a strategy to turn the chain into an emporium of brands, a mix of own-buy and concessions with a focus on concessions,” he says. “The result was a lower cost base. The model has worked well in Croydon and the store is trading well so there’s an opportunity to roll it out. Tillman may just have to tweak the mix slightly.”
BMB Group chief executive Peter Lucas, a long-time Allders concessionaire with brands such as Gibson, Baracuta and Haggar, says the business has turned around since Tillman and his team took the helm. “(Former Allders boss) Terry Green tried to move the business from A to B too quickly,” he says. “It was known as a predominantly homewares business and he tried to expand the fashion element and introduce more own brands. He had the right idea, but tried to do it too quickly and the Allders customer didn’t understand.
“The acid test is that a lot of brands that got badly burnt when it closed and were owed money are mostly back in store now,” he adds. “That shows the degree of acceptance of the new management. It’s more upmarket and brand-driven now. It has the right concession mix.”
Lucas says he is pleased with the Croydon store’s performance and adds that a roll-out would not surprise him. “There’s potential and there are plenty of areas where there isn’t the competition,” he says.
But whether Owen Owen’s varied portfolio is a good fit for the Allders offer is up for debate. The Lewis’s shop in Liverpool is off-prime pitch. What’s more, with huge redevelopment happening in the city over the next 18 months, the retail footprint is in flux. The Owen Owen model may be similar to Allders, but if the former was unable to make it work, Allders could struggle as well.
However, one supplier says that management and mistimed expansion were more likely to be the root of Owen Owen’s problems. “It used to be just the Liverpool store until it bought the others and maybe it became overstretched,” he says. “But Allders is a good fit. Tillman could change it to a more concession-based model like in Croydon.”
One retail property agent says Allders would have to be clear about its target customer if it wanted to find suitable sites. “Allders would find it easy to get good locations at a good price if the offer is right.”
He says there are many developers with schemes who would “fall over themselves” for a department store with the right brand mix, aimed at the 35- or 40-plus age group. However, he adds: “Targeting an older, 50-plus market would be less attractive to developers in terms of fitting with the rest of the retail mix. Also, the likes of Primark, TK Maxx and Next are looking for bigger stores, so Allders would be competing with them for space.”
According to Verdict Research, the over-55s spend £75 billion a year in stores. That figure is predicted to rise by 57% to £118bn by 2015.
Retailers looking for growth should ditch attempts to focus on hard-up younger shoppers, says Ian Thurman, head of location planning for data analysis firm CACI. “Those born in the 1960s will be the spending powerhouses from 2010 onwards, if not sooner,” he says.
Whether it opts to target the grey pound or simply dip its toe in the water of expansion, Allders believes it now has a business model with which it can take on its rivals.
THE UK’S GREY AREAS
Top locations for Allders to target the 50-plus market - % of catchment aged 50-plus
Eastbourne - 45.2%
Chichester - 44.2%
Bournemouth - 41.7%
Southport - 41.6%
Hereford - 40.4%
Norwich - 40.3%
Blackpool - 39.5%
Shrewsbury - 39.4%
Swansea - 37.9%
Source: CACI Retail Footprint.