Fenwick boss John Edgar said the department store chain is considering cutting prices. Photo: Eddie Mulholland
One of the oldest departments in the UK, Fenwick stores, criticized some brands for aggressively raising prices, and also predicted that the UK was finally coming out of the inflationary crisis.
Fenwick, which has nine department stores in cities across the UK, was in talks last week to bring prices down on some items. CEO John Edgar said: “I do think some people have raised prices too much. Some brands have been more aggressive than others…. This week we had a conversation about lowering the prices of some things.”
However, he warned buyers not to expect price drops anytime soon. He said costs are still high for many businesses.
“Are we coming to the end of the inflationary environment we have seen? Probably yes, but this does not mean that things are falling in price and cost. It simply means that they do not rise. This is the end? End of what? I just think the uncertainty will continue.”
If Edgar seems surprisingly calm about the prospect of more uncertainty, it's probably because he hasn't been through much since he took over in early 2020. Fenwick, just weeks after the UK plunged into its first Covid-19 lockdown.
Since then, his task has been to get Fenwick back into the plus, for which he says they are “on the right track”, although they have not yet reached it. The department store's loss for the last financial year has halved to £18 million.
However, Edgar is not waiting for the overall economic situation to improve and kick-start retailers.
“The reality is that if we stick around waiting for things to go back to normal, we will be stuck there for a long time,” he shrugs. “When we get through this, it will be something else. There is always something.”
For Fenwick, a beloved department store that opened its first store in Newcastle in 1882, it's not all about price, he says. “You have to ask yourself what is the role of the department store,” says Edgar. “If you're just a big space with nondescript products, then it's probably not enough to make people want to go there. A department store should be different – different in terms of the environment and in terms of products and services.
“If you lose that, then you have no reason to exist, and then the only way to stand out is the price. Then you become a discount-oriented organization, and it's just a spiral – a race to the bottom.
Edgar says that what Fenwick is trying to do is “not easy to achieve”. It's more like a model seen at companies like Harrods and Selfridges, both of which Edgar previously served as chief financial officer. “It's tricky and we haven't always been in this place.” But, he says, “it's a successful model that you see everywhere, and it's not rocket science.”
However, not every department store has managed to achieve this. In recent years, giants such as House of Fraser and Debenhams have closed stores, leaving gaping holes in city centres.
Others, like John Lewis, are doing a major overhaul of their existing spaces to try and turn them into destinations that offer more experiences and services. Signs & Amplifiers Spencer is trying to get permission to renovate her March Arch store to become a smaller store with offices and a gym.
But Edgar ignores this comparison. Fenwick, he says, is “more premium, we're better known for brands” than these stores. However, he also plans to revitalize the stores by earmarking cash for a significant investment in what Edgar says will mark a “step change” in store mixes.
which will be moved to central London, where Fenwick will not be present at all from next year. Fenwick is selling its Bond Street site to free up money, strengthen its balance sheet and allow it to be spent elsewhere.
“It puts the business in a fundamentally different position than we might otherwise be,” says Edgar. “Compared to other retailers, we have no debt, [and] we have resolved our retirement situation.” Additional investment could be used to meet the goal of generating 20% of online sales, which Edgar aims to do profitably. “Very few people make 20% of online sales profitably, so asking how much it costs to sell online is a real problem.”
Leaving London's shopping district for one of the UK's most beloved department stores may seem like a drastic move. But Edgar insists capital is “not important” to Fenwick.
And he's not the only one who thinks so. Fellow retailers and luxury goods stores also feel that government policies are not helping the city. Edgar says the decision to ditch VAT-free shopping at a time when Paris and Milan are luring tourists with their own policies is “out of the ordinary.”
“From [one] point of view, you can convince yourself that there is some logic to this, but it has broader implications for the economy, and it makes me scratch my head over this decision. I could be the richest person in the world, but if I'm in Paris and I can buy something 20% cheaper there than in the UK, then I'll buy it in Paris.”
He said, that the indirect impact on hotels and airlines was “significant”.
At Bond Street, more than any other store in the country, tourists were a key group of shoppers. However, Edgar insists, this store was only Fenwick's fourth largest store. Its flagship remains in Newcastle and according to Edgar “there are a lot of shops in central London”. The department store competition was just too tough.
“Our model is that we want to be the only show in town,” says Edgar. “With us you can get what you basically can't get anywhere else in this place.” For example, in Newcastle, customers looking for Lululemon gym products could only find them in the Fenwick store. “That's where we provide that point of difference.”
Edgar says that there are cities that Fenwick “would like to visit, but someone else is already there.” “The days of two, three or even more department stores in the city are over. I don't think the markets are big enough, and I don't think they ever have been. So if another retailer came out of the market where we could see an opportunity, I think we would really seriously consider it.” .jpg” />The department store boss called the decision to waive VAT-free shopping for tourists “out of the ordinary.” Photo: Eddie Mulholland.
He says that Fenwick is already actively looking for places in a number of cities, but refuses to say which ones, and says only that they are outside London. However, there are factors to consider when choosing a new space. Fenwick, unlike most of its competitors, owns the vast majority of its property.
This is something Edgar wants to keep in the same vein, fighting off suggestions that the store might consider selling and leasing back. “I have never been a fan of it. Other people were selling and leasing back and they don't exist anymore. The money is gone pretty quickly.”
If Fenwick is looking for new stores to enter, chances are it won't own those properties — “so we have to be very careful about that,” says Edgar.
“We don't need many, many places. I think that was part of the problem with some department stores that don't exist anymore that they had too many sites, so we want to be very picky about where we choose and make sure it's absolutely right. place in the absolutely right market.”
After all, for Edgar, the question of whether the department store has a future is a question that he is “already fed up with”. “People have been talking about it because they don't really understand what makes a place like ours.”
By strengthening Fenwick's balance sheet, Edgar hopes to continue doing so. “Now we control what we want to do, whatever it is.”
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