Rescued for the fourth time, can Ethel Austin really have a future?

Former Ethel Austin site, Wallsend (30 Jul 2012)

When value clothing retailer Ethel Austin fell into administration for the fourth time in as many years three weeks ago, it’s fair to say that its chances of surviving again were not highly rated.

Indeed, the headline in Retail Week’s print version saw this latest collapse as the “end of the road” for the 78-year-old Ethel Austin brand, citing what it claimed was the reluctance of landlords and suppliers to continue doing business with the beleaguered chain. Meanwhile, all the stores I visited on Tyneside on Monday last week were firmly in ‘closing down’ and ‘everything must go’ mode.

Ethel Austin, South Shields (30 Jul 2012)

Last Tuesday’s news that the business had, once again, been saved, therefore came as something of a surprise. Of the 41 remaining stores, 32 are to be bought by Ricli Limited, a company owned by Salford businessman Mike Basso. Of these, nearly a fifth are in the North East: Stockton and Wallsend (the latter relocated since last year), which transferred to Ricli Limited on 27 July; Redcar, which was set to transfer on 3 August; and Blyth, Byker and South Shields, which will follow on 10 August. A full list of all acquired stores is included at the end of this blog.

Relocated Ethel Austin store in Wallsend (30 Jul 2012)

While this latest deal is good news for 200 of Ethel Austin’s long-suffering staff, the trade union Usdaw has expressed “some concern” over the fact that Basso was “closely involved with the business [as an investor] under previous recent owners”. However, Basso has been publicly critical of Ethel Austin’s former management, arguing before he rescued the business that it could “prosper” if it were “run properly”.

So, can Ethel Austin’s new ownership succeed where others have failed, or are we merely witnessing a long and lingering death of a historic but now-tarnished British retail brand?

Scale

Ethel Austin, Byker (30 Jul 2012)

One big challenge to overcome is the fairly small scale of the current Ethel Austin business. With 32 shops, the chain is just a fragment of its former self, and a far cry from the 300-plus shops that still existed prior to the retailer’s second collapse, in 2010.

Former Ethel Austin, Hebburn (22 Sep 2011)

The North East, certainly, has lost out in all the previous downsizings. Seaham, for example, closed down after the 2010 administration and was a charity shop last time I passed, while Hebburn (above) lost out in last year’s cull.

Ethel Austin, Blaydon (12 Apr 2010)

Of the nine North East stores that were part of last year’s ill-fated purchase by former Blackwell director Sue Townsend, three more have also subsequently bitten the dust. Chester-le-Street appeared to have already closed when I last passed by several months ago, while Blaydon and Billingham (the town’s former Woolworths site) have also now gone. This pattern is reflected nationally, where the 48 stores that existed at the time of the latest collapse already represented a 20% reduction from the 62 that were bought by Townsend’s Ashloch Ltd in 2011.

Ethel Austin’s most recent former owner, Sue Townsend

On the face of it, then, Ethel Austin’s small size puts it at a competitive disadvantage to rival chains such as Store Twenty One and M&Co, both of which target similar small-town locations and have been growing their estates and buying power – to 200 and 300 stores respectively – as fast as Ethel’s has been dwindling. Even Peacocks, another value fashion rival, still has 400 stores following its recent rescue by Edinburgh Woollen Mill: more than 12 times the size of Ethel Austin.

However, compared to Ethel’s previous incarnations, Basso isn’t saddled with an oversized head office or warehouse – neither of which formed part of the current deal – and has scope to build buying and adminstrative synergies with Ellie Louise, the failed fashion retailer that he rescued, along with 57 of its stores, in April this year. Making the most of these opportunities will be crucial if Ethel’s is to succeed this time.

Brand

Life & Style fascia, Reading (19 Aug 2011)

Dealing with the Ethel Austin brand is another challenge. Among the retail and property community, at least, there’s no doubt that the Ethel Austin name has become somewhat associated with failure over the last few years, and work is needed to bring the brand back into favour.

Shoppers, perhaps, are either more forgiving or simply not fully aware of all the company’s travails. While some ex-Ethel’s stores have found new uses – such as Bishop Auckland’s Poundland (below) – the continued presence of Ethel Austin signage above many shuttered shops is an unhelpful and very visible reminder of the chain’s past troubles.

