Daily Mail

Decline and fall of Fraser

- Alex Brummer

THE defenestra­tion of the House of Fraser is a further blow to high streets up and down the nation but is not a surprise.

Department stores have become an expensive luxury and only those with a unique selling point – such as upmarket Harrods, Selfridges and Harvey Nichols – and those with a reputation for good prices and reliable service – notably John Lewis – will be survivors.

House of Fraser has historic problems. Under successive owners and management­s it became the buyer of last resort for famous old branded stores, but unsteady and revolving ownership meant it lacked the cash flow and investment to turn their stores into must-go destinatio­ns.

In spite of a focus on upgrading its flagship Oxford Street store the shop had become a desert, unable to compete with better-resourced upmarket neighbours.

There will be a great deal of whingeing from the British Property Federation, representi­ng landlords, over the use of ‘company voluntary arrangemen­ts’ used by new or related party owners (as in the case of House of Fraser) to chisel down rents.

Before anyone starts to shed crocodile tears it is to be remembered that for generation­s property owners, whether they be big real estate companies such as British Land or pension funds, have lived high off the hog on upwards-only rent reviews.

That is why some of the smarter retail chains of the recent past, Tesco and Marks & Spencer to name two, had property ownership written into their DNA.

They did not wish to be at the mercy of landlords who regarded rent reviews as an annuity delivering ever-higher yields.

It is not just rapacious landlords which helped to destroy House of Fraser, Mothercare and up to 100 M&S stores. The Government must also bear responsibi­lity.

The squeeze on public spending initiated by George Osborne cut the subvention to local government from the Exchequer by up to 40pc at a time when costs have been rising because of social care needs. The response of councils has been to ratchet up business rates as a revenue stream.

The Fraser closures are far from random. Most are on older high streets where custom has fallen. Stores on new sites, such as Westfield in west London, will survive.

There is a halo effect in the well-run malls, which are as much social gathering places as shopping emporiums.

Needless to say there is also Amazon, a job creator in logistics, but the enemy of even the most successful names in the shopping centres.

Clearly, the Fraser closures will be a shock for the 6,000 loyal staff affected and risk adding to the dilapidati­on on many high streets especially in towns north of Watford. Neverthele­ss, there are still new and growing retailers out there from B&M and Wilko, at the no-frills end of the market, to Joules and Superdry.

What goes around, comes around.

Patent loss

THE casual fashion in which Masayoshi Son of Softbank sold 51pc of ARM Technologi­es in China at a knockdown price needs to be examined.

It may not breach investment and headcount undertakin­gs, which ARM made at the time of the 2016 takeover, but it is not in the spirit of the agreements. If such a deal were to have been engineered by an American company, the Committee on Foreign Investment in the US, Commerce Department and security services would have been all over it.

The risk of a loss of proprietar­y British technology and intellectu­al property looks extraordin­arily high.

New majority owners, Hopu Investment Management and its partners, look to have well-placed friends in Beijing. That may be good for Softbank but not for ARM, a product of Cambridge research.

While on the subject of technology transfer there must also be regret that Oxford Biomedica, a gene therapy company which began life at Oxford University, has been snapped up by a neophyte American outfit, Axovant Sciences.

This should have been a joint venture opportunit­y for the UK’s pharma giants.

Foul play

AS MUCH as one admires the boldness of Jeff Bezos and Amazon Prime, it is hard to take much pleasure in the purchase of broadcast rights to up to 60 Premier League matches.

For fans it may mean an extra subscripti­on rather than lower prices. But, more seriously, Amazon’s complex tax arrangemen­ts means it is an unfair competitor.

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