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As it is confirmed that Austin Reed will disappear from Britain’s high streets, what can independent retailers learn from the high street’s recent casualties?
British Home Stores went into administration in April this year, putting at risk 11,000 jobs and creating a furore about the behaviour of its owners and managers in recent years.
In truth, questions about its relevance to modern retailing had been asked for more than a decade – before the arrival of its controversial former owner, Sir Phillip Green.
He took over the business in 2000 believing the brand was undervalued and could be reinvigorated. Independent retail analyst Richard Hyman argues, however, that the retail market BHS operated meant its identity no longer catered for shoppers’ needs.
“At its height, BHS was the poor man’s M&S. It was for people who liked M&S, but couldn’t quite afford it,” says Mr Hyman. “The problem is that that market does not exist anymore. It doesn’t exist for M&S either. That market has actually moved lots of notches down, towards Primark.”
What can you learn
For independent retailers the lessons from BHS and Austin Reed are clear. Know your customer and develop your offer and proposition around them. But always keep developing that understanding as customers evolve and businesses have to evolve with them. Independents have an advantage in that they can be much closer to their shoppers than bigger chains.
The billionaire retailer sold the company for £1 in 2015 to an inexperienced consortium led by a former racing driver. Its decline threatens employees’ and former employees’ pension funds and is currently under investigation by MPs.
Upmarket tailor Austin Reed, meanwhile, fell into administration this year and has been accused of not keeping pace with a changing market, with a poor website and clothing ranges coming in for particular criticism from analysts.
Neil Saunders: managing director, Conlumino
I think the main problem with both Austin Reed and BHS is that both lost touch with the customer, albeit in different ways. This meant that their offers and proposition became less relevant – a fatal position in today’s very competitive retail market.
As a heritage brand BHS failed to move with the times and remained very much in the middle of the market – neither expensive nor cheap, neither fashionable nor classic. It lost its point of view and gave people fewer and fewer reasons to visit its stores. When that happened the economics of the business started to unravel.
Austin Reed was slightly different in that it did once have a very distinct point of view which was focused on classic tailoring and quality. Unfortunately, the brand sacrificed that when it tried to cut costs on its suits and quality suffered while price points remained the same. Customers defected. This was exacerbated by the fact that Austin Reed always failed to create a broader brand identity in the way that a player like Burberry did, so it could not rely on sales from its casual offering to prop up its ailing suits business.
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