What happened to River Island?
River Island is suffering from a common affliction. Declining sales and an inability to keep up with competition have led to a restructuring plan, with imminent store closures if the strategy goes ahead.
High-street peers like Miss Selfridge, Dorothy Perkins and Debenhams have already disappeared and become online-only – River Island is just the “latest victim” according to Matthew Padian, partner at Stevens & Bolton.
Padian pointed to the “challenges associated with shoppers migrating from the high street to online” with the ease and efficiency of online shopping fuelling an exodus from high street to websites and apps.
But even e-commerce isn’t a safe bet now, with Asos, Boohoo and Pretty Little Thing all struggling.
There’s another issue at play: the ‘hollowing out’ of the middle market for retail.
Premiumisation and the new fast fashion
High streets aren’t just losing ground to online alternatives, they’re losing ground to cheaper, faster alternatives that “cater to younger shoppers”, Julie Palmer, partner at Begbies Traynor, said.
“As consumer habits evolve, legacy retailers are finding it increasingly difficult to stay relevant,” Palmer added.
Shein and Temu operate on a small-batch, data-led model, which allows them to respond to short-term online trends within a very short time frame.
Improvements in shipping mean that packages can be shipped in a matter of days, if not hours – Amazon recently announced billions of investment into same-say shipping facilities in the UK.
At the other end of the spectrum, widespread premiumisation in retail has pushed prices for sustainable and better-quality goods up and made flagship stores ever-more important, putting the mid-market, shops-on-every-high-street model under threat.
Then there’s the boom in second-hand shopping; clothing can be found on sites like Vinted and Depop for below-market prices and – like everything else – shipped very quickly.
It all combines to create what RBC analysts have called the “hollowing out” of the mid-market in retail.
“Next and M&S [are] the last ones standing,” RBC analyst Richard Chamberlain said.
“In the UK midmarket we saw capacity withdrawal [of around 10 per cent] during the pandemic from the likes of Debenhams and Arcadia… This has left room for the likes of Next and M&S to take advantage of a flight to quality trend in the sector,” he added.
Is this the end for River Island?
River Island will put its restructuring plan, in which it plans to close 33 of its 230 stores, to creditors in August.
The fate of another 70 shops depends on whether the retailer can reach rent-slashing agreements with landlords.
The direction of travel seems to be a slimming down of River Island’s portfolio to cut costs – which the UK government has recently pushed up – and align the business with the modern operating environment.
Palmer said that River Island needs “bold innovation and a clear strategy to adapt” if it wants to gain ground in an “unforgiving” market.
There are plenty on successful examples of this in recent years: Topshop is on its way back to the high street after years of online-only operations, while Abercrombie & Fitch has successfully repositioned itself with work wear and small collections of on-trend pieces.
Toys R Us, too, made a successful return to the UK high street via in-store concession stands, and after closing its doors in 2023, Cath Kidston opened a stores in London’s Westfield White City last October after being acquired by high street giant Next.