Although Arcadia Group suppliers agree that yesterday’s approval of its company voluntary arrangement (CVA) was a “fantastic” result, they are divided over whether product or property is the cause of the retailer’s woes.
Mike Demos, managing director at Camden-based manufacturer Breeze UK, said: “The only way forward is for [Arcadia] to create better product,” adding, “all owners and suppliers need to up our game.
“We need to work collaboratively, and listen to each other and to our customers. They want good product, and that is what we have to offer – they don’t know how much rents cost and they don’t care. We have to stop cutting corners and doing what everyone else on the high street is, which is essentially producing cheaper goods like Boohoo and Missguided. They are fantastic at what they do – let them be and let’s move on.
“Arcadia needs to focus on what it is good at and make sure that it stands out from other retailers and is identifiable on the high street. We can’t be bland and make what everyone else is making.
“The CVA approval is fantastic for Arcadia employees, and for suppliers, and I think it’s good for high street. But it’s not enough. I hope it leads to growth between the group and its suppliers, so that we can communicate better and work together moving forward.”
Oliver Buhus, operations director at garment supplier Paragon Clothing, disagreed. He argued that Arcardia’s product remains strong, and said its property portfolio is the problem: “Arcadia brands are without a doubt desirable, but Arcadia simply cannot pay such incredibly high leases and premiums, especially on such a vast portfolio of properties. Many of the terms were agreed years ago, when the high street was in full flourish and was the principal platform for retail sales.
“High street footfall has significantly declined and it cannot generate the same amount of sales. This has resulted in a significant imbalance between high street sales and lease premiums. Sales generated do not reflect the lease premiums that Arcadia is paying.
“The CVA has therefore been a wise, logical and strategic move forward.”
Claiming the CVA was “terrific” news for all parties involved, Buhus believed it would give Arcadia “the opportunity to execute its plan and is an exciting step forward”.
This, he said, would involve digital investment while maintaining Arcadia’s “strong” high street presence: “Arcadia’s brands offer customers a complete shopping experience – from desirable and fashionable product, to credible and relevant branding and marketing, and a persuasive, visual shopping experience.
“Stores are a necessity to the group and each of its brands’ individual offering.
“Striking the balance between profitable stores and creating headroom for digital investment to propel its brands forward is now key.”
However, another supplier believed a cull was necessary to save the group: “To get back on track Philip Green needs to sell all of the brands and keep Topshop.
“If he manages to reshape the business through a CVA then he will ultimately sell the business on. He’s at the end of his career. He shouldn’t be involved in the business any more. He’s interested in selling Topshop for the best price possible by downsizing and getting rid of debts. It will either be sold to Philip Day [owner of Edinburgh Woollen Mill Group] or [Sports Direct owner] Mike Ashley.”