Double whammy for UK bricks and mortar retail

The difficulties of bricks and mortar retail in the UK were brought into sharp relief yesterday by two separate but similar announcements.

Boohoo, the online fashion retailer, bought the Debenhams brand and website for £55 million, but said it has no interest in the company’s 118 high street shops, including the flagship department store in Oxford Street in London, nor will it take on Debenhams’ 12,000 employees.

Asos, another global online fashion retailer, has confirmed that it is in exclusive talks to take over the Topshop, Topman and Miss Selfridge brands. Price has not been mentioned, but analysts believe they could be worth more than £300 million. But Asos, just like its competitor Boohoo, is only interested in the brands and is declining to take over the group’s 500 stores or employ its 13,000-strong workforce.

The problems at both retail chains have been known for a long time. 242-year-old Debenhams has been in the hands of administrators since April 2019 and has already closed down many shops. Topshop and the other brands in Sir Philip Green’s Arcadia Group fell into administration last November.

Yesterday Boohoo hailed the deal as “transformational” for the group and said that later this year it will lead to a new Debenhams-branded online business with an international franchise. It is not the first time that Boohoo has taken over brands but shunned their stores: it has already bought Oasis, Coast and Karen Millen out of administration but closed down the shops.

Online retailers’ reluctance to take over physical stores is “a very clear message being broadcast”, said Gordon Fletcher, professor at the University of Salford Business School. “Brands are still important, have credibility and reputation. Consumers have strong emotional connections with brands. However, the importance of the bricks and mortar traditionally associated with retail brands has now fully waned.”

According to Fletcher physical stores will still be important after the pandemic for brands that bring experience and engagement, “but they will not be fashion retailers. The current lockdown has forced us to cut the final ties between our favourite brands and the physical high street.”

In a gloomy picture there was some good news for the retail sector yesterday. According to Springboard data, last week UK retail footfall rose for the first time since early December after weeks of double-digit declines. Footfall rose by 10.9% across the UK high street, 9.2% in shopping centres and 4.5% in retail parks, an improvement which Springboard attributes to “lockdown fatigue”.