WHEN Sir Stuart Rose dipped his toe back in the retail waters by becoming chairman of Blue Inc and backing The Hut last year, it should have been obvious he had his eye on bigger things.
But why Ocado? This column – not to mention several high-profile City analysts – have long taken a dim view of the former Goldman bankers’ business model, and as it faces increasing competition from mainstream grocers as well as core customer Waitrose itself moving into online delivery, Ocado’s once-innovative warehouse concept is no longer looking very fresh.
Just this week Tesco cast a shadow over Ocado’s traditional Home Counties stronghold by opening its fifth “dark store” in West Sussex, cutting out the in-store experience completely for both online shoppers and the 700 staff who’ll pound its pseudo-aisles to prep deliveries.
Meanwhile Ocado is looking further north to Warwickshire to double its warehouse capacity, but growth in its online sales (that’s all of them, then) is already trailing both Tesco and Sainsbury over the crucial Christmas trading period.
Parachuting Sir Stuart in looks great, and certainly delivered the shares – off more than 50 per cent in the past two years – a boost.
But beyond giving investors a short-term opportunity to sell as stock trades high on renewed bid rumours, his appearance at the firm is unlikely to lift anything other than morale.
NIPPER KEEPS ON BARKING
Despite the unconventional way a deal was struck, getting Hilco on board at HMV is great news for both the brand and its employees.
Since the restructuring specialist took HMV’s Canadian operations off its hands for £2m in 2011 it has kept 119 stores in the country alive, having initially provided a C$26m (£16.5m) emergency loan to keep the shops trading over a crucial Christmas period.
But it also has form closer to home with iconic UK brands. Since buying up Habitat’s debt in 2009 it’s made the furniture firm’s European operations profitable, and its acquisition of the defunct Polaroid brand and assets in April of the same year led to a relaunch backed by newly recruited “creative director” Lady Gaga.
But surely the feather in Hilco’s hat is its existing relationships with HMV’s suppliers – the music labels and film studios that have declared themselves so keen to see His Master’s Voice keep on barking.
It is stock from these suppliers that will be crucial to keeping HMV afloat in the short term. Deep discounting may drag curious punters in for now, but as soon as the in-demand Homeland box sets are cleared from the shelves it’s unlikely they’ll come back to buy Cliff Richards’ latest calendar or yet another pair of headphones.
Paul McGowan and his team have proved themselves a dab hand at mopping up the best of what’s left of some of the UK’s biggest brands. Here’s hoping they’ve got the contacts to salvage some of this latest high street mess.
Elizabeth Fournier is News Editor of City A.M. @ej_fournier