Traditional high street brands with a lack of online presence that have been struggling due to COVID-19 need to partner with those who have embraced new technology, say tax and advisory firm, Blick Rothenberg
Daniel Burke, a partner at the firm said: “It’s either that or they will get taken over. There is a new shift in power which was evidenced this week when online fashion giant Boohoo, which has no physical presence on any high street, announced that it was to buy former high street businesses Oasis and warehouse. The deal will bring the number of brands within Boohoo’s fast-growing empire to nine, which also includes Coast and Karen Millen. Boohoo was set up in 2006, but it now has a market value of almost £4.7bn, making it more than double the size in market capitalisation terms of Marks & Spencer.
He added: “In recent years the successful retail companies have predominantly been e-commerce. They appeal to the younger market, but during lockdown all age groups have become familiar with shopping online. Older established companies that have operated mainly from the high street have fallen behind.
“We may therefore see more and more big brand e-commerce businesses taking over well-known, but failing brands that have not caught up with the modern world. Without a strong online brand presence businesses will clearly struggle.
Daniel said: “In addition to Boohoo we have seen The Hut Group grow rapidly in recent years, and it now operates over 100 international websites selling Fast-moving consumer goods. It was founded in 2004 and is now valued at more than £2.5bn. The Hut Group has pursued an acquisition strategy of mainly taking full ownership of E-Commerce businesses in a variety of retail sectors and putting the websites onto its proprietary technology platform.”
He added: “Established brands are now collaborating with relatively young but well-known tech and online businesses. For example, Marks & Spencer has teamed up with Ocado, and many well know restaurant chains are now using Deliveroo. Marks & Spencer bought half of Ocado’s retail business last year for £750m, and shoppers will be able to purchase clothes as well as groceries through the Ocado platform.
“This will be a boost for M&S as they saw its clothing and home sales drop 75 per cent for the six weeks to May 9, and was forced to cancel £100m of late summer orders after it shut non-food stores and has put £200m worth of stock in warehouses to sell next year.”
Daniel said: “For businesses which are behind the curve in their digital presence, collaboration with a strong technology partner could be seen as a good strategy to fast-track its omnichannel offering and even perhaps switching to an online platform. Regardless of the sales channels, it is vital for all retailers to have a strong and distinct brand especially at a time when the digital space is allowing new and young companies to promote themselves globally.”