A shift towards online business or supermarket chains or a result of depressed incomes? East of the M60 investigates.
The 1993 opening of Oldham’s branch of TJ Hughes was a Godsend for persons yearning for cheap clothes and footwear. It coincided nicely with the opening of the Spindles Shopping Centre and the refurbishment of its older sister. Oldham at the time was one of Greater Manchester’s most popular town centres. Set in the Town Square Shopping Centre’s former Presto store, it would later occupy a street level unit, formerly leased by Toy and Hobby.
Eighteen years on, the Oldham store remains part of the Town Square shopping centre, but the centre itself has lost a fair number of shops. Its younger neighbour has seen JJB Sports and The Disney Store quit Oldham. A few yards from TJ Hughes, HMV closed its doors, in spite of a tenure spanning nearly 30 years. TJ Hughes looks set to join HMV, leaving a huge gap in the town centre’s shopping facilities.
TJ Hughes is pretty much a Liverpudlian institution, along with its dearly departed rival Lewis’s. It too has had connections with Lewis’s, once being part owned by Owen Owen till the 1980s. In 1991, it took over the Lewis’s department store chain from Sears Group with TJ Hughes sold to its management. 1992 saw a share issue which led to their expansion. Most of its expansion took place in the North West of England, though further stores opened south of Altrincham with Coventry and Eastbourne sporting branches. By 2000, JJB Sports took over TJ Hughes, an arrangement which lasted till this year.
Most of TJ Hughes’ clientele would fall within the C2DE demographic; in other words, lower-middle class to working class households. People who are most likely to have been affected by static or falling incomes. People most likely to have been affected by rising fuel prices and VAT rates. Given the number of public sector job losses in the North of England, the Northern shopper’s reduced spending power will be further squeezed. Therefore, the downturn is not only affecting the likes of Habitat, but also discounters. This April saw Home Retail Group (owners of Argos and Homebase) report a 10% drop in profits. Recent unemployment figures saw a modest drop in the South East of England with rising figures in the West Midlands and the North of England.
18 years on from the Oldham store’s opening, TJ Hughes is no longer became the sole preserve of cheap clothing. TESCO and Sainsburys started getting in on the act. ASDA upped their game with its extension of the George label. Catering for the same market as TJ Hughes is Primark, whose cut price clothes became a national phenomenon. TJ Hughes lacked the deeper pockets of Associated British Foods and the main superstore chains.
Perhaps embracing the online shopping revolution may have favoured TJ Hughes. Since 2003, TJ Hughes has been owned by private equity groups, following its short lived acquisition by JJB Sports. From there on, it has been left behind by the likes of Primark and TK Maxx, and at a critical time when superstore chains were developing their online presence. In spite of this, it expanded with some recent acquisitions including former Woolworths units. Christmas 2005 saw the launch of an online shop, but was that too late?
For many people, it seemed to be the done thing to drive into the local supermarket for all worldly goods. Instead of paying parking fees in town centre locations, a trip to ASDA, TESCO or Sainsburys meant free parking. Supermarket clothing labels became a suitable alternative to cheaper designer clothes. Therefore, in some households, the trip to the local shopping centre was superfluous.
At the other end of the scale, some savvier shoppers turned to the Pound shops and other discounters like B&M Bargains and Wilkinson. Both chains are big players in the North West’s marketplace and are often seen in the same locations as TJ Hughes. Therefore, the competition lay in cheap crockery as well as clothing.
Yet, TJ Hughes’ profits had risen over the most part of the last eight years. Continued expansion and steady footfall would have guaranteed some security. The stores already have a degree of customer loyalty, not least shoppers in its home city who will mourn the loss of another shopping institution.
Private Equity and Credit Issues
The main issue leading to its administration is regarding the loss of cover which protects suppliers in the event of collapse, and a change of private equity investor. Therefore, £30 million was needed by Autumn 2010. This wasn’t forthcoming as the private equity partners Endless made a loss of £10 million. Hence TJ Hughes being taken over by its administrators Ernst and Young (Manchester) this summer. The administrators aim to sell the business as a going concern.
Should TJ Hughes disappear from our shopping centres, it will become the second North West based store chain to disappear by means of credit issues. The other was Music Zone, where their bankers refused a financing deal, leading to them entering administration.
A Bigger Picture?
Despite the platitudes and cajoling of the banks by the coalition government, banks are still refusing to lend to small and medium businesses. Is the same happening to regional players like TJ Hughes, as has happened with Music Zone? Though TJ Hughes has expanded beyond the North West, is its progress by organic means being hampered by the City? Hence Morrisons’ expansion in the south by means of acquiring Safeway?
Perhaps there is more to this than the availability of cheap Wranglers, such as its demographic’s lost spending power. Or a shift towards the convenience of the internet (hence ASOS’s rise) and being able to find a new top besides the King Edwards, which is a bigger picture that goes beyond a main regional player?
Yet, it is in these difficult times where Britain needs the likes of TJ Hughes on its high streets. There are still some shoppers who are unable to use the internet or have any interest in the internet. People who would like to see a human face yet pay affordable prices in a less over-facing environment than an anonymous supermarket, out of town and away from bus routes.
A section of these people have free bus passes yet command huge sway over consumer spending. They, along with working class and lower middle class shoppers would miss the likes of TJ Hughes. Not least for its value for money but also its convenience.
S.V., 24 July 2011.