British retail titan House of Fraser's journey from triumph to tribulation
In the heart of Glasgow, in 1849, a modest drapery shop named House of Fraser took its first steps. Over the next century and a half, the department store would become a cornerstone of British shopping culture, leaving an indelible mark on the nation's retail landscape.
House of Fraser's growth was steady in the last decade of the 19th century, with expansion across Scotland. This strategic move, which involved acquiring established department stores rather than building from scratch, helped the company establish a nationwide presence without the cost and time associated with new construction.
The mid-20th century was House of Fraser's Golden era, with rapid economic growth and consumers earning more money. During this time, the store became a social center, offering spacious aisles, appealing displays, comfortable seating areas, personal shopping assistance, gift wrapping, and restaurant options. It was during this period that House of Fraser introduced many international beauty and fashion brands to British customers.
However, the story of House of Fraser is not one of uninterrupted success. The early 2000s saw the department store under financial strain due to high rents, a decline in footfall, and increased online competition. The growth of online shopping posed a significant challenge, and the store struggled to adapt.
In 2006, the company was purchased by Baugur Group, an Icelandic investment company. However, the 2008 financial crisis affected the company's support, and several locations were shut down for good. Despite saving a few jobs and stores, the purchase came at a cost.
The experience of House of Fraser demonstrates the necessity for adapting business models to changing customer behavior. In the early 2000s, the main challenge was how to preserve the traditional and high-quality associations of the department store while establishing an operation that was sustainable in the new digital age.
Despite its challenges, House of Fraser had a significant impact on British shopping culture, helping to establish standards for service and shopping experiences. However, in 2018, the company entered administration due to financial difficulties exacerbated by an unsustainable store portfolio, failed ownership transfers, and a lack of external funding.
In May 2018, House of Fraser entered a conditional sale to Chinese firm C.banner, which required the company to streamline its store portfolio and reduce costs. However, C.banner subsequently pulled out of the deal. By June 2018, the company announced the closure of 31 of its 58 UK stores, including the flagship Oxford Street branch and the largest store in Birmingham. This restructuring effort came too late to prevent insolvency, and on 10 August 2018, House of Fraser entered administration and was bought by Mike Ashley's Sports Direct for £90 million.
The story of House of Fraser continues with new owners as Sports Direct attempts to revitalize the brand for modern consumers. The House of Fraser brand continues to be available online and in selected physical stores, however, with a smaller footprint. The House of Fraser story illustrates the importance of efficient operations, strategic stores, and powerful digital capabilities in contemporary retail.
In summary, financial strain from an unwieldy store portfolio, the collapse of a major sale deal, and inability to secure timely external funding were the primary causes of House of Fraser's decline and administration in 2018. The experience of House of Fraser serves as a reminder of the necessity for retailers to adapt to changing consumer behavior and market pressures in order to survive and thrive in the modern retail landscape.
References:
[1] House of Fraser. (2018). Retrieved from https://www.bbc.co.uk/news/business-44819275
[2] House of Fraser. (2018). Retrieved from https://www.theguardian.com/business/2018/aug/10/house-of-fraser-to-enter-administration-after-deal-with-sports-direct
[3] House of Fraser. (2018). Retrieved from https://www.thetelegraphandargus.co.uk/news/17113236.house-fraser-collapse-what-happened-retailer-failed/
Education and self-development: Understanding the story of House of Fraser offers valuable insights for students of business and retail management, demonstrating the importance of adapting business models to changing market pressures and consumer behavior.
General news: After entering administration in 2018, House of Fraser was bought by Mike Ashley's Sports Direct for £90 million, with the brand continuing online and in selected physical stores. This serves as a reminder of the necessity for retailers to adopt efficient operations, strategic store portfolios, and powerful digital capabilities to survive and thrive in the modern retail landscape.
