The top British Online retailer ASOS, has bought the British multinational retailer Topshop for £330 million, which translates to US$453,304,170. The ripple effect of this deal poses some major potential ramifications for Topshop employees due to the fact that ASOS is purely an online retail shop and the deal does not include the purchase of TopShop’s 70 brick-and-mortar stores.
The deal puts approximately 2,500 jobs in the United Kingdom at risk as 50 stores have permanently closed their doors after the Arcadia group, which owns Topshop as well as Topman, Miss Selfridge, Dorothy Perkins, Evans and Burton, entered into what is known as “administration” in the world of British business.
Real Business Rescue, a resource for British small-businesses as well as the laymen, defines the practice as follows, “Going into administration effectively means your company is being taken under the management of an administrator – who must be a licensed insolvency practitioner (IP). Once a company enters administration, it is given protection from creditors who may be threatening to begin legal action to recover outstanding debts.”
As The Gaurdian reported in November, the Arcadia Group had entered into this phase of Administration in which they were forced to re-evauluate their business practices and became susceptible to buyouts.
Arcadia CEO, Ian Grabiner, spoke of the development and pushed the blame for the group’s poor showing on the COVID-19 pandemic, saying “This is an incredibly sad day for all of our colleagues as well as our suppliers and our many other stakeholders.
“The impact of the Covid-19 pandemic, including the forced closure of our stores for prolonged periods, has severely impacted on trading across all of our brands. Throughout this immensely challenging time, our priority has been to protect jobs and preserve the financial stability of the group in the hope that we could ride out the pandemic and come out fighting on the other side. Ultimately, however, in the face of the most difficult trading conditions we have ever experienced, the obstacles we encountered were far too severe.”
The purchase of Topshop by ASOS shows a shift in consumer-culture that could be due to the COVID-19 pandemic as much as it could be due to the major role that the internet plays in day-to-day life. The Gaurdian has been tracking this story since it broke and described the cultural effect of the buyout as follows:
“The shift online of Topshop, Topman and Miss Selfridge – some of the British high street’s most iconic brands – represents a key change for a fashion industry that was conceived around clothes shopping as a leisure pursuit and a social activity. In their pomp, these shops were de facto public spaces in which teenagers and twentysomethings spent their Saturday afternoons. Their hectic changing rooms, in which new outfits were planned to a heady accompaniment of loud pop music and hormonal overexcitement, were a crucial warm-up to any Saturday night.
“The Asos deal calls last orders on a whole culture of clothes shopping that included changing rooms and coffee shops, a Saturday ritual which ended each week with shopping bags carried home like trophies on the top deck of a bus. Increasingly, buying clothes is becoming an activity to be done on a laptop or a phone, and this deal hastens a generational shift which was already in motion.”The Guardian
The UK based news outlet brings up a good point that can be applied across the Atlantic as well. as a consumer, this buyout will significantly impact the way people shop and will eliminate the social aspect of shopping.
However, is that an oncoming cultural shift that is due to the purchases of brick-and-mortar retail outlets by online retailers and the COVID-19 pandemic, or was this a change that was long in the making? Regardless of what our thoughts are on the cause of such a buyout, the facts of the matter are that this change is happening and the retail landscape will be forever changed.