HoF: House of Fools?

Jenners

Thursday’s much trailed announcement that House of Fraser was aiming to close 31 of its 59 stores in the UK and was seeking large rent reductions on those that remain, all as part of a seemingly contested CVA, was the lead story across the country (and on most of the front pages of the national newspapers the following day), particularly in places where towns or cities were affected.  The coverage focused on a number of dimensions, often around the history of the stores and locations involved and, quite rightly, the several thousand workers likely to be affected.

Quite expectedly, attention turned to the ‘death of the high street’ and the impact HoF closures will have.  They will have an impact, no doubt, but we also need to reflect on the broader picture.

Department stores have been in difficulty for some time; both in themselves and as part of the travails of mass and middle market retailing.  C&A and BHS as well as Woolworths and the woes of Debenhams and M&S point to a broader problem.  The decline of the Department Store is not new – I think Stirling had 13 between the wars and only one now – and is symptomatic of changing behaviours and product and place availability. Department stores can succeed, by only by adapting to modern demands. House of Fraser has not done this.

The question for HoF is what makes them out as distinctive or different – and the answer in many cases is not much.  Many of the products can be found elsewhere – online and in other physical brand stores – and there’s little enough ‘wow’ factor from other elements or products to pull in the volume of consumers needed.  Add to that a relative lack of investment over a period of decades in many of the HoF stores, and for many consumers they are something of an anachronism. There has been a lack of transformation and investment in many of the stores, something competitors, such as John Lewis have been much better at (physically, online and multichannel).

That is not to say that HoF have not had ill-winds to face externally.  The rent and rates of operating large units in town and city centres is a problem for all retailers in that situation. The calls from politicians and others on Thursday for ‘bright ideas’ about “the death of the high street” and business rates seem to be ignoring the active increase and burden on such businesses placed by government and a total failure to view the need for a more level ‘playing field’ between physical and online retailing (and if we value towns and cities, in town and out of town).  Hand-wringing by governments and politicians over the health of the high street and closures such as HoF are cynical denials of the fact that their inactivity has helped create the situation. We have written more on this in our Town and Country Planning Column last year.

It is a sense of bias or lack of balance that is also behind the increasingly contested view of CVAs.  They are now, in some quarters, being viewed as a play to reduce the rent bill from landlords rather than a vehicle to obtain a going business.  The fairness of this claim is hard to assess, and I doubt any CVA is entered into lightly, but there is no doubt that the balance of costs is being more carefully looked at. In the case of House of Fraser, given HoF sold a large number of the stores slated for closure to landlords in sale and leaseback deals a while back (and presumably made some comments about the income flow accordingly), the property owners are crying foul the property owners are crying foul. It will be interesting to see what happens here.

It is also worth pausing and asking what this plan says about House of Fraser in the future and whether indeed the CVA will work (if accepted). The axe to the chain is dramatic and does say that HoF can not really make a business work in many of the major cities of the UK (a point well made by Richard Hyman on twitter and his blog). It is all very well focusing on costs and cutting (and it is needed), but we have to go back to investment point above. Where is the plan for HoF to expand sales and income and attract customers. Will this 28 or so strong chain be good enough for the future competition. At this point there seems to be little evidence that this has been given enough thought. Without it, we will not have heard the last of the decline or demise of HoF.

Finally, one also can’t but help reflect on history when looking at some of the stores to be closed e.g. Cardiff, Edinburgh or Wolverhampton, amongst others.  These are status buildings with a storied past that are integral to the streetscape and sense of place.  One hopes that their merit will be recognised and sympathetic uses found; there must be opportunities to be creative and protective here.  We can’t afford a spree of cookie-cutter clones replacing iconic units.  More unlikely or romantically perhaps, maybe there is an opportunity to remove the dead hand of centralism (HoF) and get back some of these great independent stores and names e.g. Howells, Binns, Beatties, David Evans and so on.  After all it is Jenners (180 years old  Jenners) that is the surviving store in Edinburgh. Perhaps this is more likely in some of the smaller towns affected by the closures.

 

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues. I am Chair of Scotland's Towns Partnership. I am also a Deputy Principal of the University, with responsibility for Internationalisation and Graduate Studies.
This entry was posted in BHS, Buildings, Cardiff, Consumer Change, Costs, CVA, Department Stores, Edinburgh, High Streets, Historic Shops, Internet shopping, Jenners, John Lewis Partnership, Online Retailing, Oxford Street, Places, Retail Change, Retail Failure, Town & Country PLanning, Town Centres, Urban History and tagged , , , , , , , , , . Bookmark the permalink.

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