Amazon scores, House of Fraser on a bumpy road
Amazon notched up yet another milestone last week. Surpassing $800 billion in market value, it is now worth Walmart, Home Depot, Costco, CVS, Walgreens, Target, Kroger, Best Buy, Kohls, Macy’s, Nordstrom, JC Penney & Sears combined.
Love them or hate them, you can’t deny the gulf between Amazon and most other retailers.
This was demonstrated last week by the news that the e-commerce giant will show 20 Premier League matches a season for three years from 2019.
It has shelled out for two full rounds of fixtures a season, the first December midweek round and the festive Bank Holiday round.
These will be available to Amazon Prime’s UK members, who will also be able to watch weekly highlights of all matches throughout the season.
At the same time, a British institution, House of Fraser, was taking an ax to its “unsustainable” 59 leased stores across the UK and Ireland.
It has identified 31 stores for closure and also proposes to relocate its Baker Street head office and Granite House office in Glasgow to new locations. This will affect up to 2,000 colleagues and a further 4,000 brand and concession partners.
This drastic move is essential, but there is no guarantee of success, according to GlobalData.
The embattled retailer must significantly improve its product offer and store environment to attract customers back whilst also enhancing its online proposition.
Its main problem is that it does not have a clear point of difference in a crowded market and in a climate where consumers are cutting back on discretionary items, argues Sofie Willmott, Senior Retail Analyst at GlobalData.
“’Midmarket department stores are struggling and have come under threat from all angles in recent years,” she says.
Pureplays including Asos and Amazon, offering a vast product range and convenient fulfilment options, have grown at a rapid rate, stealing share from the department stores, she adds.
In a nutshell, what we have here is a tech savvy, customer-centric Amazon vs a stagnant, customer-unfriendly House of Fraser.
“We are always looking to add more value to Prime, and we’re delighted to now offer, for the first time, live Premier League matches to Prime members at no extra cost to their membership,” says Jay Marine, Vice President of Prime Video in Europe.
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“The retail industry is undergoing fundamental change and House of Fraser urgently needs to adapt to this fast-changing landscape in order to give it a future and allow it to thrive. Our legacy store estate has created an unsustainable cost base, which without restructuring, presents an existential threat to the business,” comments Frank Slevin, Chairman of House of Fraser.
Bolstering your live sports line up on Prime Video, which also includes US Open Tennis, ATP World Tour Tennis events and NFL games, shutting stores and cutting jobs whilst mumbling about changing times. Who gets your vote?
Whilst Amazon moves on to its next big milestone, a House of Fraser turnaround will involve going beyond the notion of simply selling stuff to customers and excelling at everything buoyant pureplays can’t do.
They have to tap what is left of the store network and fuse it with the e-commerce operation to become more experiential and service-led. There’s still hope but time is running out.
19 June 2018