Despite plans to turn House of Fraser into the Harrods of the high street, store closures and frequent Sales have followed. Where is Frasers Group with its House of Fraser revamp? And whatever happened to the premium chain it promised?
By guest author Aoife Morgan from the Retail Gazette
February 7, 2023
When Mike Ashley bought House of Fraser in 2018, he set out his vision to turn the 174-year-old retailer into the “Harrods of the high street”.
In the years that have followed, the department store has become synonymous with prolonged Sales and numerous store closures with Mike Ashley admitting in 2019 that buying the department store was a mistake.
House of Frasers now has about 30 shops – about half the number it had before Frasers Group bought it in 2018.
One might think this spells that Frasers Group has given up on the department store. However, back in 2019 the retail group unveiled plans to upgrade and rebrand 31 of the department stores into a premium chain under the Frasers name, five of which would be complete by 2020.
But more than three years later the strategy has seemingly been put on pause as four years later only six stores operate under the Frasers fascia.
Where does all this leave Frasers Group’s vision of creating a Harrods of the high street?
And can new CEO Michael Murray, who has shown what he is capable of with his rollout of premium fascia Flannels, make the department store a force to be reckoned with again?
A department store that has lost its way
Arguably the biggest challenge Murray faces is rebuilding House of Fraser’s image, which has been scarred by extended closing down Sales and chaotic shop floors.
The retailer officially left central London last month, where it used to have four stores before Sports Direct bought the chain, after closing its Westfield London shop, and last week it emerged its only remaining Welsh store in Cardiff is to close.
In recent months the department store has closed a number of stores, including in Leeds and Huddersfield with its High Wycombe branch also earmarked for closure.
Retail consultant Graham Soult says: “The House of Fraser brand has undoubtedly been damaged by the last few years from all the closing down, not closing down to then closing down again; it sticks around.”
Soult refers to the four House of Fraser stores that were situated inside Intu shopping centres, which had been earmarked for closure towards the end of 2018 and ran clearance Sales, only to be saved in a last-minute deal in January 2019.
Out of the affected stores, the branches in Nottingham and Lakeside in Essex remain open while its shop in Metrocentre in Gateshead has closed.
However, more broadly across its portfolio, many House of Fraser stores look far from their best.
Retail expert Andrew Jennings, who was chief executive of House of Fraser between 1992 and 1996, believes the department store has lost its way.
“It used to be a store of brands across the country appealing to the local community,” he says. “It now lacks a point of view and understanding of its local customers.”
The issue with the many of the House of Fraser stores dates back to when Frasers Group snapped up the retailer in a £90m pre-pack administration deal in 2018, according to Soult.
A lot of the stores it inherited were situated in “very old and quite decrepit buildings”, which would require significant investment into the property to truly become a “really high end experience”, he says.
Inevitably the economics have not worked out at a number of stores, particularly at a time when rents and rates don’t yet reflect a retail market where footfall is notably down on pre-pandemic levels.
As a result, the retailer has been left with about 30 shops in the UK – almost half the number it had before Ashley bought House of Fraser out of administration in 2018.
Some retail experts believe the store closures were necessary.
Little Mistress chief executive Mark Ashton, who sells via the department store, says they “will make Frasers stronger”. “Less is more for their growth and profit plan,” says the fashion boss.
Meanwhile, ex-John Lewis and Crew Clothing executive Amy Bastow, now managing director at retail operations software firm StorIQ, says its move out of London is right.
“When I was at Crew, we didn’t have any stores in central London because it didn’t make economic sense to be paying rent at that height and our target customer group wasn’t a city centre type.
“I imagine that’s the similar kind of thinking at Frasers, where they look at the target customer group and do the math of [operating in] central London and decide it’s not for them.”
The big store divide
It is less the store closures, but the fact that some of the remaining stores are suffering from a lack of investment.
There seems to be a big divide between stores in which Frasers has decided to invest in – when Retail Gazette visited the Bluewater and Lakeside branches, for example, both stores looked in good condition – and those where it has opted not to.
The Birmingham branch falls into the latter category. The store, which used to operate on six floors, has been slowly shrinking over the years. The retailer has closed its cafe and its fifth and sixth floors are now out of action.
The Birmingham Mail reported: “The site continues to shift from being an all-embracing department store to what increasingly feels like a fashion and beauty outlet with a ‘Big Brand Clearance’ discount floor included.”
House of Fraser, Birmingham
Jennings reports that the cafe has also been removed in his local store in Bath, which he says is a mistake.
“You need to give shoppers a reason to stay in the store. They want somewhere to sit down and have a coffee as part of their shopping experience,” he says.
These are not the only House of Fraser stores to be looking far from their best. The retailer has faced widespread criticism, including one social media user who said their local Solihull store was “suffering a slow death”.
Upon visiting several House of Fraser stores, Retail Gazette has seen prices slashed on many upmarket brands such as Tommy Hilfiger, Hobbs and Barbour.
Brand adjacencies are also confusing in some branches with luxury brands placed next to athleisure or childrenswear next to lingerie.
