1951: Company She Keeps – Cromwell
The world of retail is a complicated one. La Senza, the UK lingerie retailer was placed into administration this week. A sign of poor trading conditions on the high street and perhaps a reminder that sometimes “niche marketing” is not always the right solution for every economic condition and where larger retailers such as Debenhams and Marks and Spencer have the advantage of a wider product line. That said, this is an “odd one” given today’s news that Tesco has had the worst Christmas for 20 years. This calls into question the management of retailers as it certainly does not seem as simple as product range (either narrow or broad) as John Lewis and Waitrose continue to demonstrate good business models and management.  As for La Senza, KPMG the administrators have already sold La Senza to Alshaya UK originally from Kuwait and who manages many well known brands. Perhaps this is coincidental to the news last week that Saudi Arabia has finally permitted women to sell lingerie (previously only male retailers were able to perform this role). One might be left to wonder if retailers are changing the world or the consumer?
The apparent failure of La Senza is surprising. The UK lingerie market was worth nearly £3bn in 2010. Key Note published data in February last year suggesting that the market was overcrowded with too many retailers providing essentially the same thing. However they report continuous growth and the planned arrival of Victoria’s Secret to high streets in 2012, which they suggest will create further competition. Yet Victoria’s Secret are a part of the same American company Limited Brands whose share price has been on a steady rise since 2009. Limited Brands largely operate businesses on a franchise or license basis, La Senza is actually a Canadian company, it is just the British franchise that has gone into administration. The UK company was originally set up by Dragon’s Den Theo Paphitis who sold the company in 2006 for an estimated £100m to private equity company Lion Capital. Lion Capital have stakes in many other well known brands such as Wagamama, Jimmy Choo, Weetabix, Findus Group and Amerian Apparel to name a few. Mr Paphitis, who clearly as an eye for timing, now runs Boux Avenue (another lingerie company) amongst many other ventures.
Whatever your thoughts about retail, it is certainly a world where brands are clearly powerful. However, I suspect that many will not appreciate quite how complex and interwoven global retail really is. The British high street is no more British than anything else it would seem.
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