February 13th, 2013 § 1 Comment
As news breaks that Republic have gone into administration this morning, it looks like the pain’s not over yet for the struggling UK high street. The fashion giant has 121 retail shops, opening a new flagship store in Leeds just last year, and an e-commerce store pushing out offers and email marketing campaigns on a daily basis.
Were Republic doing anything wrong and could they have averted this crisis? Well, like a lot of fashion retailers they have a big offline presence, and it looks like this is where a lot of cash was being lost with poor Xmas sales and high rents squeezing profit margins.
The problem is, I don’t think they could have closed a load of shops and concentrated solely on their online business. Suppliers prefer retailers to have a high street presence, and simply being on the high street makes you visible. It helps to make you a brand and that boosts your buying power (thus enabling you to get the right stock at the right price for your customers, increasing sales and profit margins).
It’s a catch-22. People like to go into shops, to try things on and see how they fit, but they also like to look online for the best price.
Republic and a lot of fashion shops like them stock brands – Glamorous dresses, Jack & Jones jeans, all these brands that you can find in half a dozen other shops. I’ve seen something in a shop and then searched online to see if I can get it cheaper elsewhere, and any high street shop that stocks branded goods will have the same problem. This isn’t confined to the fashion industry at all, but I bet competing on price has contributed to the downfall of a lot of high street retailers.
I don’t know what the answer is – there’s clearly still a need for the high street as there’s a need to physically look at something and try it out. Maybe having just a few flagship stores where people can see your whole range, and a really strong online offering is the future?
Whatever the high street looks like in a couple of years time, it’s obvious there’ll be a lot more casualties along the way.