Following the news that the Arcadia group is reportedly on the brink of administration, Sofie Willmott, Content Head of Apparel at data and analytics company, GlobalData, offers her view on this development.
Arcadia’s stable of brands have lost relevance in recent years, with more appealing and innovative retailers that better target their shoppers, such as ASOS and the boohoo group, muscling their way in.
Arcadia’s UK clothing market share has slumped 1.8 percentage points since 2015, to 2.7% in 2020, leaving it at the bottom of the top 10 UK clothing players, from fourth just five years ago, held back by its cumbersome store estate (despite a CVA in 2019) and controversial owner.
With demand for clothing & footwear plummeting this year due to a lack of social occasions, clothing specialists have been hard hit but some of Arcadia’s more digitally savvy competitors have thrived, posting impressive results as spend has shifted online.
Although Arcadia’s brands including Topshop, Burton and Dorothy Perkins have well established online propositions, the majority of their sales would still have been generated in stores and its digital channels will not have made up for the significant sales lost from store closures during lockdowns.
Considering its high street brand acquisitions in the last few years and that it has openly stated that it is poised for a shopping spree as competitors struggle, the boohoo group is likely to be interested in snapping up Topshop/ Topman, to boost its portfolio.
However, a deal with the boohoo group is unlikely to include stores, bringing more bad news for high street locations and property owners, who will struggle to find other retailers that can fill this space.