Older women are becoming increasingly fickle shoppers. With like-for-like sales at Alexon’s branded arm slipping 5% in the past year, how will the multi-brand group fight back?
Once the core of the classic offer in department stores across the UK, the Alexon Group’s six brands –Alex & Co, Kaliko, Eastex, Dash, Minuet and Ann Harvey –are facing increased competition from newer kids on the block. Brands such as Hobbs, Phase Eight and Fenn Wright Manson are now all quoted by department stores as the key names catering for the 45-plus concessions market.
Alexon, along with the likes of Viyella and Jacques Vert, has represented the more mature womenswear market in department stores for many years. The business is still widely represented, with a total of 865 concessions and 77 shops, but some of its department store customers are questioning whether its brands are moving at the same pace as its shoppers, many of whom are now becoming more adventurous and trying younger looks.
Alexon Group’s answer was to try to recapture market share by launching trend-led brand Mandolin in 2005. The move backfired drastically, with Mandolin failing to meet sales targets and distracting the group’s management team from the core labels. The brand was axed in January 2007 after recording losses of £5.1 million.
Earlier this week Alexon Group reported its annual results for the year to January 26 2008. The brands division of the business racked up operating profits of £14m against £12.9m last year, with sales down by 5%, but margin was up by 1.1 percentage points. Chief executive John Osborn told shareholders that while the outcome for the forthcoming year would be affected by the overall trading climate, the business was well placed to continue its recovery.
The Alexon brands division is now made up of Alex & Co, a smart separates label aimed at 35- to 55-year-olds; Dash, a co-ordinated leisurewear range; the more contemporary and premium Kaliko offering; Eastex’s classic occasionwear and tailoring offer; the Ann Harvey plus-size range; and petites label Minuet.
The merchandise director at one of the UK’s leading independent department stores says: “The problem for the Alexon brands is that the customers they had 10 years ago are now shopping a look that is up to 20 years younger than where they would have shopped a decade ago. Unlike some of the own-bought labels stocked by department stores, such as Betty Barclay and Oui Moments, Alexon does not seem to have moved on with the market.
“If you look at a range such as Dash, it just has not got the confidence and style that its target customer has. Women who should be buying into Dash buy into leisure brands such as White Stuff – they like the quirkiness of it, and it’s easy to wear and slightly funky. These women watch TV programmes such as Trinny and Susannah Undress and What Not To Wear and have listened to the advice, which is to be confident, to dress to their shape and to loosen up their look.”
Consultant Kathryn Horsfall, the former womenswear director at House of Fraser, says: “All of the classic womenswear brands like to say they are targeting the 35-plus market, but it doesn’t take a genius to realise that their core customer is now at least 50-plus. When you stand in a department store and look at who is shopping a brand such as Alex & Co, the majority are aged over 60.
“Alex & Co’s target customers are now more likely to be shopping brands such as Hobbs and Jaeger. In fact, I’d go as far as to say that Hobbs is the new Alexon in terms of the job it does for department stores. Hobbs is about design detail. It’s not trendy, but it knows how to reference trends for its market and it is well co-ordinated.
“There is nothing Hobbs does that the Alexon Group brands couldn’t be doing, but somehow the business has got stuck producing the same shapes and silhouettes. Alexon has decent facilities to put a more distinctive handwriting into its key brands because it uses exclusive prints. It just needs to be dragged into the 21st century.
“The Ann Harvey plus-size range is the same – if you compare it with the likes of N Brown’s larger sizes for women of the same age, Ann Harvey looks like something out of another decade.”
Alexon has recently appointed new fashion director Hannah Obdam, formerly of Dutch brand Mexx. She replaces Lesley Thompson, who retired last month after more than a decade at the business. The group’s department store customers are hoping that Obdam’s influence will refresh the fashion direction of the brands.
The buying and merchandising director of one department store that houses Eastex and Alexon concessions said: “Alex & Co has had a poor couple of years with us. It’s a shame because two years ago it was one of our best-performing concessions. Alex & Co says it is targeted at 45-plus women, but in our stores the customers are aged 60-plus, with Eastex customers aged 70-plus.
“Alex & Co has been hit hard by the resurgence of Marks & Spencer, which I think is now serving the 45-plus group so well with brands such as Per Una and Autograph. Customers are also looking hard at value for money and that is something that Alex & Co has to look at. The January product from Alex & Co and Eastex is an improvement, but these brands are up against tough competition and Alexon needs some bold steps internally to change the approach.”
The chief executive of one of Alexon’s direct competitors agrees that ensuring your quality is right is key to this target customer. He says one of his biggest challenges at this level of the market is that it is oversupplied, and adds: “The key to success is maintaining quality. If it means moving prices up, we will. Our core market will spend money for quality. Look at how a brand such as Jaeger has benefited from redefining its position in the market and addressing its fashionability. If you’ve got the right product, customers will pay for it. You must be true to the roots of the brand, but also develop it.”
One of Alexon’s more upbeat stockists warns that its management has an uneasy tightrope to walk to retain its present customer group while it re-energises its brand portfolio. “We stock almost all of Alexon Group’s brands and the majority are performing reasonably well,” he said. “Product has improved and all the signs are that it will get even better. But it will have to be careful not to change too radically or it could alienate the business it already has. I think the team needs to focus on investing in shopfits, which are looking extremely scruffy compared with its competitors and are in danger of damaging its profile among the customer base.”
Andy Wade, analyst at broker Seymour Pierce, says improving fashionability would benefit the brands. “This is the bright part of the story for the business – there is an opportunity to tinker with the brands and make them better. The company seems to think that the underperformance wasn’t because they had the wrong people at the business, but that the brands were suffering from those people focusing on Mandolin.
“The big problem for a concessions-heavy business such as Alexon is that it is at the mercy of department stores and is powerless if they demand new terms, or they decide to shift focus and push their brands to the back behind pillars or by the men’s toilets. Being a concessions-based retailer in today’s department store market is just not a happy place to be.”
£7.25bn: Total sales in the50-plus womenswear market for the year to February 23
10.2%: The slice of the 50-plus womenswear market spent in department stores
Source: TNS FashionTrak