By Lola Miller
Your commercial awareness dose…
Major high street chain Debenhams announced last week that it was set to close, putting 12,000 jobs at risk. The 242-year-old company has been in administration since April, but is now set to begin winding-up, closing its 142 outlet stores across the United Kingdom.
Business correspondent Dominic O’Connell stated on December 1st that the company had “succumbed finally to the twin threats of the internet and pandemic shutdowns”. The company, first founded in 1886, was bought out in 2003 by a private equity consortium; a period that retail experts argue the company never recovered from, returning to the stock market in 2006 with a debt of over £1bn. Other reasons cited for the demise of the retail company include a failure to remain “relevant”, falling behind fashion trends, alongside an inability to keep up with the competitive prices of likes of Primark, Boohoo, and Amazon.
On the 7th December, however, Mike Ashley’s Frasers Groups entered ‘rescue talks’ with Debenhams. Mike Ashley is a billionaire retail entrepreneur, Chief Executive of Frasers Group Plc, under whose umbrella fall companies such as House of Fraser, Sports Direct, Game Group, Evan Cycles and Jack Wills. Ashley confirmed on the 6th December that he had entered last-ditch negotiations, stating that: ‘we hope to be able to save as many jobs as possible’ at Debenhams.
Deidre Hipwell, writing for Bloomberg, suggests that if a deal were made, Frasers could operate the 124 stores owned by Debenhams on an annual basis, and see how many of said stores can be saved. All reports, however, caution that a deal is by no means certain. The collapse of Philip Green’s Arcadia Groups, which owns Topshop and Dorothy Perkins, was also announced this week, threatening a further 13,000 jobs. The collapse of these two high street giants signifies a terrible collapse within the British retail industry. Not only this, Arcadia was also Debenhams’ biggest customer: a spokesperson for Frasers Group Plc confirming that: ‘time is short and the position is further complicated by the recent administration of the Arcadia Group, Debenhams’ biggest concession holder.’
JD Sports had previously been involved in talks regarding buying out the company, but confirmed it had withdrawn its interest; some linking this to the collapse of Arcadia, though JD Sports has since refuted these claims. Many workers are now anxiously awaiting the result of these last minute talks with Frasers Group Plc; their livelihoods depend upon them.
With the BBC reporting yesterday that shopper numbers last weekend were down by over a quarter in comparison to the same weekend in 2019 (despite a lifting of the coronavirus lockdown) many are voicing concerns about the future of the British High Street. Department stores and retail brands have been struggling to compete with online brands for years; how badly the impacts of COVID-19 will compound this issue remains to be seen, however, the collapse of both Debenhams and Arcadia bodes ill for the industry as a whole. The demise of these two companies alone represents a loss of 25,000 jobs. The Centre for Retail Research predicts that the industry will lose a total of 235,000 jobs this year.
To keep up to date with the latest commercial news, click on commercial awareness to get your daily dose.
Donate & Support