In Reading, near GBP 200 Samsonite suitcases were also displayed next to 70 % off at GBP 13 Slazenger suitcases straight out of Sports Direct.
In fact, the Reading branch is a good metaphor for the House of Fraser business as a whole.
Although there were signs that the store was evolving into something more premium, with upmarket brands such as Hugo Boss, Diesel, Paul Smith, Coach, Mulberry and Armani Exchange displayed in an impressive looking menwear and accessories departments, cut-price Sales elsewhere somewhat ruins the premium feel.
Bringing Frasers Group brands into HoF
Retail has been hit hard over the last five years, which has hit many of the brands that House of Fraser stocks.
Former concessions Oasis, Warehouse, Karen Millen, and Coast all collapsed into administration before they were bought and taken online-only by Boohoo, which has left a sizable gap on the House of Fraser shop floor which required filling.
Fortunately, House of Fraser has been well placed to plug those gaps by rolling out other brands from the Frasers Group wider portfolio, says Soult.
“Over the years, Frasers has had a bit of a magpie approach to picking up what seems to be random failed brands but actually, it has done a pretty good job of packaging those up into something that makes sense,” he says.
Earlier this month, Frasers revealed it would add Missguided into its stores this spring, joining the group’s other brands Jack Wills, Agent Provocateur, Sofa.com and Game on the shop floor.
Frasers Group has also built stakes in businesses including Hugo Boss and Mulberry, which are also stocked in the department store.
While Jennings thinks integrating the group’s brands into House of Fraser can work, he says that it has to fit with that particular store.
“Department stores are like jigsaw puzzles,” he says. “There’s no point trying to get pieces in if they don’t fit and are not relevant.”
From our visits, the group’s brands could be integrated more sympathetically on the shop floor.
The House of Fraser website could also do with improvement.
The challenge department stores often have online is turning their vast assortments into something easy to navigate for consumers, says Bastow, who used to head up operations at John Lewis’s online business.
“Companies like Asos are specialists in that. But if you look at the House of Fraser coats page, for example, they’ve got a similar number of coats as Asos but actually, it’s very hard to shop,” she says.
“With a very big fashion assortment, unless you’re really investing tons and tons of money and you’re really good at fashion online, it’s very hard to compete with specialists.”
What happened to premium chain Frasers?
Four years ago, the retailer teased plans that the bulk of House of Fraser locations would be transformed into a new premium concept simply named Frasers.
The retail group claimed the new fascia would be a modern take on the department store and would carry high-end and contemporary brands as well as temporary showcases for new labels.
Michael Murray, who at the time of the announcement was the group’s head of elevation, told Drapers: “Frasers is far from a rebrand, it’s a complete reimagination.
“Discussions [with brands] have all been extremely positive – with both existing brands, who remain important to us, and new ones alike.”
The first-of-its-kind store opened in Wolverhampton in 2021, in the former Debenhams unit, and brought together House of Fraser, Flannels and Sports Direct into the 65,000sq ft space.
However, the group has failed to follow through on its ambitious rollout plans and at present only six branches trade under Frasers.
These stores are in Middlesbrough, Derby, Telford, Derry and Newbridge in Ireland, as well as the original Wolverhampton store.
There may only be a few of them, but the Frasers stores have impressed.
“If you go to the Frasers stores, you start to have a sense of what the future might be and it’s not House of Fraser as we know it but a modern iteration of the brand,” says Soult.
“It does feel like the Harrods of Derby,” he adds.
Former Intu customer experience director Roger Binks, who now runs his own retail consultancy Binks, believes the retailer “should double down on the Frasers concept, rebrand House of Fraser stores, and close the ones that they will not invest in”.
He described the original Frasers store in Wolverhampton as “bright, fresh, high end and organised” with knowledgeable staff on hand to help.
Trading under the Frasers fascia also gives the retailer an opportunity to distance itself from the negative image some now associated with House of Fraser, says Soult.
The last department store in town
With only regional branches left open, House of Fraser is well positioned to dominate those markets, according to Soult.
“In certain areas House of Fraser is effectively the last department store standing, it gives them a chance to really curate and offer something that resonates in that place,” he says.
Jennings agrees that sticking to regional stores is a good idea for the retailer.
“London is well covered with Harrods and Selfridges, so House of Fraser can become the Harrods of Manchester or Birmingham.”
However, he emphasises the importance of store localisation, which includes stocking local brands in regional stores.
Little Mistress’ Ashton believes there is much opportunity for House of Fraser in the regions.
“Debenhams and BHS customers are now shopping at John Lewis with their excellent push across their Anyday brand but there is still many untouched pockets of the UK that need that across all categories.
“Once that’s mixed with in-house and third-party brands it will be a really appealing proposition, better than before,” he says.
House of Fraser certainly has an opportunity, and in new CEO Michael Murray it has a leader that has already started to change perceptions about stablemate Sports Direct.
However, he needs to act soon before House of Fraser stagnates a further and long-lasting damage is done.