As nearly as delayed as the Elizabeth Line, well, not quite, the new Flannels on the eastern side of Oxford Street has been the most anticipated addition to London’s busiest retail thoroughfare this year.
Sandwiched between Marks & Spencer’s Pantheon store and Matalan, this four storey, 18,000 sq ft store, selling designer clothes and accessorises, has been 3 years in the making. The entire building was purchased for £108 million in 2016 by a Sports Direct subsidiary and doubles as office space for its parent group. Part of Mike Ashley’s growing empire, it is the debut of Flannels in Central London.
Left - Veja display inside the new Oxford Street Flannels
This is Flannels' 44th store in the UK, after a lightning expansion, with a further 15 stores coming this year alone. In 2012, sportswear giant Sports Direct bought a majority 51% stake in Flannels and in September 2017 they acquired the brand in full and began investing in and opening stores.
It is worth noting Sports Direct also own other premium fashion chains such as USC, Cruise and Van Mildert, but, it is Flannels which has been chosen to lead the designer crusade to “elevate” the company. Sports Direct currently has an obsession with moving from discounted sports to full price branded.
Mike Ashley said at a recent shareholder meeting regarding Flannels, “I think they are better than any other stores in the market. Now, I might have rose-tinted glasses but one of the reasons is because I have absolutely nothing to do with it. I just sign off the money. It has nothing to do with Mike Ashley.
“It’s not just a few show stores. When you have a pipeline it takes time. I’m telling you – this is for real. The reality is, I’m telling you it is real and the proof of the pudding will be when they start to roll out. It’s happening, it’s coming. It’s just not as fast as I would like it.
“I’m going to do the same with House of Fraser and get around to elevating. The modern-day consumer – that’s what they want. It could be Stone Island, it could be Nike and Adidas – it’s all about the branded world.
“Maybe I was late to the party, I accept that. Maybe my son-in-law should’ve gone out with my daughter when she was 12, but now we’re on it, nothing’s going to get us off it.”
Oxford Street is their new flagship and is a physical testament to their ambitious intentions of becoming “the biggest global luxury retailer,”. This is what Sports Direct Group’s head of elevation, Mike Murray, Mike Ashley’s daughter’s boyfriend, told Drapers in March. He went on, “We’re in the early stages, but we have a clear vision for Flannels, we have ambition and we are willing to invest,”.
Right - Art on the second floor
The £10 million new store has been designed by Italian studio P con P, and you can see the Gucci influence in the rugs, over blown William Morris type screens, 1970s brass changing rooms and waiting areas and contrasting use of materials.
The store is split into women’s accessorises on ground, womenswear in the basement, men’s designer on first and men’s accessorise and sportswear on the second, though there wasn’t much difference between the latter two. The second-floor will also house the first ever UK retail space for US footwear brand Flight Club and the store offers services such as Click & Collect and personal styling.
One notable difference was the huge amount of staff, all dressed in black. I was told 50 members of staff currently work there. I visited on a late Tuesday afternoon and the only people seriously buying were a group of Asian tourists in the Gucci men’s section. They’d probably never heard of Flannels before.
I expected to see the usual chav labels such as Off-White and Burberry, which were there, but, interestingly, there were also brands such as Barena, Brioni, Alanui and JW Anderson. There was even a diamond necklace for nearly £60,000. I did ask how many they’d sold that week?!
Cire Trudon candles, Acqua Di Parma fragrances and Ganni dresses were also spied, and while nothing particularly revolutionary, it is difficult to pick holes in.
“His whole plan for 100 Flannels stores is bonkers. Knock a nought off, mate!” says Eric Musgrave, former editor of Drapers and fashion industry consultant. “It will be a ghost town for 5 or 6 days a week. Wrong location. Too big. Offering nothing you can't get in the West End or Knightsbridge already.” he says.
“My guess is that they will leave it as it is for two or three years, then reorganise it, making the Flannels area smaller and bringing in USC and SD. But, I believe Ashley owns the building, so he can run it as a vanity project.” says Musgrave.
Left - Display in collaboration with artist, Alec Monopoly
The simile I would use is, it’s like an Essex nightclub, which, if playing the right music, you’d have a good time in. And that’s what the clothes and buy is, the music.
(The security guards do look a bit like bouncers though, and one made me delete a picture I took on my phone of the new store *eyeroll*).
