Strategy spotlight: Five ways Frasers Group aims to elevate its proposition

1. World-leading retail ecosystem 

Former head of elevation Michael Murray took the helm as chief executive of Frasers Group in May 2022.

He set out a clear vision for the business: “To provide consumers with access to the world’s best sports, premium and luxury brands by providing a world-leading retail ecosystem.” 

Frasers Group sees itself as a platform of brands with an efficient merged operating system, merchandising and supply chain operation underpinning the sports, luxury and premium businesses that sit on top of it. 

Its acquisition strategy, which saw it snap up retailers such as department store House of Fraser in August 2018, entertainment specialist Game in June 2019 and fashion retailer Jack Wills in August 2019, forms part of this evolving ecosystem.  

Murray said at the World Retail Congress (WRC) in April that Frasers Group seeks to acquire companies in which the infrastructure may be broken but the image of the business is still intact, as exemplified by Jack Wills.

He added that the group expects to make more acquisitions this year and there will “more than one, no more than 10” by the end of 2023.  

In 2022, Frasers Group had already acquired Studio Retail, Missguided, I Saw It First, Gieves & Hawkes and Amara.com, as well as building up stakes in other businesses.

The group is also now the fourth-largest investor in Asos, as well as owning a 3.9% stake in Hugo Boss.

Both Missguided and I Saw It First tap into a younger, digitally native market. Missguided was launched into selected Frasers stores in April 2023; it remains to be seen whether the brand will be expanded under other Frasers Group banners. 

The next step for Frasers Group is to develop a Frasers Plus membership programme, uniting its brands with a single loyalty points rewards scheme and buy-now-pay-later facility.

If it can do that successfully, it could significantly accelerate growth through greater loyalty and consumer insight. Frasers even plans to develop this over time as a white-label scheme to sell to other brands. 

2. Elevating its sports division 

The Frasers Group UK sports retail division represents 55% of group revenue. Sales jumped 34.1% to £2.6bn in its latest financial year. 

It has set itself an ambitious goal to transform the core Sports Direct business by developing new-generation stores to showcase the best products and improve customer experience. 

Frasers Group is building a growing number of flagship stores to support its strategy, having opened its third in Manchester in March 2023.  

The 50,000 sq ft store houses several high-profile brands, such as Nike and Vans, alongside new technologies and specialist sporting areas, including its newly launched running concept. 

Driving this change is former Nike veteran Ger Wright, who joined Frasers group as managing director of sports in June 2022.  

The appointment signaled the determination with which Frasers aims to propel its store proposition, already competing with a raft of JD Sports flagships in the UK. 

Yet as retailers seek to target the next generation – Gen Alpha – Frasers Group may well hold the trump card.  

Having acquired Game in 2019, it is now installing the brand in many of its Sports Direct stores as part of its multi-fascia strategy.  

Gen Alpha is already adept at navigating the metaverse through gaming platforms such as Fortnite and Minecraft. Should Frasers choose to enter Web3 – the next evolution of the internet including open-source and decentralised applications, AI and machine learning – it already has a receptive target audience. 

3. Flannels – attracting a younger demographic 

Honing its target audience appears to be a key strategy within the Flannels business, part of the retailer’s premium lifestyle division. 

Frasers Group rebranded its Flannels store on Oxford Street in March 2023 to Flannels X in a bid to appeal to Gen Z customers. 

It described the store as “an ever-evolving cultural playground of pop-ups, gigs, exhibitions and exclusive brand experiences”.  

In conjunction with the rebrand, Flannels X announced the launch of a “creative council” – a “next-gen advisory board filled with six of the most exciting voices in the industry”.

The six include founder and editor-in-chief of CircleZeroEight Elgar Johnson and fashion and celebrity stylist Leah Abbott. 

Flannels said: “Over the coming months, Flannels X will become their creative playground with a series of talks, multimedia exhibitions and exclusive pop-ups.” 

Under the main Flannels banner, the business is set to open new flagship stores in Leeds, Cardiff and Gateshead in 2023 as Frasers Group progresses its premium elevation strategy. 

Flannels’ beauty halls also showcase its intent to ensure stores become destinations for its customers.  

With US cosmetics giant Sephora having returned to the UK earlier this year, this revival of physical spaces within the beauty market only plays in Frasers Group’s favour. 

The halls host beauty changing rooms where customers can test and trial products alone in a closed space and its Beauty Bar is dedicated to services, with customers able to access a range of treatments. 

Experiential elements are something Frasers Group will surely build on as it continues to expand its physical presence across the Flannels brand. 

4. Resizing House of Fraser  

Murray told WRC that the acquisition of House of Fraser in 2018 had “nearly killed us as a business” because the store’s model was difficult to integrate.   

However, the acquisition of House of Fraser took the group into a new marketplace of beauty and premium brands, helping to enhance its Flannels business. 

Many House of Fraser stores operate on rolling leases, which allows Frasers Group to keep them going, but consequently the stores tend to lack investment. Murray accepts that this is not necessarily the “right brand image” in the medium to long term. 

House of Fraser shuttered its remaining central London store in January 2023, with Croydon now its only store in the capital.  

In total, 28 House of Fraser stores remain, from 59 on acquisition, proving how difficult the department store sector has been over recent years.

Even those stores still open could be considered damaging to the group’s brand image while they remain so severely underinvested. 

With recent store closures at John Lewis and the demise of Debenhams, Frasers Group perhaps appears wise in leaning into Flannels as a premium destination, rather than focusing on House of Fraser in a squeezed and challenging middle market. 

5. Unlocking international expansion 

Frasers Group’s international business comprises its Rest of the World and European retail divisions. 

The Rest of the World division includes sports stores in Malaysia trading under the Sports Direct fascia, shops in the US trading under Bob’s Stores and Eastern Mountain Sports, and its online businesses.   

Sales at the combined international divisions climbed 22.5% to £940.5m in 2021/22, driven by its European division where sales jumped 28.4% to £790.2m.  

The international divisions represent around 19.5% of overall sales and Frasers Group aims to grow them. 

At WRC, Murray discussed the group’s potential expansion into Europe, which will likely be via Sports Direct as it has “four or five key brands that are always strong – such as Nike, Puma, Under Armour – so you can get a nicely defined strategy for them”.  

Here the group will need to carefully enter into “white space where the brands see opportunity”. 

The Retail Week analyst team forecasts Frasers Group to reach sales of £6.9bn as it doubles down on its premium strategy and develops its brand ecosystem.