House of Fraser takeover: A game of brand versus customer

Last week Mike Ashley and his flagship company Sports Direct bought House of Fraser after it went into administration. Ashley has been overt about his desire to own HoF, having unsuccessfully attempted to purchase it four years ago.

In interviews Ashley has given since the takeover, he has announced more details about how he intends to alter HoF’s strategy. Essentially the crux seems to be that he will be aiming to lead it more up-market, stating ‘In Harrods you get some exceptional services. What we would like to do is introduce a ‘concierge click and collect’ […] when you go online and say you want to collect goods in-store, you should be able to book a time, book a changing room and book a stylist. You get that kind of personal shopping in Harrods. There’s no reason why it couldn’t be rolled out nationally across House of Fraser.’

This all makes sense, by positioning the ailing brand in a different market, Ashley will draw in new customers and potentially make larger profits through the sale of designer and luxury items. It seems to be full steam ahead, as he’s already planning to introduce schemes such as the ‘concierge click and collect’, and by taking the highly successful Harrods as a business model example, he is focusing on the necessary changes to potentially lead HoF back to its former position as leader of the high street.

However Ashley also says something that feels off-kilter with the very high-end, luxury market he’s aiming at. The Sun reports that in an interview Ashley said that ‘larger House of Fraser stores […] could see whole floors turned over to Sports Direct or Flannels [a luxury fashion chain owned by Sports Direct]’. Flannels might seem at home in House of Fraser, already having a high-end target, but Sports Direct feels an odd choice, shoehorning a sportswear retailer into a premium department store.

At more2 we always maintain a customer-centric approach to the way we analyse and explore our retail clients’ data. The lesson that Mike Ashley may be choosing to ignore here is one – we believe – of paramount importance. Namely:

Use your customers to dictate your brand, not your brand to dictate your customers.

It is increasingly easy to lose sight of who your actual customers are. A brand that pushes their clothing towards 20 year old women might find after careful analysis of the database and customer behaviour, that the bulk of their customer base is actually 50 year old women. By then re-adjusting the marketing to easily reach and appeal to their actual target market, they have a far higher likelihood of achieving significant growth in size and profit.

If that same brand then said ‘but we like to think our customers are 20 year old women, we will continue plugging away at them’, they would be attempting to dictate their customers. Not only is this a tad egotistical, it’s also unerringly ineffective. In legend King Cnut sat on the beach and ordered the tide to go back; so it is here. By insisting your customers be who you want them to be, rather than who they actually are, you will (like King Cnut) end up soaking wet in your own delusions.

What House of Fraser should be looking to do, before announcing new schemes and immediately locking down its position within the retail market, is some fastidious groundwork. They should be looking at their current customer base and running analytical work to find out two things:

1. Who is actually their customer?
2. How are they marketing to that same customer?

By finding the customer, they can then begin to build a strategy around how to play to that exact person. They can adjust the way they market to them, and really tailor it to a specific person with a specific taste in the way that fellow high street mammoth Zara currently excels at.

It might do Ashley and the ailing HoF more good to calm down the whirling furore of excitement about this new move, and actually spend some crucial time working out who the current customer is, and how best to market to them in ways that will bring House of Fraser back to its position as a towering giant of the British High Street.