Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

In the value sector, size does matter

In conversation the other day, the ex-chief executive of a prominent value retailer gave me his gloomy prediction for the future of the value market in the form of a blunt Anglo-Saxon phrase.

Many would agree with him. Most of the recent crop of failures on the high street have been so-called ‘value’ players. We’ve seen Select and Ethel Austin fall into administration, while Ossian Retail, which owns Internaçionale and Au Naturale, is reported to be ‘on the brink’, and even Baugur, despite its deep pockets, has put MK One up for sale.

It’s not as simple as blaming the rise of Primark. It’s true the barriers to competing well in Primark’s world are huge; it has volume, scale, a good offer, prime position, and excellent PR.

Because the profit margin in value retailers tends to be low, the value retail model totally relies on large volumes. A small fall in these volumes means big problems.

You always need better ranges, and greater efficiencies. But to weather this particular storm, you also need scale and a business already in good shape. Peacocks, under Richard Kirk, recognised the need to differentiate its offer some time ago. It has scale and while still offering value, has been quietly increasing selling price, improving fashion credentials and distancing itself from Primark.

If the summer is not good there will be more casualties, even before we get to Christmas. The value market will adjust, and survive, but for the foreseeable future size really does matter.

David Pidgeon is the former chief executive of value retailer QS

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.