To say there is blood on the shopfloor today is an understatement. The fashion sector has been left reeling with uncertainty following the collapse of Ethel Austin, the announcement of store closures from JJB Sports and the For Sale sign hoisted over MK One.
This morning, Ethel Austin’s head office fell silent after administrators announced that 181 staff would not be required at work. It will trade out stock from 33 underperforming stores over the next three weeks, before pulling down the shutters.
Meanwhile, some 800 jobs will also be slashed at JJB’s, with the closure of 72 of its branches. And with rumours of continuing poor performance at MK One, let’s hope Baugur’s asking price doesn’t become a begging price.
And more casualties are likely. We saw the symptoms earlier this year with the downfall of retailers such as Dolcis, Stead & Simpson and Select. Now, it seems we are on the brink of an epidemic.
Small value fashion chains are proving most susceptible to plummeting consumer confidence. Without the critical mass to compete with their larger rivals’ empires or the scale to leverage their brand, they face an uphill struggle to bag their customer.
Their small private equity backers or lenders can’t refinance their debt and when the going gets tough, the backers get going.
Much has been made of what retailers can do to trade through these torturous times but, in some cases, it is hard to imagine a different prognosis.
Administration ruthlessly wipes all liabilities clean and perhaps new owners will return the troubled retailer to the high street in a cleaner, leaner form. It would be a bitter pill to swallow in the case of Ethel Austin, after management’s attempts to turn the business around into a head wind.
And what of the management and staff? They get lost among the headline figures and behind the strings pulled by their backers. Union Usdaw is in talks with Ethel Austin’s administrator about how best to support those left without a job.
As the retail sector continues to bear the brunt of the slump in consumer confidence and staff get jittery, now is the time for retailers to have a more hands-on approach with their teams and go deeper down into the business. The sector needs reassurance.
And where reassurance has failed, administrators and prospective buyers would do well to be sensitive to those left grieving the death of their business, if the retail sector is to keep its dignity.