Michel Boutin, who purchased the brand from administrators Cor Cordis last week through his investment vehicle Black Bear Holdings, is gearing up to silence the waves of retail cynicism with a revamped retail strategy that includes a new range and international expansion.
Backed by South African private equity firm AO Capital, Rhodes & Beckett will be relaunched soon after Boutin is given the keys in October, while negotiations continue regarding the future of Herringbone.
Boutin says he plans to “clean up and reposition” Rhodes & Beckett’s portfolio, with plans to reduce exposure to the Australian market by opening in Southeast Asia, China and the Americas.
“The clear strategy is to clean up, reposition and open overseas,” he reveals to IRW, adding there are “interesting partners” in Indonesia and Singapore.
“This isn’t just looking, these are active partnerships that we will be seeking out, and we will be opening in the immediate term.”
Boutin is confident that Rhodes & Beckett’s premium boutique offer is poised for success in international markets, particularly in Asia where discretionary spending has skyrocketed in recent years.
It’s part of a broader move to reposition the company to focus on an essential portfolio of experience-centric stores, bolstered by exclusive international product partnerships and a renewed emphasis on womenswear, geared to attracting attention overseas.
“We’re going to return to where it should be positioned, which is a quality premium offering – luxury at a premium price,” Boutin says.
The brand will adopt a wardrobe-focused product philosophy that ranges collections, doubling down on its existing customers rather than going too far out of the way to attract a new type of clientele.
New market position
Womenswear, which was 30 per cent of the brand’s business before its collapse, will be a “number one” priority, and there will be less private label stock, much of which is still available at steeply marked down prices.
“Will we have premium shoes to offer that complement a collection when it’s released? Yes. Will they be branded Rhodes & Beckett? Absolutely not. We’re not going to pretend to be something we’re not,” Boutin says.
“We’ll bring in brands that are benchmarked above us, or at least equal to us, that will complement our offering to the customer.”
AO Capital will be active in providing support and expertise across the breadth of the business, which is now in the final stages of stock liquidation after its former majority owner, German-owned luxury business van Laack Holdings handed it over, alongside Herringbone, to Cordis in February.
Liquidation is expected to be completed in August, with the brand’s eight Myer concessions having recently closed, freeing up the new venture to test its new offering.
“I’ll be revamping and rejigging into a market space that no-one really sits in,” explains Boutin, who managed product for the brand under Van Laack’s ownership.
“You’ve got 50 million brands that sell suits, womenswear and corporate wear, but in that premium segment, I can’t really name that many and the ones that are there are fighting for volume and dropping price.”
The strategy signals the changing pace of the corporate wear market, as workforce casualisation drives a move away from bigger-ticket suit purchases, according to Bettina Kurnik, a senior industry analyst for Euromonitor International.
“As many corporate workplaces around Australia are permitting a more casual wardrobe, brands instead need to concentrate on the everyday essentials of a premium-casual wardrobe,” Kurnik says.
However, Kurnik warns that the womenswear market is “oversaturated” and that fierce competition would be a challenge for Rhodes & Beckett, especially as menswear continues to outperform womenswear on value growth year-on-year.
Boutin remains confident though, explaining that there’s not a spending issue plaguing the retail sector, and that the stress being faced by players in the apparel market boils down to “poor management of a retail business”.
“Retailers are being baited into expansion, they buy too much and open more stores to get rid of stock,” he said, adding that discounting has become a sickness born from poor buying and execution.
Avoiding the “landlord race”
Instead, Boutin plans to “streamline” Rhodes & Beckett’s local portfolio, as negotiations continue with landlords of the 15 remaining stores.
While it’s too early to say whether stores will be closed or which locations will be cut, Boutin intends to avoid the “landlord race” that has dragged retailers into unsustainable expansion.
“Everyone’s gotten into a rush and has been suckered in by landlords giving incentives to open the next one and the next one – they forgot that the most important part is making that customer feel better for walking in, that’s an emotional attachment,” he says. “I don’t even have the business yet, we haven’t even settled and we’re already being incentivised.”
Research released by Citi’s retail team last week revealed that some of Australia’s largest retailers have been opening stores faster than population growth in recent years, but many have failed to show “satisfactory incremental profit” from the extra space.
Citi analysts, led by Craig Woolford, argue that retailers expanding are likely to experience a 2.5 per cent increase in costs per square metre, once wage and rent growth are considered.
“If we analyse the past five years of store openings, we find most retailers do not achieve a satisfactory margin on new stores,” the report says.
Satisfactory returns would then require at least a 2.5 per cent increase in sales productivity, but Citi says that the likes of Woolies supermarkets, Target, Oroton, Myer, Harvey Norman and JB Hi-Fi didn’t make the cut.
According to Boutin, the swathe of retail collapses in the last 12 months have, in part, been driven by landlords baiting retailers into expansion they can’t control, explaining that with less than 30 million customers, the market “simply isn’t there” for more stores.