Major clothing retailer operating over 250 stores within the UK is reportedly devising a drastic turnaround strategy, with the potential for store closures and job losses looming.
Fashion Retailer Sets Sights on Major Restructuring
It's looking like a big-name UK fashion retailer, boasting over 250 stores and approximately 5,500 employees, is preparing for a drastic makeover. Faced with challenging market conditions, the company has brought in PricewaterhouseCoopers (PwC) for some hard-nosed number-crunching.
The iconic clothing chain, which has been a staple on Britain's high streets for decades, is reportedly mulling over plans that might include cutting stores and jobs. With the help of PwC, they're working on solutions to trim costs and stay afloat.
The details of the overhaul are still being hammered out, but it's said that it won't be finalized for several more days. While no decisions have been set in stone, insiders remain tight-lipped about the retailer's future.
The retail landscape is a tough one, with customers seeking faster, more convenient shopping experiences and increased competition in the online sphere. River Island's latest financial statements, from the year ending December 30, 2023, paint a bleak picture, showing a pre-tax loss of £33.2 million. Sales during the year plummeted by more than 19%, dropping to £578.1 million.
The firm's battle isn't unique—retailers across the nation face similar challenges. In an effort to turn the tide, River Island snagged consulting firm AlixPartners in January to help them shore up their financial standing. Now it seems PwC has taken the reins, intensifying the company's efforts to cut costs and boost profits.
In recent months, multiple River Island stores have closed shop, including locations in Corby and Chesterfield. Founded in 1948 by Bernard Lewis, River Island made its mark on the fashion world during the '60s, even influencing the popular mini-dress trend. Later rebranded as River Island in 1988, it went on to become a powerhouse in the UK high street scene, with a presence in over 125 international markets today.
The question on everyone's minds is, why are retailers shutting up shop? The rise of online shopping has squeezed brick-and-mortar stores, and it's become more expensive to keep them open. Add to that the British Retail Consortium's prediction that the hike to employer National Insurance Contributions (NICs) in April 2025 will cost the sector £2.3 billion, and it’s a recipe for struggle. At the same time, the minimum wage is poised to increase, putting additional pressure on retailers.
One strategy some retailers are employing is to shutter old stores and open new ones in more high-demand locations. However, when a big store closes, it can cause a ripple effect—lowering footfall in the surrounding area and putting other stores at risk. But there's a silver lining: retail parks are increasingly popular due to their convenient parking options, making them an attractive alternative for shoppers.
In some instances, stores have shuttered during bankruptcies, such as Carpetright, Debenhams, Dorothy Perkins, Paperchase, Ted Baker, The Body Shop, Topshop, and Wilko. Don't be surprised if you see other retail chains follow suit. And when a chain goes under, it isn't uncommon for another retailer or private equity firm to swoop in, snatching up the intellectual property rights and relaunching the brand online. While this might lead to a handful of physical stores opening if there's public interest, the new outlets typically don't reach the numbers or locations of the original chain.
The Centre for Retail Research (CRR) has predicted that around 17,350 retail sites will close in 2023. So brace yourself for some changes on the high street. In the meantime, let's keep our fingers crossed for our favorite retailers to find their footing and make it through these tough times.
The fashion retailer, striving to revamp its financial standing, has enlisted the services of PricewaterhouseCoopers (PwC), potentially leading to store and job reductions as part of an extensive cost-cutting strategy. In an attempt to boost profits and stay competitive in the challenging retail landscape, the company has also consulted AlixPartners.
