Brand width

Hesitant we may be at OPUS News to say we told you so but…we told you so. Readers of “It’s the brand stupid” posted January 2021 will note our then bullish view that failed Arcadia group still had a financial twist left in it. And so, it came to pass. And what an array of known brand delights there were to tempt the bidders.

Bargain hunt

Last month BooHoo filled its boots with the purchase of Debenhams for £55m. It added to that this week snapping up the brands of Dorothy Perkins, Wallis and Burton from administrators Deloitte for another £25.2m. BooHoo has been on the acquisition trail for some time now buying Oasis and Warehouse last year for £5.25m and Karen Millen and Coast the year before that.

Asos hasn’t been tardy either buying Topshop, Topman, Miss Selfridge and HIIT from Arcadia just last week for a whopping £330m. What’s going on?

Digital dominance

In the world of intellectual property part of what’s going on is obvious. All the brands mentioned above, although linked with the past and the walk-in Saturday afternoon shopping experience (remember that?) they have sufficient ‘brand imprint’ on the minds of their customers, to successfully transition to online retail platforms taking their sound reputation and customers with them. At least the purchasers hope the brand value can stretch that width.

The other part is more complex and less certain. That is, can these digital disrupters with their online platforms create a virtual department store? For that, put simply, is clearly the idea although the marketeers refer to them as “retail marketplaces” preferring no hint of the past.

BooHoo’s chief executive, John Lyttle said:

“…acquiring these well-known brands in British fashion out of administration ensures their heritage is sustained, while our investment aims to transform them into brands that are fit for the current market environment.”

Winners and losers

If they succeed can we expect experiential shopping outlets to be bull-dozed? Don’t scoff – the first of these events is already scheduled in Stockton-on-Tees! If they fail, the brands will prove not as strong as the public’s resistance to change. More likely, modern outlets and online department stores will co-exist at the expense of the High Street which will require total reinvention.

For now, all we know is the perception and value in these retail brands is strong, these names will live on – online, tens of thousands of traditional retail jobs will go, and hundreds of bricks and mortar stores will be shuttered. Perhaps, for a very long time if local councils fail to think up a Plan B.

Fire Sale

Arcadia Group – that was some fire. But only those who understand the value of strong brand would have predicted that there, lying untarnished amongst the dirty ashes of destruction, was over £400m.

Whether exit is forced or planned, never forget the brand. Protect it.

Murray Fairclough
Development Underwriter
OPUS Underwriting Limited  
+44 (0) 203 920 9985
underwriting@opusunderwriting.com
Written and researched by Ben Fairclough