News World News

Monday 20 August 2018

House of Fraser’s woes a reflection of survival of the fittest – analysts

The retail market is overcrowded and consumer spending is not enough to keep everyone afloat, analysts say.

Pedestrians pass the Middlesbrough branch of House of Fraser.
Pedestrians pass the Middlesbrough branch of House of Fraser.

By Josie Clarke, Press Association Consumer Affairs Correspondent

House of Fraser’s woes are a reflection of a brutal retail environment in which only those with the strongest relationship with their customers will survive, according to analysts.

Richard Hyman, who has analysed the retail sector for more than 30 years and predicted last year that 2018 would be “the year of retail distress”, said any retailer that did not “exactly” understand its core customer would not last in the current environment.

He attributed House of Fraser’s difficulties to a lack of investment, declining relevance with shoppers, a lack of brand differentiation and a failure to focus on the store’s core customer.

If you don't understand exactly who your customer is and build your brand accordingly, you won't last

He said today’s announcement had been “a long time coming”, but reflected the “most difficult retail market anyone has ever seen”.

He noted that House of Fraser’s more successful rivals almost all had a strong private or own-brand label, which he described as “enormously valuable” for differentiating the brand.

He said: “House of Fraser has developed lots of private labels but in a half-hearted way.

“In terms of its concessions, House of Fraser doesn’t have anything that nobody else has got. That’s why a private label is so important. House of Fraser has plenty but they’re all anonymous.

“Their [House of Fraser’s] sales productivity is very weak and that tells you that they’re just not a strong enough draw in an overcrowded market.”

He added: “This is the most difficult retail market anyone has ever seen.

“The winning retailers have one thing in common and that is their relationship with their customers. If you don’t understand exactly who your customer is and build your brand accordingly, you won’t last.

“This really difficult market is going to be with us for years. Consumer spending is just not enough to support all the hungry mouths and there is no evidence of that changing.”

Richard Lim, chief executive at analysts Retail Economics, said: “Department stores are incredibly expensive to operate and the last few years have seen costs spiralling upwards from business rates, rents and the National Living Wage.

“The announcement to close such a significant number of stores highlights the unyielding shift towards online shopping and the overcapacity concerns faced by a significant proportion of the market.”

Press Association

Today's news headlines, directly to your inbox every morning.

Editors Choice

Also in World News