April 13 is D-day for youth fashion retailer Select as its creditors vote on a company voluntary agreement (CVA) proposal. Despite the potential rent reductions and store closures a CVA could bring, with landlords being given the option to take back unprofitable sites, as an unsuccessful challenger in the clothing sector with an inferior proposition to competitors, Select lacks the necessary appeal to survive long term.
As retail behemoths Debenhams, M&S, New Look and Next continue to struggle in the fashion sector, it is no surprise that smaller players are also under pressure. Select has 183 UK stores with coverage spanning Torquay to Newcastle, albeit in secondary and tertiary locations, however it held just a 0.6% share of the UK value clothing market in 2017. Operating in the fiercely contested 16-24 year old youth segment, though its reach extends to pre-teens, Select finds itself outplayed by rivals such as value leader Primark and online pureplay boohoo.com. While Select is at pains to detail reasons for consumers to shop its offer, listing 10 such reasons on its website, it ultimately lacks the excitement and draw of its larger counterparts – and offers little differentiation to set itself apart and drive loyalty.
Business advisory firm Quantuma, appointed by Select to advise on the CVA, has emphasised the negative impact of the loss of high profile tenants on secondary high streets and in shopping centres, muting location attractiveness and limiting footfall, hitting smaller players such as Select. While this is true, it also makes it plain that Select does not possess destination appeal itself.
Though value clothing growth is not what it once was, squeezed consumer budgets continue to protect the sector. While Select’s basics offer provides value for money, where the retailer falls short is on trend-led ranges, product quality and customer engagement – all crucial to master in order to lure shoppers away from rivals. Indeed with New Look and H&M known to be suffering, their customers are ripe for stealing, but Select is unable to take advantage due to an uncompelling proposition.
A CVA itself will not rectify Select’s failings; and retaining its existing strategy post CVA, if it is approved on Friday, is a sure fire way to end up in administration. Despite Select’s desire to continue operating all of its stores, a trimmed down portfolio would be more manageable, especially as existing stores feel unloved and are not enjoyable to shop, therefore requiring significant investment to give consumers a reason to visit. However, fewer stores filled with the same undesirable product will not get the business back on track.
With young shoppers’ unrelenting demand for the latest must-have fashion items, the absence of trend authority reinforces Select’s irrelevance among its target customer base and ultimately threatens its existence in the retail sector. While this can be addressed via enhanced designs, more regular newness, and investment in quality, the idea that Select can grow its appeal enough to become top of mind ahead of boohoo.com, Missguided and Primark is farfetched given their dominance at the youth end of the market. Quantuma laments the possibility of another retailer exiting the UK high street however a weak player with little prospect of outshining rivals, given how fast moving and innovative its contemporaries are, has no place on the high street.
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