Online is tricky look for fashion cast-offs
Investors snapping up brands and relaunching them is hardly a licence to print money, writes Laura Onita ‘More than ever before, no one is owed a living in the market that is unfolding’
Other than being fashion failures, s, what do Laura Ashley, y, Karen Millen, Coast, Oasis and Warehouse ouse have in common? on? Despite collapsing and closing ng all their stores, the brands are surviving ving online after being bought by a mix ix of trade buyers or indeed rivals. These se brave businesses are hoping ng that the brand DNA is strong enough gh to lure shoppers to their respective websites ebsites and convince them to spend. end.
Other than Laura Ashley, which is still trading from stores res for now, all of the aforementioned brands have been bought by Boohoo.
The timing is seemingly mingly in their favour as click-and-collect ollect in shops might become e less popular, with more people working from home and able to accept deliveries.
Plus, with over a quarter of shoppers now planning ing to spend more online after fter the lockdown restrictions ns are lifted, according to Global
Data, it is looking up for e-commerce – although ugh challenges still remain. in.
Typically, the immediate appeal when a business goes into administration is cheap stock. The new parent company gets it for next to nothing.
Even shifting that at a big discount online could produce a quick profit. fit. While their new owners’ intentions tentions appear noble, the move ove is largely opportunistic.
“If you can do it regularly, egularly, [buy] one or two [businesses] es] a year, it can make quite a nice e boost to your trading performance. e. It conveniently blurs the underlying performance,” says Richard Hyman, , an independent retail analyst.
“What makes them m [brands] so attractive is the opportunity ortunity to buy some revenue. It’s asset-stripping sset-stripping really and it’s low-cost.” st.”
Hoarding brands is s not a new idea, either. Retail billionaires aires Mike Ashley and Philip Day ay have both accumulated struggling ing chains over the years, most of which hich were bought out of administration. The new breed of brand owners, however, is hoping that by shedding the extra cost and logistics that come with running stores, they will be easier to manage.
Selling online is not without its issues, however. Many brands stopped being relevant long ago. A drastic reinvention, whether it is the name, the logo or the actual design of the clothes, requires cash at a time when there is already a plethora of choice online and some consumers are squirrelling away money.
Businesses such as Boohoo are banking on scale to source all of their garments for all their brands from the same suppliers at better prices, and share all the back-end infrastructure to keep the brands alive. They have a decent shot at capturing a new wave of shoppers.
Those that live online on their own will find the going much harder and it means marketing becomes even more important.
From a commercial standpoint, Karen Millen is arguably the most meaningful because its success stems from selling to more affluent shoppers at higher prices. The main concern after Boohoo swooped was the potential mismatch that could devalue the brand.
Laura Ashley’s new owner is Gordon Brothers, the restructuring specialist, which is typically drafted in to shift the leftover stock for defunct brands.
Its view, according to Nick Taylor, a senior managing director, is that e-commerce is only one pillar of its wider strategy that he calls “assetless”. He wants to expand its portfolio of licences and franchises, and strike more wholesale deals. “Through strategic licensing arrangements and specialist companies, a brand can delegate many of a retailer’s complexiti complexities, obligations, sourcing, distribution and an logistics,” Taylor says.
Before the pandemic, pandem structural changes in retail, such suc as the shift to online, were already alread evident, Taylor says. What the pandemic has done is accelerate those changes. “It’s likely that we’ll see 10 years’ ye worth in as many months.”
It is not just the recent recen wave of brands that have sought a life online. BHS, once owned by Sir Philip Green, launched online a few months after the high street cha chain went bust in 2016 after Qata Qatar-based owner Al Mana bought its website and its internati international arm. However, it an announced it was shutting d down two years later.
The Wool Woolworths brand was also resurrected re online for several years after the retailer r collapsed in 2008. Selling o online is not exactly am a moneymaker. Discount fas fashion chain Primark, for e example, has been resolute in its refusal to sell online becau because it would erode its already t thin profit margins. The cost costs of delivery and warehousing all add up. Moreover, losing t their physical presence would ha have been detrimental to sales for most brands in the first in instance too. “Most people are looking at businesses through throug the only eyes they’ve got and they are rooted in the p past,” says Hyman.
“What th that leads them to conclud conclude is that if they can ditch the liabilit liabilities, every everything will be alright alright. More than ever be before, no one is owed a living in the market that is unfoldi unfolding. It would be reall really naive for people to think that being online means more than it does.”
Left to right: Warehouse, TM Lewin and Laura Ashley have all run into financial difficulties following the Covid outbreak Hannah Uttley