The House of Fraser Debacle

The House of Fraser Debacle

The House of Fraser Debacle

What happened to retail giant House of Fraser?

- 4 reasons why they failed and 5 lessons to learn from their mistakes.

House of Fraser going into administration is fashions' version of ‘too big to fail’ a la Lehman brothers - Ok, I exaggerate but e pain me small. When businesses like ToysRus, BHS, House of Fraser and a dozen others become insolvent you know that there is no room for retailers to rest on their laurels. You have to ‘open eye’ at all times!

So, what had happened was House of Fraser (HoF) is being bought over for £90m by sports direct owner Mike Ashley who has plans of turning the retail chain into the ‘Harrods of the high street’

House of Fraser is a 169 year old premium department store that stocks multiple designer and high street brands. It is the third largest group of traditional department stores in the UK with a whopping 59 store chain. It has come as a shock to many people that it hasn’t been able to stay profitable.

This is big for me because I grew up on those high street shops, and as I discussed this with my friend when we heard the news, I asked if she would miss it and the answer was a very quick- NO.

So what exactly went wrong? Apart from the obvious high street crisis, (primarily as a result of limited disposable income, high overheads and change in consumer behavior) here are a few reasons I believe HoF went down the can -

1. What was so special about them anyway?

They had a weird mix of brands (I always wondered who their buyers were) that were accessible from every other high street store. In this cut throat era where everything is available at your fingertips and with a lower friction/ Reward index they didn’t do enough to set themselves apart. Which was all well and dandy when retailers controlled the market. However, the power has shifted to the customers who dictate what they want and when they want it. There is simply no room for just ‘getting the job done’. I can’t think of one single reason to go into a house of Fraser - with the myriad of options out there, this simply cannot cut it.

2. They didn’t sell an experience

Look, when I walk into a Harvey Nichols or an Alara - I start to talk with a stiff upper lip and I immediately start feeling like I need to deserve to be there! ‘You mean you let me walk through your store?? Eat in your restaurants??? Test the perfume? I am not worthy!!!’. It is totally aspirational and beautiful in every sense. You feel LUXE and pre-rich!! Lol Even if all I can afford is a glass of wine I will go there for the feeling they allow me to feel! After all is said and done, HoF carries some of the brands that HN do but OH, what a difference the experience makes.

3. Slow adoption of e-commerce

They were slow on the uptake and didn’t invest nearly as much as their competitors (HoF invested about £25m in their digital space in comparison with John Lewis who spent £500m). Instead, HoF invested heavily in their physical expansion growing their chain to 59 stores. Amazon has revolutionized the retail world and done it in reverse - dominated online and will soon dominate the high streets by creating seamless shopping experiences. HoF was miles and £££ away from creating an online platform to convert their shoppers and acquiring new ones.

4. The Survival trap

When they began to fail, they made a series of management and ownership changes. In the bid to survive we begin to make choices that may affect us detrimentally in the long run. HoF lost sight of their strategy and direction - understandable so, there was no vested interest! The straw that broke the camels back came when share prices dropped 70% (WOW) ending the hope of being saved by the Chinese company (C. Banner). They had no choice but to go into administration only to be ‘saved’ by Mike Ashley.

This 169 year old brand sold for £90m ( Approx. N4bn). As a retailer, I know the costs required to keep your retail business afloat so this must be a real blow to the business owners. With the amount of cash trapped in the system, I hope for the sake of the concessioners that they are able to salvage this challenging phase!

Now this is not the end for HoF, there is still an opportunity in this dire situation to change the narrative and create a new HoF experience!!

So, here’s a quick overview of lessons learned -

• Lesson #1 - In the words of Lil Wayne and Babyface “Don’t you…ever….get too... comfortable”

• Lesson #2 - Put your customers first - The sooner you accept that there is no business without them, the longer you stay in business. Understand who they are and find out what their challenges and needs are.

• Lesson #3 - Keep your eyes open for current trends and be ready to adopt the ones that are in line with your brand direction.

• Lesson #4 - Have a Unique selling point (USP) - The competition is STEEP.

• Lesson #5 - Review your competitors - Everything they can do; you can do better!!

Wonuola Okoye Principal Coach Big Startup

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