Frasers Group has been making a lot of moves in the luxury fashion space of late – the acquisition of Matches, Coggles and an attempted Mulberry takeover to name a few – and many are curious as to what the grand plan for its Flannels brand really is.
The Mike Ashley-controlled business raised eyebrows when it snapped up a majority share in Flannels back in 2012 when it was a six store retailer, before buying the entire business five years later. Many baulked at the prospect of the Sports Direct owner taking on luxury fashion.
Since then, it has expanded the business into the largest multi-brand premium fashion retailer in the UK as it vies to “extend luxury to every corner of the country”.
Flannels, which accounts for the bulk of Frasers Group’s £1.2bn premium lifestyle sales, has found its niche in an overcrowded market by targeting the regional consumer, explains the group’s managing director of premium and luxury David Epstein.
He says the retailer, which he describes as “the jewel in the crown for Frasers”, has been “completely changing the state of luxury retail for the regions” over the last seven years.
This has been driven by a “significant investment” in upgrading and expanding the Flannels store network of 70 plus “boutique” 20,000 sq ft stores and handful of 50,000 plus sq ft flagships, as well as forging new exclusive partnerships with some of the most coveted upmarket brands.
Fraser’s big bet on luxury comes as the wider market has struggled in the last couple of years with high inflation resulting in plummeting sales.
However, Epstein shakes off concerns about the current downward trend: “Everything we build is medium to long term. We have confidence those brands are going to come back stronger.”
Re-imagining luxury
The retailer’s most recent investment is the multi-million pound transformation of the former Debenhams store in Leeds to open its latest – and sixth – flagship store. It’s one of the 12 units the group has taken over from the department store chain since it’s collapse.
The site, which spans a whopping six floors and 70,000 sq ft, is described as one of its “biggest and boldest” store to date and it’s clear to see why.
Epstein says its stores are not “a copy and paste” job, explaining the team have sought to “move the dial” with every flagship and think, “how can we be even more disruptive?”.
In the case of the Leeds store, which will soon be home to a gym and café, several activations are located on every level as part of exclusive tie-ups with big brands such as Prada, Off-White and Valentino.
“All these activations keep the store fresh…making it like a living store that isn’t the same every month,” says Epstein.
The ground floor features a concession from pre-loved specialist Sellier, an accessories department, and its new Flannels Beauty concept.
“Everything we do within beauty has to be through the lens of luxury fashion. Every time I’m thinking: ‘how does our luxury fashion consumer want to shop and what brand mix do they want?’
“When we were building the strategy for Flannels Beauty, we had to think ‘what’s going to bring that digital beauty customer back into the physical space?’
He explains that most of the brands are “widely accessible” online, so the focus has been on “giving [customers] that immersive experience to understand the brand”.
An unfamiliar sight in many stores is that more space is given to menswear, with womenswear and women’s shoes sitting on one floor, while mens occupies two.
“With the breadth of brands that we’re working with on streetwear and the premium brands, we felt it made sense to have two floors for men,” says Epstein.
Introducing new concepts
Flannels’ strategy of how to “move the dial” with each flagship has allowed the retailer to trial new design features, categories and services as it opens store after store.
“What’s been developed out of the flagship strategy is beauty, homewares, kidswear. We’ve been developing tailoring, [personal shopping], active and then the other components, where we bring in a food and beverage partner and the wellness gym partner.”
The lower ground floor of the Leeds flagship is dedicated to Flannels’ new activewear department that houses collections from the likes of On and Lululemon, its Sneakerboy concept, and a gym, set to open Spring next year.
“Flannels active…is a real growth category for us. It’s understanding that regional shopper. For them wellness, keeping fit and going to the gym is such a key part of their life.”
There is also lingerie department in store.
Epstein says: “The easiest thing to do is say, ‘don’t put it in’. I said, ‘let’s bring it in, develop it and understand how our consumer wants to shop and what brands’.”
He points out that was how the retailer’s beauty offer started. “Beauty started with fragrance and we’ve now got seven beauty halls.”
