The deal is done, and it’s another blow for UK bricks and mortar retail.
Online fashion retailer Asos announced yesterday that it is spending £295 million to buy the Topshop, Topman, Miss Selfridge and HIIT brands from Sir Philip Green’s Arcadia Group, which fell into administration last November.
Asos is paying £265 million for the brands and £30 million for the stock, but it is not interested in its 70 physical stores. This follows a similar move by rival company Boohoo, which last week took acquired Debenhams but declined to take over its 118 department stores across the UK.
Boohoo is also in exclusive talks with Arcadia’s administrators to buy the group’s Dorothy Perkins, Wallis and Burton brands, thereby completing the break-up of Green’s former empire.
The two deals have shown how power has shifted to online retailers, a trend that was already apparent but that has been accelerated by the multiple lockdowns in the UK since March last year.
Following the Asos and Boohoo acquisitions, 25,000 people have lost their jobs. According to the Centre for Retail Research, the UK retail sector lost 177,000 jobs in 2020 and another 200,000 are expected to be lost this year.
‘The acquisition of these iconic British brands will help accelerate our multi-brand platform strategy’, said Nick Beighton, CEO, Asos. ‘We’re the natural owners for these brands. We know these customers and we know this market. We’ll become the number one destination for fashion-loving 20-somethings throughout the world’.
Asos has performed particularly well during the pandemic and has been a wholesaler for the brands it has now bought.
The Asos deal is ‘another nail in the High Street’s coffin’, said John Colley, associate dean of Warwick Business School.
Re-purposing is the name of the game now as the hundreds of empty shops in the UK’s high streets are unlikely to be let to another fashion retailer and could be turned into flats, last-mile logistics or offices.
‘Landlords will have to try to re-let the properties and there will be few takers in the current climate’, said Colley. ‘With retail values collapsing, it is likely that many of these properties have to be converted for other uses. In that sense, we can see Covid-19 accelerating and crystallising trends which have been developing for many years’.