As I See It
Ashley emerging as saviour of British high street
His acquisition of House of Fraser may prove a watershed moment in helping to reshape British retailing for the new digital world.
Already there is talk of a merger with Debenhams, in which the Sport Direct tycoon owns a 30% stake, and there could be more to come as the withering of retail champions goes on.
In the process of snapping up Frasers Mr Ashley also acquires the famous Jenners stores. Those Morningside shoppers readying themselves for rows of trackies and trainers to appear among the regular tweeds may breathe more easily as he is talking of turning Frasers into the “Harrod’s of the high street”, an interesting move, given his “stack-em-high and sell-em-cheap” track record.
He had previously spoken of ambitions to create the Selfridges of the high street, so the owner of Newcastle United where he has also divided support, appears to have raised his game another notch.
Ashley now believes that style will be the route back to growth for the Frasers chain and it certainly needs more than a makeover for its current ad hoc and dated displays.
It’s not clear whether Ashley will stick to the earlier plan to shut 31 of the 59 stores but his comments suggest a shift in approach towards higher value shoppers. This points to focusing on those stores in locations with a healthy traffic of wealthier customers and cash-rich tourists.
Closures will certainly trigger the mother of all closing down sales, although HoF has been running 70% discounts for some time. Its rivals have had their own deeply discounted sales which is further evidence of over-capacity on the high street. Under the previous plan, 19 of the doomed outlets were in the same town as a Debenhams and eight are near a John Lewis. In the face of a downward trend in footfall a tie-up with Debenhams would therefore offer scope for further rationalisation of floorspace and running costs.
Of equal urgency is tackling the online issue. House of Fraser has invested a fraction of the £500m spent by John Lewis to create one of the more successful online retail offerings. Ashley will have noted how Marks & Spencer suffered from an under-performing online strategy which it is now attempting to correct. He will also be aware of Chancellor Philip Hammond’s leaning towards imposing an online retail tax to rebalance the sector.
As for the future of all those empty department stores it may be no surprise to see letting agents eager to market them as hotels, student accommodation or as mixed use apartments, gyms and restaurants. Such a plan has already been suggested for the Frasers in Edinburgh’s west end.
It will mean a lot of job losses and the unions are already raising questions about his employment policies for those who remain.
But selling all those properties will enable Ashley to offset the £90m he paid for the chain and may prove to be the bargain of the century if he also manages to turn around its fortunes, even after settling a £70m bill owed to suppliers and concession holders.