There’s nothing to fault in the design and money spent, it feels premium and everything is nicely presented, but Flannels has a problem with the snobby stigma London has towards Mike Ashley. He needs to distance himself like he says above.
People will need persuading to part with their cash here, unless it is product they can’t get anywhere else. Flannels needs to change perceptions so people are happy to be seen swinging a Flannels bag when they leave. It’s just not cool right now. They need to turn into leaders rather than just flogging the same old mega brands to punters.
Right - That £60,000 necklace
They own the building here, so are here for the long haul, but it will be interesting to see how it develops and how long they stick to this initial format. Flannels recorded sales of £173.9 million in its latest financial year, up 12 per cent from 2018. It’s growing because it is rapidly expanding, it obviously wants to get to the point where is it more powerful than the brands, rather than the other way around currently. I can imagine many luxury brands, currently, being cautious about choosing them as a stockist, but watch this space as they grow.
Flannels will also struggle with some of the quality of the product, and disappointed consumers. Read Gucci Quality Is Rubbish - here - which isn’t their fault.
Left - Flannels Oxford Street exterior. Sports Direct own the entire building
Sports Direct want more elevation than the Wright brothers, but it’s going to be expensive and I can't help think that 100 stores is too many, especially when you’re trying to sell £900 Gucci hoodies. Even though this is on Oxford Street, it needs to become a destination. It feels like the kind of store going against the retail tide, but I certainly admire the ambition.
Below - Interior shot of the new Flannels Oxford Street store
Mike Ashley is a retail predator. Much like a lion watching his prey out on the savannah, he waits until the wildebeest looks weak and separated from the herd and then bides his time. Pouncing only when it suits him and he’s certain of a tasty and easy meal.
This week he pounced and was rewarded with House of Fraser for £90m. He already had a 11% stake in HOF, bought in 2014, so he had an interest.
Left - Harrods of the High-Street?
This price was drastically down from the £480m the Chinese owners, Sanpower, paid for it. The brand is weak and damaged, but not dead, but it will need investment in order to survive. They didn’t seem to have a strategy and they didn’t define why you would go to House of Fraser over another store.
Ashley needs to work on making it clear why you’d return to House of Fraser. While John Lewis is offers mostly necessity, and can be bought online, Ashley would be better at targeting ‘treats’, relating to fashion and dressing up to seduce a higher spending customer to leave the house.
This needs to be the store for birthdays, for Christmas, for anniversaries, or anything that requires fancy packaging and that feel good, swinging bag feeling. Fewer visits, but more money out of people’s pockets. At the moment the nicest thing they sell is a Mulberry handbag, but they need more excitement to keep people interested.
Promising to turn the struggling chain into “the Harrods of the high street”, could be Ashley’s flippant words, but if he focuses on that idea, he could be onto something. You don’t go to Harrods for the mundane or ordinary. Admittedly, the prices will have to be different, but you can still package everything nicely and tie-in exclusive product and brands.
Reading about his ‘elevation’ and expansion plans for his other brands, recently, what’s left of House of Fraser will be in prime locations such as Bluewater, Westfield White City and Glasgow, if he decides to stick to closing the other 31 struggling stores, and would fit nicely into this expansion plan. He could easily use his premium Flannels brands to insert much higher end product, something House of Fraser always aspired to be, but never quite got there.
He’s realised that it’s important to have product and brands for each level of customer. The bargain end is fickle and requires huge volumes, while the growth in luxury brands offers lower volumes, but much higher profits. Flannels is expanding rapidly and this acquisition will help create a larger scale.
Flannels is opening new stores at Glasgow Fort shopping centre, Hull and Leicester as part of its ongoing expansion drive. The retailer announced, recently, it expects to open between 6 and 12 new Flannels stores before its financial year end next April 2019. In its premium lifestyle division, Sports Direct currently operates 21 Flannels stores, 10 Cruise stores and three Van Mildert stores, so its premium designer business is really growing. Even Oxford Street is getting a Flannels next year.
He could introduce his underwear brand, Agent Provocateur, into HOF stores and work on their strong existing brands like Biba.
It’s inevitable, if Debenhams continues to struggle, that he’ll merge the two, already owning 29.7% of Debenhams. He’s probably waiting for his moment to strike on this one too and get it at a knocked down price. The high street will plateau soon and even go back into a growth mode and, if in the right locations, in the right cities, House of Fraser will be smaller, but much stronger.