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House of Fraser: RetailX analysis of how the department store is performing six months on from its acquisition by SportsDirect Group

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It’s now just over six months since Mike Ashley and Sports Direct bought House of Fraser. We took a look at the RetailX research that underpins the annual IRUK Top500 ranking to see what has changed at the retailer since then.

The news came on August 10. SportsDirect International had stepped in with a last minute offer for House of Fraser, buying the department store out of administration and saving the jobs of thousands of its staff. Sports Direct chief executive Mike Ashley said in the retailer’s half-year results, published in December, that the retailer would have “significant challenges” in turning House of Fraser around – but that it could potentially turn the department store group into “the Harrods of the High Street.” He also said that the acquisition was likely to hit full-year profits. 

At the time, House of Fraser was a Leading retailer in IRUK Top500 research – and it has retained that Leading position in the recently-published 2019 ranking, despite headline-catching store closures and the temporary shutdown of its website. RetailX researchers took a look, six months on from House of Fraser’s administration and subsequent purchase, at how the multichannel retailer is now performing across the RetailX metrics. 

Delivery, collection and returns

The big changes that House of Fraser has made since it was acquired in August are in delivery and collection, according to RetailX findings. RetailX research recorded House of Fraser’s performance in February 2018, in July 2018 and again in February 2019. It found that while the retailer previously offered free next-day click and collect, it no longer did so by February 2019. Instead, it charged £4.99 for collection within five days. 

Similarly, delivery promises have become less expansive. Previously the retailer offered next-day or nominated-day delivery, with free delivery for orders worth £50 or more. Now, all delivery services now attract a charge of £4.99 – where the charge was previously £3.50 for orders under £50. One addition to its delivery policy is that the retailer does now offer Saturday delivery, as part of its standard delivery service – which continues to deliver in a standard time of five days.

Finally, House of Fraser’s returns policy does not seem to have changed. Shoppers can return items via post or to the store, but not by drop-off at a third-party location. Returns are not prepaid and the cost of making a return is not refunded, although an unopened item will be fully refunded.

Website functionality

The House of Fraser website continues to operate in many ways just as it did previously, while its app appears unchanged. On its website its navigational filters by characteristics such as brand, price and product type are as they were previously, as are the availability of features such as wish lists and while Its visual appeal remains as it was before the acquisition, according to RetailX researchers. 

However, some key elements have been removed. The retailer no longer shows product reviews and ratings on its main website or on its mobile app. Social sharing has also been removed from its website, so that shoppers can no longer like a product from the product page or share it with friends. They can, however, share an item from its mobile app on social media. Its Twitter following has grown regardless: in February 2019, the retailer had 353,331 followers, while a year earlier it had 329,504 followers. 

What’s changed?

House of Fraser seems to have reduced the flexibility of its promise to customers around delivery, while reducing customers’ ability to share their opinions of products, whether through social media sharing or through reviews and ratings. The question now is whether customers will opt to buy from more flexible retailers, or whether by cutting these services House of Fraser is cutting costs that dent the profitability of its online service. We’re likely to find that out through its financial results and we’ll be watching with interest when new owner SportsDirect Group reports full-year figures in July 2019. 

Industry opinion

Alessandra Mariani, strategist at brand and retail consultancy Fitch, says on House of Fraser’s future as Sports Direct: “It’s a bold claim from Mike Ashley that he can turn a struggling retailer into the ‘Harrods of the High Street’, especially given Kantar’s recent report that the retailer suffered a 60% sales slump over the festive period. 

“With retailers experiencing a generally steady Christmas, and the latest ONS data revealing the biggest annual increase in January retail sales since 2016, it’s clear there is progression and life in the high street, and plenty of hope for positive opportunities across the rest of the year for retailers.

“For any criticism of Mike Ashley, it is fair to say he’s an impressive businessman. If anyone will be able to capitalise on an opportunity to grow a high-street retailer in 2019, it’s him. The only caveat is that heavy discounting, particularly in the fashion category, underpinned recent positive figures – and whilst this is a model that Ashley may use to grow House of Fraser, it’s not a strategy that will easily earn it the title he proposes.

“A core focus this year, for both Ashley and all British retailers, should be on the in-store experience. As the high street store evolves beyond a transactional space, people need to fall back in love with getting out, and in-store – Harrods is famous for exactly this reason. The excitement of walking into entrance area, the discovery of different themed sections and taking a break in one of the many international eateries all made a trip to Harrods synonymous with a fun afternoon. While replicating to a similar scale might be a challenge – the concept is achievable for all.”

Image: House of Fraser

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