Page 30 - September 2020

MARK FAITHFULL

Following

the Money

Mark Faithfull crunches the numbers as he looks at
analysis and expansion that reflects changing markets

ATHLEISURE IS SOARING THE DEPARTMENT STORE SECTOR IS IN TURMOIL
was very interested to see that o shutter a full-line flagship department
Gymshark is to roll out stores, store five years after opening is
I first in the US and then the UK Textraordinary even in these extraordinary
and Canada. The athleisure brand has times, but that’s just what UK group John Lewis
been a big winner during lockdown, has done. It’s easy to lay the blame for the closure
running a very well judged social media - or perhaps that should be non-resuscitation -
presence that both supported the at its Birmingham Grande Central location on
brand but was highly empathetic to Covid-19 but the malaise runs much deeper than
the sentiment of the crisis. It has had that and questions have to be asked of the retailer’s
a physical presence before, opening development strategy, given that a department
a pre-lockdown pop up at Covent store should be a long-term investment. Beyond
Garden in late February that I believe the virus, what else is different about the challenges
just saw out its four-week stay before now compared with 2015? I’d argue pretty much
non-essential shops were forced to nothing. And the situation facing John Lewis could
close. But this is an all-together more be far worse. In the early 2000s the company set
serious store play and will provide a out an ambitious development programme for 10
small amount of comfort to those new full-line stores by 2013 and an additional 10
concerned that online brands may after that, ultimately expanding from 26 to circa
think again in a Covid-19 world about 50 stores. But an economic crisis spiked many of
taking a physical presence. Gymshark the schemes it was to anchor and reshaped the
is currently seeking a head of retail to retail world - from online retail to austerity and
lead the new venture. an experience-based economy. John Lewis had
dodged a bullet and instead switched its attention
to smaller formats and Home. But Birmingham was
developed and executed in this new age and if John
Lewis couldn’t make it work, were the foundations
ever there? Indeed, if anyone thought that Covid-19
wasn’t going to be a massive retail accelerator for
department stores and their role as mall anchors
then just look at the global department store news.
Unibail-Rodamco-Westfield is set to gain planning
consent to turn the former House of Fraser at
Westfield London into 68,400sq ft of flexible it to vacate its shops without penalty. Facebook
offices plus two 16,145sq ft stores. Meanwhile, the has already leased 1.5 million square feet at 30,
owner of Hudson Yards is apparently talking to 50, and 55 Hudson Yards. These developments
Facebook as Neiman Marcus looks to vacate after come hot on the heels of longstanding demises at
just one year at the project in Manhattan. Facebook department store groups including JC Penney and
has been shopping for more space at Hudson Macy’s in the US and Debenhams, Karstadt and
Yards and Related Companies has reportedly been Hudson’s Bay in Europe, not to mention the myriad
mulling Plan B for the retailer’s 188,000sq ft space smaller department store group casualties. Be in
after its May bankruptcy filing, which would allow no doubt, this is change at warp speed.

INTERNATIONAL GROCERY APPEARS ALL BUT OVER

almart has resumed its attempts to sell its British subsidiary
Asda, which it had paused because of the coronavirus crisis. The
W American retail giant says however that a positive result is not
guaranteed. Walmart has already engaged in discussions with a number of
potential investors, interested in purchasing a stake in the British supermarket
chain. Earlier this year three parties - Apollo Global Management, TDR
Capital and Lone Star Funds – held acquisition talks with Walmart, but the
negotiations were disrupted by the then-emerging Covid-19 crisis. Walmart
has been trying to divest Asda for some time now and even struck a deal
with its British competitor Sainsbury’s. However, that attempt failed after the
British competition watchdog put the brakes on any deal, fearing for market
imbalance. Walmart purchased the Leeds-headquartered supermarket chain
in 1999 to great fanfare but in recent years it has reviewed its international
strategy and decided to focus on markets like India and China, where it sees
room for growth through alliances with local partners.
50 RETAIL & LEISURE INTERNATIONAL NOVEMBER 2018