Where do You Stand?

By Ryan Cooper-Brown

As the financial breakdown across the pond’s wake breaks closer and closer to the UK, the casualties are starting to role in. Here in Manchester we have begun to see the effects of the not so mythical credit crunch on our retailers. The young fashion store Joy bowed out from the Arndale this month as is it could not compete with such a hostile environment. According to the Financial Times, the insolvency specialists currently have 323 on its critical watch list. In order to qualify for this list you must qualify as having a 70% chance of failing as a business.

An industry insider claims brands such as Joy, Miss Sixty and Hardy Amies who have all gone into administration in recent days, highlights the fact that smaller firms that just don’t have the backing will not survive.  The basic principles of business would lead you to believe that this opinion is more of a fact. Smaller businesses with less turn over yet the same costs, and no way of spreading the difference i.e. through product diversification will fail. 

Speaking to Roger Wade whilst he attended an MFN event in Manchester, the former Boxfresh owner although agreeing that market had never been this bad during his period of trading. He advised smaller companies that if they cannot secure backing or merge with another brand in this current climate, “then brands should stick to what they know and do best”.  He agreed that innovative product are the USP for any niche brand, however you must not alienate the wider audience “ Produce that staple t-shirt that you don’t like but people are buying, and do not try to work too far ahead” “ this type of trade although it may not totally represent you will keep you afloat”.

Words of caution also need to be given to those larger brands as this week Euler Hermes, one of the countries  biggest  credit insurers have declined cover for suppliers to a number of  retailers owned by apparel giant Bauger.  A company which owns such high street staples at Hamleys, Karen Millen and House of Fraser. So as consumers may continue to spend with these big retailers the problem now for these businesses may begin to come from the financial sector. This is where smaller companies may have the upper hand as since they borrow less and deal in smaller orders these brands have a greater chance of the banks securing their loans.

There is no defined answer within in this argument and there is no guaranteed plan B for any business. Smaller brands and independents need to batten down the hatchets and go back to their consumers.  

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