It’s early closing for George after four years on the UK high street. However, it is far from surprising that Asda has called time on the 11-store standalone clothing concept.
Almost a year ago to the day of Wednesday’s announcement, Asda chief executive Andy Bond conceded to Retail Week that the high street operation was “not successful” enough to expand and that he was considering shutting the stores.
“The operating model is so different to out-of-town retailing and we have learned a lot about the costs of logistics and labour and the management of the offer,” he said at the time.
The Wal-Mart-owned retailer has confirmed that its strategy will be to focus on its non-food Asda Living stores, which will continue to stock George products.
The closures will leave George’s value retailer rivals breathing a sigh of relief, but it has also fired a warning shot across their bows.
Primark, Tesco, New Look and TK Maxx will all take lessons from George’s inability to generate the kind of high volumes of sales required to cover the high rent at town centre sites, particularly with the fashion market so tough.
For some, thoughts may turn to the footfall-driving benefits available through cross-category partnerships, such as those being explored by Peacocks through concessions in chains including Somerfield and Woolworths.
But, while Tesco can tempt its customers to stray into its clothing terrain as part of their weekly food shop, Primark is surely the most shielded from the woes experienced by George by the sheer scale of its operations and size of its stores in prime locations.
At the beginning of this year, Primark leapfrogged George to become the UK’s leading value fashion retailer, according to Verdict.
Primark’s success in gobbling up 2.5 million sq ft of sales space in the UK since 2002 and in driving extraordinary sales volumes caused fissures to form in George’s smaller-scale town-centre value fashion ambitions.
But, despite the massive growth in value retail powered by Primark and the supermarkets, all value fashion retailers face the challenge of maintaining growth and profit levels this year as they face hugely challenging market conditions.
For those without the clout of the world’s largest retailer behind them it will be less of a high street retreat and more like last orders.