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Store stopped stocking what the customers wanted to buy claims ex-chief

PRODUCTS no one wanted to buy and "an obsession with property development" is behind Arnott's crippling debt, according to the store's former marketing director.

Eddie Shanahan said a drain of senior managers, middle managers and staff also contributed to the decline.

"Many of these people had given a lifetime's service so with them went an intrinsic knowledge of the brand and a special understanding of the store's customers," he said.

His criticism comes as efforts to restructure the store's crippling €300m debts could see all the shares sold for a nominal sum -- which could be as low as just €1.

Anglo Irish Bank and Ulster Bank -- effectively Arnott's new owners, who are owed the money -- agreed earlier this year that they could buy out the shares for a nominal sum.



POTENT

Such a deal would wipe out the shareholding of senior counsel Richard Nesbitt and his family as well as funding partner boundary Capital which is led by financier Niall McFadden.

But Mr Shanahan says he has "watched with some dismay" as Arnotts appeared to mimic its main competitor, the more upmarket Brown Thomas.

"Good retailers know that a strong brand will be a beacon for any street provided it engages its customers and delivers on its promises.

"Arnotts was a potent draw on the northside as Brown Thomas was on the South."

Unfortunately, says the former director, Arnotts allowed some of its core departments to decline "especially the sports department which always was distinctive in its unparalled choice of labels and equipment. Popular brands such as Carl Goss in menswear were discontinued in favour of new labels.

"I have a lifelong professional interest in fashion and some of these new labels were ones I had barely heard of, so what chance was there they they could be recognised by the average Arnott's customer?"

The retail mix in the shop changed "but with little real innovation. It became more like a High Street mall in some parts as ubiquitous brands took more and more concession space".

"The master retailer appeared to lose touch with consumers," he said.

Arnotts relationship with its customers, he stresses, "was always based on trust. In a country that has a seriously diminished trust in banks, yesterday's announcement that this iconic store has come under the control of two banks raises serious challenges for the shop".

The store, he adds, "needs to create a real buzz again" and return to delivering credible profits by exploiting its core strength "which was matching the stock it bought to the customers who wanted to buy it.

"That may sound glaringly obvious but it is the absolute bedrock of any successful retail operation".



LEGENDARY

The real challenge facing the new team is that they "must be the advocates and guardians of the values and service that resonated with six generations of consumers who have shopped at Arnotts".

They will have to feel and understand and have an innate appreciation of the brand ethos.

He added: "There is a future for Arnotts, of that I have no doubt, but it must evolve with a clear focus on the values that made the store legendary."

The banks are awaiting EU approval to take "joint control" of the store and once this happens the share deal could go ahead.

The banks would then be free to sell it on with a view to recouping some of the money they are owed.

Labour TD for Dublin Central Joe Costello has warned that "Anglo, which is now owned by the State, must resist the temptation to offload Arnotts at a fire-sale price just to make some short-term gain".

csheehy@herald.ie


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