2021 will be seen as the year that the internet took over the UK high street.
One locked-down month into the new year and “online only” retailer ASOS.com agreed to acquire Sir Philip Green's collapsed Arcadia brands, TOPSHOP, TOPMAN, Miss Selfridge and HIIT, in a deal worth £295 million.
This deal follows a similar move to their rivals Boohoo Group PLC - the relatively ‘young’ online fashion retailer, which has established itself as one of UK retail’s most savvy online operators - who bought Debenhams last week for a reported £55 million.
In both transactions, the intellectual property and brand names Debenhams, TOPSHOP, TOPMAN, Miss Selfridge and HIIT will survive, whilst the stores will close.
Both deals should (in theory) succeed.
Arcadia brands have a typical demographic savvy to online shopping and almost, dependent on it. That along with ASOS’ notorious next day delivery means that this may have been the best outcome possible for them.
Debenhams, which has been a mainstay of high streets up and down the country for over 200 years, had already started the process of shutting its doors forever, after a deal to save the business couldn’t be finalised.
Debenhams is the latest in a series of “IP and Brand” acquisitions for Boohoo which has also snapped up other bricks and mortar fashion destinations, Karen Millen, Oasis and Warehouse.
In each instance, the model has been to take those established brands ‘online’, acquiring those assets which offer long term value such as the URLs and social media channels, branding, goodwill, and leaving any legacy liabilities behind. In Boohoo’s business model there are no stores (which have all been closed), it will not assume any debts and financing obligations and sadly for those involved, employees are left out of the deal, leading to thousands of job losses.
The implication is as clear as the business model - the cost of having large retail stores in virtually every city and town in the country is seen as an unnecessary expense, and the real value is in the on-line presence.
Boohoo is quoted as stating that the Debenhams website receives 300 million visits a year, which makes it a top 10 retail website in the UK by traffic.
Moreover, the demographic of those website visits is likely to be quite different from the current customer base of Boohoo, giving them a ready-made bolt-on to their existing business.
Boohoo will relaunch the department store as an online-only operation from next year, and the remaining business will be wound down.
Whilst on the one hand, these deals signal the “end” of the Great British High Street, it is important to add the words “as we knew it” to any such statements.
The reality of business cycles and of human ingenuity is that people and businesses with new, sometimes revolutionary ideas will see value in physical destinations and the same high streets and spaces will likely be reimagined and reinvented to sell other products and services.
History has shown us that this has happened many times before - think mail order businesses which date back to the 19th and early 20th centuries (Sears in the US, GUS and Littlewoods in the UK), out of town shopping centres and retail parks, Tesco (or US’s Wal-Mart) Megastores, Ocado forcing their grocery peers to up their online game.
The same thing will no-doubt happen again.
If the pandemic has taught us anything, it is that people need “people”.
Whilst the virtual world and its lightning fast algorithms may be mind-bogglingly brilliant, super convenient and on a continuous drive to replace our thinking and keep us addicted to our devices, the Coronavirus has on the one hand made us thankful for the technologies that have enabled continuous communication, but on the other made us long for family, friends and community.
Most would agree that “social gatherings” are preferable to “social distancing” and isolation.
Crowds will return in one form or another as city centres and high street reimagine and regenerate leading future business opportunities.
How Our Commercial Lawyers Can Help Your Business:
At Gregory Abrams Davidson, our experts are constantly advising clients on their Commercial and Residential Property matters – Landlords, Tenants, Buyers and Sellers.
We also guide clients through commercial transactions and asset purchases and sales, similar to Boohoo’s purchase of Debenhams’ IP and Brand acquisition.
We advise clients on both the buy and sell-side, including corporate clients, management teams, e-commerce, private equity firms and business owners, both as majority and minority interest-holders.
For further information or to discuss your Commercial property matter or business transaction, please contact:
Jonathan Abrams,
Head of Business Services,
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