Poundland, Bishop Auckland (including ex-Ethel Austin site) (27 Mar 2012)

The response of former owner Elaine McPherson – who ran the company prior to its second and third administrations – was to rebrand the business completely, replacing the Ethel Austin name with Life & Style. The problem with this was that it threw out all that was good about the Ethel Austin brand – such as its heritage – with the bad, replacing it with a generic name that lacked any meaning or resonance.

Life & Style, Wombwell (3 Nov 2011)

In the end, it appeared that the transformation was too expensive and ambitious to implement anyway: by the time Sue Townsend bought the business a year ago, only three of the 62 acquired stores – including the one in Wombwell (historically a Woolworths site), above – had been switched over to the new fascia.

The irony is that McPherson probably got the look and feel of Life & Style about right, with the burgundy fascia and modernised store interior creating a much bolder and fresher face to the street than Ethel’s slightly dated, anaemic and sometimes tatty frontages.

Ethel Austin, Chester-le-Street (now closed) (8 Feb 2012)

Happily, few Ethel Austin stores look as truly dreadful as the Chester-le-Street one did in the months leading up to its closure – with missing letters, a broken shutter and uninspiring shop windows – though the lack of any signage when I visited the Blyth store (below) in April seemed an unusual approach to selling. Such a lack of attention to detail begs the question of why any shopper would be attracted to visit.

However, by quickly implementing a new look that retains but refreshes the Ethel Austin brand – perhaps even recycling the white-on-burgundy colour scheme – the new owner can send a clear signal to shoppers, landlords and suppliers that this incarnation of Ethel’s is serious about moving forward. The size of the truncated estate at least means that rolling out a new look to every shop should be more achievable and affordable.

Offer and customer experience

Ethel Austin – not that you’d know it – in Blyth (11 Apr 2012)

Of course, no amount of refurbishment will work if customers aren’t persuaded to buy the product. However, Ethel Austin’s typically long-established position within smaller or secondary shopping centres – often rendering it an anchor retailer in those locations – means that there’s a surprising amount of affection for the brand to tap into.

Looking at Ethel’s locations and brand, my suspicion is that its target customers will typically be mums with children and older women. Often they will live nearby, will appreciate the convenience of being able to pop into the store while doing their shop at the nearby supermarket or Wilkinson’s, will probably know the staff by name, and will be looking for clothes and accessories that are reasonably priced and offer great value.

Ethel Austin, Redcar (7 Mar 2012)

Frustratingly, former owner Sue Townsend seemed to have really understood this when she described Ethel Austin, in an interview with me last year, as “a good, solid, Northern brand, with fantastic heritage, a really good provenance as to why it existed and how it managed its customer base”.

Alongside getting the product mix right, my approach to reinvigorating the stores would therefore be to build on their position at the heart of their communities, providing support for the store managers and staff to be creative, individual and local – perhaps in terms of window display, or organising events such as fashion shows and new product launches. All this could be wrapped in an overarching celebration of Northernness that plays on the chain’s heritage and longevity, and reflects the fact that few Ethel Austin stores remain outside its North of England heartland.

Few fashion chains have as compelling a backstory as Ethel Austin’s eponymous founder starting the business in her Liverpool front room back in 1934, so celebrating and being playful with this history could offer a point of difference from Ethel’s successful yet slightly samey competitors.

Conclusion

Ethel Austin, Stockton (26 Sep 2011)

After four failures, it seems clear that simply doing more of the same at Ethel Austin isn’t going to work. In summary, my priorities for action would include:

Making sure central operations are lean, and synergies with sister businesses maximised – but not seeing cost-cutting as a way of addressing all the problems;
Rolling out a refreshed Ethel Austin fascia to all stores, and urgently tidying up tatty store frontages;
Clarifying the target customer, and getting the product offer right;
Tapping into the chain’s position at the heart of communities with localised displays and events;
Developing Ethel Austin as a distinctive brand that celebrates the chain’s heritage and ‘Northernness’.

When retail businesses fail, the ones that rediscover success are typically those that have several key attributes: creativity, new ideas, attention to detail, and a clear understanding of the customer. Let’s hope, for the sake of Ethel Austin’s staff and those towns where it still has stores, that the chain’s new owners have the resources and vision to make it fifth time lucky.

My retail consultancy business, CannyInsights.com, works with retailers nationwide to improve their stores, customer communications and market knowledge, and can provide bespoke place- and sector-specific market intelligence. For more information, visit www.cannyinsights.com, drop me an email, or give me a call on (0191) 461 0361.

List of acquired stores

Stores transferred to Ricli Limited on 27 July: