The final countdown has begun for fashion retailer Austin Reed, after administrators failed to find a buyer for the collapsed chain.
The company’s website has ceased operations, and by the end of this month all 120 shops are expected to have closed with the loss of more than 1,000 jobs.
Online orders that are still being processed will be fulfilled, the joint administrators of Austin Reed have said: If you have already placed your order on our websites your order will be sourced and despatched in the usual way. You will receive an email from us when your order has been despatched to your chosen delivery address or store.
Returns will also be accepted during the final winding down, “on the grounds that they were purchased within the last 28 days and are exchanged for a replacement product or an alternative product of the same value. No refunds will be given… But if they were purchased on or after 26 April 2016 (the date Austin Reed went into administration), refunds can be offered.”
The demise of the once iconic formalwear brand, which began life in the early 1900s in London, coincided with BHS, another high street stalwart that went into administration in April. BHS had been acquired for £1 but by the time it collapsed had a pension deficit which has been valued at anything between £274m and £571m. A rescue deal has not yet been ruled out for BHS, but unless one is found soon it is likely to face the same fate as Austin Reed.
Both retailers had been slow to adapt to changing shopper behaviour or migrate to an omnichannel operations model. Caught between old ways of operating and rapidly evolving customer expectations they were caught out by a combination of too much stock, too many assets and liabilities, and too few options.
Chris Field, independent retail analyst and chairman of Retail Connections, believes others will follow suit: “Many retailers are in denial over what is happening. There are too many players with too much stock chasing too few customers. All of which means that retail is polarising between those who get it and those who do not. Clearly, BHS and Austin Reed are in the latter group because they did not adapt to the changes, and there are plenty more to come.
“The answer for all retailers is to get out more and see what is happening all around them; and the best place to start? Talk to customers and also to the people who understand customers – brand owners, consumer psychologists and the better research companies. Customers are dictating the future of retail and retailers who embrace that early will be the winners.”
In eDelivery’s sister title InternetRetailing, Stephane Monier, VP, EMEA at digital experience management platform Jahia, said Austin Reed’s collapse was a reminder of digital’s power to connect – and divide. “Brands cannot afford to rest on their laurels and rely on their heritage to survive. It’s a question of being current and consistently meeting the customer where they are in their journey. As conditions on the high-street remain competitive, those retailers that do not have the agility to respond to evolving customer conversations and needs will be divided from the market and fall from the high-street.”
Austin Reed and BHS are victims of the squeezed middle phenomenon – not high end, not bargain basement, not fast and agile, but also not deeply embedded in the minds of an unflinchingly loyal customer base.
A similar fate befell Woolworths, another long time presence on the UK’s high streets that had lost its focus and sense of purpose.
It’s a phenomenon that isn’t restricted to retail; the retail fulfillment sector is just as vulnerable. You can see City Link, which collapsed on 24 December 2014, as a prime example. It’s a hard sector to thrive in currently, despite the growth of ecommerce and the subsequent increased reliance on fulfillment.
While high volumes are good news in a linear business, fulfillment is reliant on order density. Add to that the increasing need to be able to deploy new services to help retailers keep their promises to customers, and you’re not looking at a traditional linear business anymore.
Being able to offer a variety of delivery and collection options – in-store, third party click-and-collect, named day, same-day, and more – and offer them in varied formats to different customers is no mean feat. It takes long-term vision, short-term flexibility, and investment in the right platforms, processes and people to pull it off perfectly.
Once you turn away from that and start competing on price you are locked into a cycle of persistent pressure on margins with little room for manoeuvre.