House of Fraser has announced that they are closing half of their stores, axing 6,000 jobs. Amongst the stores to close are the Flagship Oxford Street Store as well as their stores in Shrewsbury and Telford. Another store in a growing list contacting floor space in the face of increasing cost pressures. A trend that makes Shropshire Councils recent decision to spend £51 million to buy Shopping centres in Shrewsbury look increasingly reckless.
This is very sad news for everybody who is impacted by these closures. I hope they can quickly find suitable alternative employment. Having been laid-off for a protracted period and then made redundant in 2008 I fully sympathise with the concerns and the worry these families will now be facing. Sadly this won’t be the last announcement of this kind.
House of Fraser won’t be the last to contract in this way
House of Fraser is part of a growing list of companies affected by the changes facing the retail sector. The increase of online shopping, threats from changes in consumer spending patterns and Brexit are all causing a contraction in demand for retail floor space as outlined by the Deloitte Retail Trends 2018 released in January.
House of Fraser Chief Executive, Alex Williamson, said: “Today’s announcement is one of the most important in this company’s 169-year history… We are fully committed to supporting those personally affected by the proposals.”
Chairman, Frank Slevin, has said the company was facing an ‘existential threat’. “The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive. Our legacy stores estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business.”
“2018 could see a further acceleration in store closures as retailers finally get to grips with transforming their real estate portfolios, to be fit for a market where online continues to outperform the rest of the market.” Deloitte Retail Trends 2018
In the report they highlight figures for last 5 weeks of 2017:
- Sales Online UP 9.4%;
- 2/3 spent was on mobile
- Footfall DOWN 5.5%
- Sales in store DOWN 4.4%
At a time when services are being pared to the bone, our roads are beginning to look like the moon, retailers are under huge pressure and shopping habits are changing dramatically, buying these retail site is a massive white elephant.
Even if this investment brings in money in the short-term, the long-term downside and risk is significant and represents a poor use of public money to fix a problem of the Conservatives own making. Shropshire Council is facing a £59m shortfall in its finances by 2020.
That £51m could have been better spent on roads, Street Lights, housing and other key capital projects, at less risk, and with a bigger return on the investment., that could have reduced the burden
Would that money have been better spent directly supporting the 1000s of businesses in the county? Is this really a sound investment?
I would say, yes they should have directly supported businesses across the whole county to stimulate broader growth, and no this £51m isn’t a sound investment. It is a poor use of limited capital reserves that doesn’t do enough to fill in the gaping hole in the Councils revenue budget.