House of Fraser opts for upmarket retail therapy

For years House of Fraser (HoF) has suffered an identity crisis on the high street, but the retailer hopes it has found the answer with a move upmarket.

John King, the newly appointed chief executive, last week unveiled plans to make HoF the UK equivalent of upscale US department store group Nordstrom and has launched a premier own-label womenswear brand called Untold to get the transformation underway.

It will compete with the likes of Karen Millen and Whistles, sitting above Linea, the company’s existing own-label brand, and will be joined by more high-end brands in HoF’s 61 stores in the near future.

The interiors of three flagship London stores are also being revamped in the coming months. The Oxford Street, City and Victoria stores are all being redesigned as part of the repositioning.

Mike Godliman, director of retail analysts Pragma, believes King is making the right move. He says: “House of Fraser is in a transient phase and has got by through having a fragmented and inconsistent offering. Its position is slightly grey. It’s above Debenhams but down from John Lewis. And it doesn’t have a strong brand.

“But department stores can be very successful. John Lewis is smaller but has always been successful. Marks & Spencer is like a department store that has had a huge turnaround in the past three years.”

A Fourth department store
Godliman believes there is room for a fourth department store chain in the UK and says a move downmarket would have been a mistake for HoF. “Department stores should be a bit more special,” he adds. “If it went downmarket it would put it head-on with Debenhams. It needs to go upmarket, although I still don’t think it will compete directly with John Lewis.” The group has been talking about rebranding its locally named stores as House of Fraser – a move Godliman applauds. “I think one of the problems HoF has had is inconsistency, which is partly down to the different brands.” But Richard Perks, director of retail research at Datamonitor, does not believe it is necessary to rebrand the local stores. “I don’t see retaining the local names as a problem,” he says.

“I think they have a lot of meaning for customers locally. John Lewis has renamed but it did it very gently. If a name has meaning why change it? It’s corporate arrogance.”

Finding the middle ground
Perks also sees little value in moving the brand to the higher end of the market. “I think it’s too upmarket for the majority of places it trades in,” he says. “You have the premier end with Selfridges and Harvey Nichols, then you have Debenhams in the middle market. I would have thought there is a market between these two.” HoF was bought for £351m last year by Icelandic group Baugur and reported a 7.3% jump in sales for the period December 3 to December 30 compared to the year before.

The company recently announced plans to axe 150 back office staff, including up to a quarter of its marketing department (MW last week), but has denied it is about to launch a pitch for its £3m advertising business.

The jury is still out on HoF’s plans to move upmarket and only time will tell as to whether King is the right man to prove the sceptics wrong.

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