One has to admire the ambition. Frasers Group’s constant striving for ‘elevation’ has seen it gobble up multiple designer independents and multi-brand retailers across the UK and online. Retailers such as Coggles and Thackerays are yet more names that have been bought by the group with the suspicion that they will subsequently shut down alongside many others that have gone before, such as Sunderland’s Aphrodite after more than 30 years in business.
To much negative coverage, Frasers Group closed luxury multi-brand retailer Matches, less than three months after buying it. The move did nothing for Frasers’s ruthless reputation. Forever on the hunt for an opportunity, it was recently reported as having approached the bankers at Goldman Sachs with regards to buying online giant Yoox Net-a-Porter, no doubt gladly taking it off the hands of the owner, the luxury conglomerate Richemont, for a steal and a huge coup if it manages to do so.
So, what is the end goal? Buy and close all the competition and have a regional/online monopoly on the luxury market in the UK under its Flannels branding?
If only it was that easy. If Flannels does become the last nationwide luxury man standing, it won’t necessarily mean sales by default. Luxury selling needs more, especially while we are seeing a shift from relying solely on designer brand names.
There is a major global slowdown in ‘luxury’ due to the cost-of-living crisis and the huge increase in prices of luxury goods. Frasers Group is banking on owning the majority of the market when there is a bounce back from the current downturn, but how can it be so certain if and when that may happen?
The luxury consumer is sick of being taken advantage of as brands hike prices while cutting back on quality. It will be hard to re-engage many of those consumers who have switched off from the sector and it is questionable if Flannels has the image, allure or personality to attract true luxury shoppers, particularly those from older demographics. 52% of Flannels’ online shoppers are between 18 and 34 reports web analytics platform Similarweb. Huge price rises have put a lot of people off buying luxury brands, permanently, even those who can afford them. Also, Flannels’ newsletters seem to be continually pushing sales to its outlet site online, which does nothing to help full-price sales.
Frasers Group-owned Flannels in Liverpool.
In its latest financials, Frasers Group stated that ‘Premium Lifestyle’, including Flannels, increased by just 1.2% in FY24, with sales of just over £1.2 billion. Frasers Group currently has 82 Flannels stores in the UK. Store openings are slowing from 24 in 2024 to just five forecasts in 2025. It is reaching saturation point and many commentators are questioning how sustainable and how big the UK market is at this level despite this wiping out of the competition.
Frasers Group is growing sales by opening bigger stores. It is set to relocate its Leeds Flannels store to a larger, former Debenhams site. It is also moving into financial products. Frasers Plus, the new in-house Buy Now Pay Later option, has a long-term ambition of £1 billion-plus in sales, £600 million balances delivering a greater than 15% yield with over two million active Frasers Plus customers, this is excluding any third-party partnerships, according to its latest financial report. BNPL was designed to spread the costs of an item, usually across three months, making those extortionate costs a little more palatable and perfect for flogging overpriced designer gear.
Despite being supported by other areas of the Frasers Group, Flannels will have significant costs with a network this big. It also has to be laser-focused on trends with buying in an industry hellbent on controlling its channels, particularly wholesale. Luxury brands don’t want their product discounted continually.
The big question for a luxury fashion industry seemingly in panic – with many brands changing strategy or ditching creative directors – is what will be the new normal for designer fashion? Growth, much of it formerly inflation-based, will be limited with many going into reverse gear.
Flannels has grown through store openings and acquisitions. Soon, it will have the UK fully covered and will have to innovate in other ways. The brand needs to feel more approachable and inclusive too. It needs to demonstrate to customers its expertise in the market and offer an aspirational lifestyle for customers to buy into.
Local designer independents knew their customers and local markets. They had a ‘buy’ and a point of view. They had service. Flannels is often perceived as aggressive and there can be a stigma attached to shopping there.
It needs an overall of its image, branding and creative direction. If Flannels stores in places like Norwich or Peterborough are to last, they will need to appeal to a larger cross section of customers other than youngsters buying trainers, which also must have seen a considerable drop-off.
Some 87 stores across the UK by next year selling large Bottega Veneta Andiamo bags at £5,730 or logo-ed Gucci dresses at £2,150 feels like peak Flannels. Evolve or die, otherwise, Frasers Group could be getting a taste of its own ruthless medicine.
