Fashion Failures Hint at Crisis on the High Street

Fashion Failures Hint at Crisis on the High Street

We wear clothes, we admire them, they can define an era and even people. But what we apparently are not doing is being much help to high street retailers who sell them.

The collapse of clothing manufacturer Courtaulds, hot on the heels of the failure at BHS, which it supplied, are indicators of an unfolding crisis. At the very least we are witnessing a game of consequences. If BHS is not rescued we now know there will be more than the fate of its 11,000 staff and 164 stores at stake.

The Guardian newspaper reports that up to 1,000 suppliers, from a biscuit maker in Lanarkshire and a lighting company in Poole, could be left unpaid £52 million. Many small producers rely on the purchasing power of major department stores. For them, a collapse is catastrophic and, sadly, is likely to mean many go under.

It is not just BHS. At my firm we are seeing a significant, and unexpected, rise this year in restructuring work. In accountancy-speak 'restructuring' is the last chance saloon before bankruptcy, the time when you seek cuts and contractual favours (such as reduced rents) to keep a firm going.

What is striking about the workload is that most of it is related to the retail, haulage and construction sectors, and shows no sign of letting up.

Dear old Marks & Spencer continues to struggle, somehow seeming to be a temple to the timid without even covering the basics in a way people used to appreciate.

The new rebranding exercise, aimed at "Mrs M&S" (shall we just agree to let that one pass with a sigh?) is the latest attempt to commercially resuscitate a UK superbrand. Hopefully it will work for a chain somehow stuck in a middle, adrift between cheap and luxury. But it is the fashion middle that seems to be suffering.

Just as the established UK supermarkets are rudely discomfited by cheaper, but huge, Continental European arrivals, so the fashion sector is being hollowed out: Very cheap and very expensive are doing just fine.

It is hard to know what to make of this strange polarisation. In so many areas being in the middle is highly desired. Our politicians generally gravitate there, and 'middle England' is generally a euphemism for the solid and sensible. And, of course, most people claim to be middle class.

But to be in the middle of the fashion market is the equivalent to turning up in jeans when the dress code says 'formal'.

Serious? For many firms yes. Few retailers have much spare fat to cut away as they face twin threats from a wobbling, uncertain economy and the migration of shoppers to the internet. Everyone is trying to be inventive, whether by sharing space, bigging up click-and-collect or reducing costs. Unfortunately, eight years into a dark economic period, there is little more they can do.

Her Majesty's Revenue and Customs and banks have generally been reluctant to force companies into bankruptcy during the slowdown. But what these companies cannot survive is a loss of customers.

More optimistic observers will argue that this is no different to any era. The High Street will evolve. Last century's marine chandlers is this century's coffee shop. But there is a difference: Computers.

In the past people always needed to shop to be sociable. Now they don't. In fact, the Millennial generation and younger is scarcely even bothering with night clubs these days, which are also closing at a rapid rate. Social media is cutting a swathe through our need to meet real people in real time, let alone see what they have to sell and make a purchase.

The sad state of some of most famous brands may, I fear, be just the start of the turmoil ahead. Fashion, it seems, is becoming its own victim.


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