House of Fraser’s announcement today that it is proposing to close 31 of its 59 stores is a sad but necessary development.
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The business has struggled to keep up with a rapidly changing environment – it fell into the discounting trap and has failed to find its unique place in the market to engage shoppers.
Results revealing a loss of nearly £44m for the year to 31 December highlighted just how challenging times had become. HoF struggled to balance managing a raft of large stores at the same time as keeping up with the digital transformation of other market leaders. Issues with its ecommerce upgrade in 2017 further stilted its digital innovation.
While it is no shock that the retailer is closing stores, some of the locations chosen are more surprising. There is no doubt that the rent and business rates on Oxford Street store are a factor, but what will be the impact of not having a presence on London’s most prominent shopping street?
The job losses are of course an extremely sad repercussion of this development, but CEO Alex Williamson, sounding sombre in today’s call with the press, highlighted that without making these tough decisions, more jobs would have been at risk.
What this means for brands and concession partners is yet to be seen. So far, there are mixed responses as to whether brands will move away from HoF altogether or remain confident that the measures taken will get the business back on track.
Williamson’s ambition to become the “House of Brands” and home to a more premium brand mix will require a further development in strategy to move away from discounting. It will also require a strong team to reassure brands that the business is set up to survive and restore the market’s confidence in HoF. Bringing in former Fenwick director David Walker-Smith as chief product and trading officer in March was a smart decision to engage premium brands. But can he convince them to take a chance on HoF in its current form?
As stated by retailers, landlords and industry observers in a Drapers analysis earlier this year, to move forward HoF requires serious investment. Since Williamson’s appointment in July 2017, the business has been restructuring. It has made several redundancies at senior level and, unfortunately, the closing of stores is the next step. However, there is still more to do and as the industry continues to change, tough business decisions must be made to set HoF up for the future.
- Suppliers to House of Fraser have warned of “knock-on effects” of the CVA. Are you affected? Email email@example.com
Comment: House of Fraser shows tough decisions are required to survive