Catering to regional customers
While large luxury department stores such as Selfridges and Harvey Nichols have flocked to the big cities, Flannels has chosen to target the regional consumer.
“They have a ‘wear your wealth’ culture…they’ll buy that statement Bottega handbag, they’ll buy those Gucci eyewear sunglasses or a Burberry trench coat. They’ll wear it with Anine Bing or Ganni so they’re also cross-dressing different types of brands,” Epstein notes.
The support Flannels has received from the big luxury brands including conglomerates LVMH and Kering is something Epstein is proud of.
“We’ve only been able to open the number of stores we have because the brands believe in what we’re doing, and they understand the importance of that regional consumer outside of London.
“Too often, brands always felt the UK was London, but there’s a whole country outside of [the capital] and we’ve obsessed over that regional consumer.”
“No one else in this industry is opening up a flagship on this scale.
Epstein says this expansion is possible due to the support of major luxury brands, including Gucci, Prada, Miu Miu, Balenciaga, Valentino, and Bottega Veneta.
He points out that Mulberry are still a proud brand partner, despite the recent abandoned takeover attempt, that saw the British brand’s largest shareholder refuse to sell to Frasers.
When making its bid, the Mike Ashley-owned brand had criticised the “governance of Mulberry, the apparent lack of a commercial plan against a backdrop of increasing market headwinds, and critically, the financial position in which Mulberry currently finds itself”. It also said it wanted to avoid “another Debenhams situation”.
Epstein says: “I can’t really comment. They are a brand partner. They’re very supportive of this strategy.”
“Similar to how the luxury brands work with Flannels to engage those young regional consumers, Mulberry is no different.”
The Mulberry battle is not the only controversy Frasers has been embroiled in within the luxury world.
The group made headlines earlier this year when it put Matches into administration weeks after buying it.
It was a similar story at Sunderland-based indie Aphrodite, which Frasers closed earlier this year just two months after buying. These moves sparked concerns that the group was looking to take its competitors out of the market.
However, its latest acquisition of Coggles is unlikely to meet the same fate with Epstein confirming it will “continue as a digital platform with a separate team in Manchester”.
The group has taken over the luxury platform’s stand-alone store in Alderley Edge and transformed it into a new Flannels boutique, which opened on 31 October.
Adapting to the market
Flannels has been in expansion mode for the last several years in its quest to “be the number one luxury destination”, says Epstein.
However, the group is nearing the end of its store rollout plans for Flannels, he says, and will soon enter its next phase of growth.
“We’ve invested heavily over the six years in building the network…there’s another five regional stores opening over the next 12 months,” he says, quickly caveating “unless other opportunities come our way”.
“The existing stores got a refurbishment during Covid, so the previous concept stores all got brought up to the same standard. There’s one or two that are still outstanding, but they’re subject to being relocated.”
Flannels has deliberately steered clear of the capital and Epstein refers to its Flannels X flagship on London’s Oxford Street as “more of a marketing vehicle“.
“We do events in there and brands see huge value. It’s also become a very important platform and creates a huge halo effect across all our regional stores.
“Whatever event we do in London; you’ll then see a version of that in all the flagships and mini version in the regional stores.”
Epstein notes the next phase of growth for Flannels will be “a very different mentality”.
“It’s going be sustainable growth…you won’t see another 20,30 store openings,” he adds.
“We’ve got to adapt the industry. You’ll see categories [in the stores] that weren’t in the business two to three years ago,” he says, referencing the new activewear assortment in store and its Flannels Home collection that launched last November.
He highlights the Sellier concession that became a permanent partnership across several of its stores in June following the rising demand for pre-loved goods.
“We’ve got different trends in the industry, and we’ve got to work out how does Flannels adapt whilst keeping the luxury business. We will not deviate away from these key luxury brands.”
However, given the current weakened luxury market, Epstein admits that in the shorter term, “that’s also why we have to adapt to bring new trends in and new brands in but we will never move away from those anchor luxury brands”.
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