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Failure to adapt leaves Beales on the brink

Department store Beales’s secondary store locations and failure to adapt to the rapidly changing environment have led it to the brink of administration, analysts have told Drapers.

The retailer filed its intention to appoint administrators last week and warned it could collapse if it fails to secure a buyer. All of the retailer’s 22 stores and 1,000 jobs are at risk. Beales said it was negotiating with landlords and councils to try to agree rent and rate reductions.

The privately owned business hired professional services firm KPMG in December to lead a strategic review.

Beales CEO Tony Brown said additional costs and the trading environment had made business “difficult”.

“The sheer weight of the additional costs that are put upon us, if you take pension increases, rates, changes in the way we can apply for lending, there is a co-ordinated effort – or it feels like it – to make it as difficult as possible,” Brown told BBC Radio 4’s Today programme.

“This isn’t about whether Beales is well managed or the business is strong – it’s about an environment we’re trading in.”

However, analysts said the retailer had been struggling for a while.

“I think the writing has been on the wall and it’s been a business that’s been struggling for quite some time,” said retail analyst Richard Hyman.

“Beales’ stores are largely in secondary towns, 30% of non-food sales are now online and [if you take into consideration] what that means for shopping patterns and secondary towns increasingly losing out to primary towns, I think it’s inevitable.”

Emily Salter, analyst at GlobalData, said the retailer had also been slow to adapt to changing retail markets: “An important factor in Beales being on the brink of administration is the slow speed at which it has tried to adapt to the shift to online shopping. It only launched a transactional website in 2017/18 with a limited product range, which was too little, too late.”

Anusha Couttigane, Kantar’s principal fashion analyst, said: “Drab stores and a failure to invest in experience mean those who do step into stores are not given much to entice them in again. Beales relies heavily on its home and lifestyle offer, but its showrooms simply do not do enough to sell an aspirational lifestyle, while the fashion offer can often be limited or inconsistent.”

Retail analyst Nick Bubb said: “[Beales] suffers from all the problems of department stores in general, in terms of fixed costs, without the scale of the big three in terms of marketing clout. Its stores are small and lack dominance in any one area, and I assume it’s weak in online. I can see why it’s in trouble.”

Beales’ operating losses grew to £2m in the year to 31 March 2019, from £865,000 the year before. Turnover was £48.3m in 2019, marginally down from the previous year (£48.7m). Beales began trading in Bournemouth in 1881.

 

 

 

Readers' comments (1)

  • “This isn’t about whether Beales is well managed or the business is strong – it’s about an environment we’re trading in.”

    Not strictly true, otherwise nobody would be doing any good. Beales is a well meaning dinosaur that has not adapted well to modern trends. The last store I visited was far from contemporary and had the feeling of a 'jack of all trades, but master of none.'

    Not nice to see a business that has been going so long in trouble, but a lesson to all that any business must constantly be evolving to remain relevant and viable.

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