Brazil’s Natura has started making cuts at The Body Shop. On Friday the Australian and Thai group that bought Selfridges announced losses of more than £100m.
Under the ownership of the American private equity giant Clayton, Dubilier & Rice it is hard to feel very optimistic about the fate of Morrisons in a grocery market that is getting tougher and tougher all the time. The list goes on and on.
There are foreign chains that do very well in Britain. Ikea, for example, or Zara. But buying a British chain always ends badly for whoever is foolish enough to attempt it.
There are three big problems.
First, it takes a lot of local knowledge to make a success of retailing. The likes of Mike Ashley, owner of the Sports Direct empire, or even Sir Philip Green, the former owner of the Arcadia empire, may not be very lovable. But there is no question that they know the high street, and what sells in each particular region. That kind of savvy is impossible to replicate.
Next, it takes deep roots in any country to make a success of retailing. The best retail businesses in the UK, such as Next, for example, or the B&Q owner Kingfisher, or Tesco, are based in this country, and while they may have operations abroad, usually with, to put it politely, very mixed results, their focus is mainly on this country.
Finally, management has to be close to the market. Retail is detail, as the old cliche has it, and that turns out to be very true. It is not possible to fine-tune a chain of shops from a headquarters several thousand miles away, and as much as companies may say they are delegating to local managers, we all know that there is always some interference. The team on the ground is never allowed any genuine autonomy.
Walgreen has already made one attempt to sell Boots, but it could not get the price it wanted. It is now reported to be looking at a potential demerger instead. For the sake of the company, that should happen as quickly as possible.
Neither its customers, its staff nor its shareholders are getting anything out of this increasingly unhappy marriage.
Foreign ownership of a British retail chain never works – and we hardly need any more examples to prove that point, nor can the high street survive many more failed foreign takeovers.
Boots is just the latest disastrous foreign takeover of a British retailer
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Brazil’s Natura has started making cuts at The Body Shop. On Friday the Australian and Thai group that bought Selfridges announced losses of more than £100m.
Under the ownership of the American private equity giant Clayton, Dubilier & Rice it is hard to feel very optimistic about the fate of Morrisons in a grocery market that is getting tougher and tougher all the time. The list goes on and on.
There are foreign chains that do very well in Britain. Ikea, for example, or Zara. But buying a British chain always ends badly for whoever is foolish enough to attempt it.
There are three big problems.
First, it takes a lot of local knowledge to make a success of retailing. The likes of Mike Ashley, owner of the Sports Direct empire, or even Sir Philip Green, the former owner of the Arcadia empire, may not be very lovable. But there is no question that they know the high street, and what sells in each particular region. That kind of savvy is impossible to replicate.
Next, it takes deep roots in any country to make a success of retailing. The best retail businesses in the UK, such as Next, for example, or the B&Q owner Kingfisher, or Tesco, are based in this country, and while they may have operations abroad, usually with, to put it politely, very mixed results, their focus is mainly on this country.
Finally, management has to be close to the market. Retail is detail, as the old cliche has it, and that turns out to be very true. It is not possible to fine-tune a chain of shops from a headquarters several thousand miles away, and as much as companies may say they are delegating to local managers, we all know that there is always some interference. The team on the ground is never allowed any genuine autonomy.
Walgreen has already made one attempt to sell Boots, but it could not get the price it wanted. It is now reported to be looking at a potential demerger instead. For the sake of the company, that should happen as quickly as possible.
Neither its customers, its staff nor its shareholders are getting anything out of this increasingly unhappy marriage.
Foreign ownership of a British retail chain never works – and we hardly need any more examples to prove that point, nor can the high street survive many more failed foreign takeovers.
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