In April 2016, menswear retailer Austin Reed went into administration. A high profile company with over a hundred of its own branches, plus stocked in many department stores, Austin Reed has a long history, able to boast they were tailors to Winston Churchill.
So what led to the decline of this once prosperous chain? The company itself blamed a depressed retail environment and lack of cash flow for its difficulties. However, retail analysts have also highlighted other key issues which they feel led to problems within the business.
What Can Other Businesses Learn From This?
Cash Flow
One of the first lessons businesses learn is the value of maintaining a steady cash flow. While this can be easier to manage for start-ups, as a company matures it risks overextending itself by growing too rapidly. Combine this with a less than buoyant market and issues can soon arise. Therefore, it’s important to always maintain detailed cash flow targets and to ensure that your finance department has a clear picture of your income and expenditure at all times, especially during periods of rapid expansion.
Evolution
No company, whatever its heritage, can rest on its laurels when it comes to keeping pace with the changing times. Shoppers now have access to a huge range of businesses hungry for their custom and they can shop 24 hours a day online. One criticism of Austin Reed was that its online store failed to match up to those of its competitors and thus they lost sales in this way. An important factor when you come to examine the online capability of your business.
Image
Furthermore, it’s not just how you offer your stock to customers but also the range of products you have available. If a business is felt to be behind the times its image and thus its sales can suffer. It’s always important therefore to keep current with the needs and wants of your target audience, to make sure you are meeting expectations. This can be done through research, social media, and even the conversations that take place on the shop floor.
Investment in marketing can take a backseat when companies are failing to thrive but it can be this lack of investment which causes the business to lose relevance in an ever competitive marketplace.
People
The bottom line is that the success of any business rests on people whether that’s your staff or your customers. When it comes to hiring, choose carefully and make sure candidates can demonstrate the skill set you need. It’s also important to maintain good relations with your staff as strong employee engagement will lead to higher productivity levels and thus increased staff and customer satisfaction.
Repeat business in any enterprise is easier to come by than selling cold, therefore, always nurture your existing customers and maintain clear channels of communication with them so you can bring them back to purchase again.
The lesson to be learned from the Austin Reed scenario is that administration doesn’t always have to be the end of the line for a business as OpCapita demonstrated when it brought the chain Game Digital out of administration in 2012. Game was re-branded and ultimately floated on the stock market with a valuation of £340 million.
The future for Austin Reed now hangs in the balance as Alix Partners, the restructuring firm, seeks a rescue deal for whole or part of the business. With a long history on the high street and 1,200 jobs at risk there are many people hoping that a way to secure the future of Austin Reed can be found.
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