Close this search box.

EDITORIAL Arcadia staves off administration but can it beat Zara and Boohoo?

Topman – saved for now

Sighs of relief across the retail industry as Arcadia Group staves off administration and lives to trade another day. The ailing retailer has successfully renegotiated its rents and, despite having to close nearly 100 stores with the loss of 1000 jobs, it believes it is now in a good place to fight back.

But is it? Many argue that it is already too late for Arcadia: its brands tarnished by both being dated and by association with Sir Philip Green, the group’s owner, who has rarely been out of the headlines these past 18 months.

The group has seen sales slide across all seven of its major High Street fashion brands, as well as being forced to play catch up online with a host of more quirky, cool, young and hip pure-plays that are eating its lunch.

Analysts have also blamed Brexit for some of Arcadia’s troubles, with Fiona Cincotta of City Index convinced that the problems at Arcadia are the same that have hit Debenhams, LK Bennett, Wine Direct, Office Outlet, Steamer Trading, Patisserie Valerie, OddBins and Jamie Oliver’s chain of restaurants – the slow and almost imperceptible erosion of consumer confidence that the Brexit debacle has brought about.

Yet, while there is a good deal of truth in both these arguments, it doesn’t need to be this way. Boohoo has managed to record record growth again this quarter, showing that despite this erosion of confidence, the young ‘uns still want nice trousers.

Similarly, while Arcadia and all the other fashion brands suffer greatly, Zara owner Inditex has recorded a record quarter, turning over nearly €6 billion in three months. €6 billion. That is incredible.

What Boohoo and Zara have is that they have not only got their offering right – great clothes at the right price with slick service – but they are also turning over lines quickly, keeping their marketing, especially through social, interesting and, in Inditex’s case, keeping an extremely tight grip on costs while they do all this.

This axis of right stuff at the right price across channels run at optimal cost is the key to understanding modern retail. With its rents down, Arcadia can seek to look at ticking off one of the boxes. All it has to do now is spend the next month getting the other two right and it might – and it’s only a ‘might’ – stand a chance.

All retailers all also need to look right now at how they can garner some much needed cash flow from Father’s Day. While not the peak that Christmas, Easter, or even Mother’s Day is, retail consultants Savvy are tipping it to be worth nearly a £1 billion to UK retailers this month. That is an awful lot of extra cash to inject into the blighted retail economy.

It is perhaps the one straw worth grabbing at right now. With the UK government likely to be in disarray until at least the end of July – probably way beyond that: a new Prime Minister is going to face all the same problems ahead of Brexit – retailers need to seize this opportunity.

Read More

Register for Newsletter

Group 4 Copy 3Created with Sketch.

Receive 3 newsletters per week

Group 3Created with Sketch.

Gain access to all Top500 research

Group 4Created with Sketch.

Personalise your experience on