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What Failure of Arcadia Means for the High Street

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Written by:

Dr Gordon Fletcher,

University of Salford

 

 


With Arcadia potentially hours away from collapse, retail expert Dr Gordon Fletcher, of the University of Salford Business School, looks at what has gone wrong for the former titan of the high street and its boss Philip Green.

As Cyber Monday began, the news of the imminent failure of the Arcadia group started gaining pace. The twist in this story is that the rumours started on Black Friday. It is the day when many retailers would move into the ‘black' – in other words into profit.

Arcadia's failure is a significant blow to the high street with so many recognisable brands within the group. This is a significant rewriting of what we will experience in face-to-face retail in the near future.

Some parts of the fallen empire will be retrieved but there are some immediate challenges. The fate of 13,000 employees, a £350 million pension shortfall and an estimated £250 million owed to suppliers all hangs in the balance.

With such large numbers the fate of Arcadia will also have an impact on many other businesses across the UK. While the failure will be blamed on the trading position brought about by COVID-19 and the lockdown, the media reporting of Arcadia hints to the much deeper issues.

Arcadia is personalised around its chairman, Philip Green. This is a textbook case study into the impact that different styles of leadership and management can have on a business. Arcadia's brands have been slow to diversify into other countries or to make an exciting online offering – although Topshop's 80% discounting on Cyber Monday is a headline in its own right – and have not kept pace with the contemporary fashion offerings of the online-only competitors.

As a private company the focus appears to have been on the short term by reaping of dividends during profitable periods with no investment back into the brands themselves. Consumers do increasingly expect conversations and interaction with the brands that they want. If that investment has not been made to let that conversation happen then loyal consumers will look elsewhere. Arcadia and its brands are now paying the price for this lack of focus on the consumer and its ability to keep pace with the changing expectations of retail.”