Struggling department stores and a shift in consumer behaviour could lead to more concession businesses like Calvetron falling into administration, industry insiders have said.
On 4 July administrators for Calvetron Brands, Benjamin Wiles, Trevor Birch and Philip Duffy of Duff & Phelps, decided to close all the business’s remaining concessions after failing to find a buyer.
The closures resulted in a further 500 retail redundancies as well as 90 job losses in the global head office and distribution centre, where a small number of staff will be retained in the short term. A further 250 jobs are affected in Canada.
Struggling department store chains House of Fraser and Debenhams were key accounts for Calvetron, and its collapse could be the “tip of the iceberg” for businesses working on a concession model, retail analyst Richard Hyman said: “This market is vastly oversupplied, and the weaker players and concessions are going to be progressively weeded out. We are going to see many more casualties.
“Most of the department stores are struggling and footfall is down. Calvetron has taken a hit, but there will be others.”
One source close to the situation said concessions in regional stores are particularly at risk: “I can go to a department store in Winchester or Cheltenham and there are a finite number of brands available to me. But I can now go online and get any brands, so I bypass the department store entirely.
“Concessions can still make money in Oxford Street and Birmingham but it gets tricky in the mid-rated towns. The problem is that then lower-performing and Sale stock is shifted to those regional stores but people don’t want to buy it.”
The news follows the closure of 102 Jacques Vert and Precis concessions and 68 Dash and Eastex concessions, affecting 445 and 13 employees respectfully, in June.
One Calvetron supplier said the earlier closures meant the brand business had lost its ability to buy and trade at the volume needed to survive: “There was no critical mass to go to forward and they lost two critical months of trading. Any potential buyer would be investing in the department store market and they wouldn’t necessarily get that money back.”
Calvetron Brands had 300 concessions and employed a total of 1,408 people – 997 in the UK, 155 in Ireland and 256 in Canada – when administrators were appointed on 4 May.