To give House of Fraser future the best chance, Sports Direct and its owner Mike Ashley must make drastic changes to both its product proposition and store environment to entice shoppers back.
This will require significant investment – something which the chain has been starved of in recent years.
Mike Ashley could harness his mixed portfolio of retail businesses to transform House of Fraser, combining his more premium fascias Agent Provocateur and Flannels, which sells brands like Burberry London, Fendi and Sophia Webster, to create a more upmarket department store.
Although very few of House of Fraser’s own brands remain, those such as Issa and Biba would slot into this new format. Given the success of luxury department stores like Selfridges and Harrods, Ashley’s strategy is to replicate their model using House of Fraser’s locations, with the aim to transform the retailer into ‘the Harrods of the high street’.
However, it is questionable whether the high-end price points would appeal nationwide, particularly given that London-based department store retailers have benefited from tourism.
Stores located outside city centres with smaller catchment areas could become Sports Direct branches however, with around 750 existing Sports Direct branches and clothing & footwear offline spend forecast to decline out to 2022, there is really no need for any more.
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There may be opportunities to relocate current Sports Direct stores to House of Fraser locations if they offer more space to house both products and leisure options like gyms, which Ashley has recently introduced in the Thurrock branch.
Sports Direct’s UK like-for-like sales fell 0.6% in the year to April 2018, despite operating in one of the more buoyant sectors in a tough retail climate, indicating that it needs to address problems before rolling out its offer to additional stores.
Breaking up stores to create smaller units would be a better option in areas with a lower population, attracting local independent retailers or food service and leisure operators and helping to create more vibrant and unique town centres.
Ultimately as the new owner of 59 House of Fraser stores, Sports Direct must ensure that however it decides to adapt the branches they are relevant for the local community in order to drive spend and protect their future.