Topshop collapse: What went wrong for Sir Philip Green’s Arcadia retail empire?
Sir Philip Green’s retail empire Arcadia has collapsed, risking 13,000 jobs, in a dramatic fall from grace for the multi-millionaire once dubbed the “king of the high street”.
Arcadia, and its flagship retailer Topshop, was, until recently, considered to be a UK retail success story.
Topshop was a beloved high street brand, had secured lucrative partnerships with Kate Moss and Beyonce, and boasted star-studded front rows at its London Fashion Week shows.
As the jewel in Arcadia’s crown, Topshop was prioritised to the detriment of other less trendy brands, such as Dorothy Perkins, Evans, Miss Selfridge and Burton.
Slow to respond
However, Topshop, and Arcadia’s other retailers, have fallen out of fashion in recent years, as it failed to respond to increasing competition from younger firms such as Asos and Boohoo.
Last year it secured a company voluntary arrangement in order to shrink its store estate amid falling sales.
According to retail experts, the coronavirus pandemic has been the final nail in the coffin for Arcadia, which has become a victim of its lack of investment in digital platforms.
Meanwhile, Green has suffered his own reputational damage.
Tarnished reputation
Last year he was named in parliament as the businessman at the centre of bullying and harassment allegations – accusations that he has denied.
Previously his name was dragged through the mud after he sold BHS to Dominic Chappell for £1 in 2015, after paying out huge dividends to his family, leaving the pension pot with a £571m deficit.
Much of Topshop’s 20-something target customer group is increasingly interested in supporting brands that align with their views on social and environmental causes, and Green’s involvement has increasingly made Arcadia seem like a poor fit.
Lost its edge
Simon Geale, senior vice president of client solutions at Proxima, said the collapse will leave a “very bad taste in the mouth” for some, and that the fallout will reform the retail sector.
“For many, the Arcadia brands were leaders in their time; reshaping clothes shopping on the high street with offerings that were highly targeted, delivered via new in-store experiences and were supported by ground-breaking customer loyalty schemes,” he said.
“This success has paved the way for the more digitally-savvy brands which have replaced them”
However, Arcadia’s brands “aged” and “lost their edge”, Geale said.
“There are now other brands that are cheaper, more convenient, and have greater variety to their ranges. These are the brands that are winning the battle.”
Underinvestment in digital
Experts said Arcadia had rested on its laurels and failed to invest in its digital offering to keep up with e-commerce brands.
Michael Hewson, chief market analyst at CMC Market, said: “The chain of iconic brands, which have been a staple of the UK high street for decades, has been in difficulties for some time now, with the coronavirus pandemic proving to be the final straw to a business model that has been on its last legs for some time now.
“The lack of a coherent strategy to deal with changing consumer behaviour, and the move to on-line shopping has seen the business struggle for the last few years, with the result that more stores could well disappear from the high street in the coming weeks, unless a rescue package is agreed.”
Liam Patterson, the founder of online retail consultancy Bidnamic, said Arcadia “resisted innovation and was late to the digital party”.
“Covid-19 lockdowns only exacerbated these issues as the business lost customers to digital natives like Asos and Boohoothat had more engaging online presence and more reputable brands,” he said.
Leadership issues
Other issues, such as the allegations of harassment and bullying surrounding Green, “meant the brand struggled to remain relevant to younger, socially aware, digital consumers”, Patterson added.
Euromonitor International fashion and luxury analyst Nina Marson said: “The pandemic has caused many consumers to pause and reflect on their priorities with many concluding that they want to be more proactive about creating a better world, and prioritising the idea that the brands they invest in should share their values and objectives.
“Arcadia Group brands have fallen short of these expectations in recent years, particularly with the scandals surrounding founder Philip Green, the group’s sluggishness to create a transparent sustainability strategy and recent headlines reporting the group’s refusal to pay employees and manufacturers during the pandemic, all of which have caused Arcadia Group brands to fall out of favour.”