Resolver blog – Did the pandemic cause the demise of the Arcadia Group?

I feel like we have been talking about the demise of the high street for longer than we would all care to remember. And it has become an all too familiar event to hear about a well known big brand closing its doors in recent years. 

So, it’s been a sad week for the retail industry with the collapse of brands that have been loved by many over decades. First, Arcadia Group, owner of TopShop, Burton, Miss Selfridge and Dorothy Perkins to name just a few, finally succumbed to its difficulties after much build-up and speculation in the weeks beforehand, calling in administrators right before the Christmas countdown. Just a day later Debenhams, more than six months after it too became insolvent, is likely to be wound up in the coming weeks or months, shutting its doors and unplugging its website for good.

I remember fondly shopping in a TopShop and Miss Selfridge, but that was more than a decade ago and it made me wonder why I stopped and whether the rot set in for the Arcadia Group well before the pandemic hit.

It’s clear that retailers – all industries in fact – can cite the impact of Covid-19 and (in the UK) two nationally enforced lockdowns as a driving force for dropping sales. However, is it more the symptom not the real cause of the distress?

The Arcadia Group conundrum

So what turned customers off Arcadia Group brands in particular? We took a look at our data to try and find out.

Much has been made this week of the view that the group was not nimble enough in its move to an online retail platform. With cheaper, faster competitors (with perhaps more established online platforms in shorter times) Arcadia Group was always going to face a challenge – particularly looking at our complaints data.

Over the past two years, Arcadia Group brands combined have seen complaints about their online offering convincingly outstrip their in-store counterparts virtually every month. An example pre-lockdown including complaints about online shopping totalling more than three times those of in-store almost exactly two years ago through December 2018. Looking more recently, the trend didn’t dissipate despite shops being one of the first sectors to be ‘released’ from lockdown. During July 2020, complaints were more than a thousand times higher for online shopping. The top two issues over the past two years complained about were refunds and returns and deliveries. 

That said Resolver is repeatedly clear that complaint volumes do not necessarily equate ‘poor performance’. But here’s where it got slightly puzzling. We’d have expected our users’ feedback of their complaints with Arcadia Group to have become more negative – but the opposite is true. Customer satisfaction rose steadily and in fact November 2020 saw its highest average in two years – as did our analysis of whether customers were likely to recommend. Meanwhile our ‘ease score’ – the effort it took for consumers to complain has also risen favourably post-lockdown compared to even pre-Covid (let alone pre-lockdown) levels. 

What I would say is that these scores were not stand-out, and in fact given my views on delighting customers, the fact that they clearly were not doing this before Covid-19 is more telling. They also support the sentiment that consumers have been more forgiving over the past months, given the pressures and difficulties we are all facing.

So all in all I’d say there’s nothing in both the volume, type and sentiment from consumers that would support the idea that the pandemic has caused the decline of Arcadia Group. It’s more likely to have accelerated its demise, with it not being nimble enough to meet changing consumer demands and behaviour – but this started well before Covid-19 hit. 

The plethora of competition and the pressure this created meant that the more online-savvy or online-only competitors were quicker to answer to the complications of increased demand, easy access to its stock and a slicker process for returning goods. Add to that ‘in the middle’ performance in complaints handling and Arcadia Group was struggling to be ‘above others’ in almost every measure of what I consider a good customer experience.

And finally – where do your consumer rights stand?

We wanted to be clear on where you stand if a company goes into administration. Take note – even if a retailer is still trading, your consumer rights under the law are not as clear cut as perhaps they should be.

If you buy something and it turns up faulty then you are likely to be able to still claim a refund under the Consumer Rights Act within 30 days of receiving the product. But be careful.

You will need to submit your complaint or request for a refund directly to the administrators. While Arcadia Group is still trading, and in the case of Debenhams this lasted for months, we have heard of companies going ‘under’ within a day of calling in the administrators – or sooner. In this case, you can still try and get your money back, but be aware you will likely be towards the back of the creditor queue. 

If you try and return something simply because you don’t like it or change your mind, bear in mind that in-store policies are not legal rights and could be suspended, while for online orders you may not be able to rely so heavily on the 14-day cancellation period, particularly if the retailer winds up before that period ends.

Our advice? If you want to return something to a company that is in the throes of insolvency, then at the same time try and use ‘charge back’ to get your credit or debit card company to reimburse you. This is not a legal right, rather than a goodwill agreement that card providers offer, but it can help. There is also of course the route of Section 75 if your product cost more than £100. 

You may also be wondering about vouchers or gift cards – take a look at our guide to assess your rights. Beyond this I’d advise against buying vouchers as gifts even if the retailer is still ‘in business on the face of it’ – as there’s every chance that may not be the case and therefore your recipient loses out. We’ve now heard that Arcadia Group has limited the use of gift vouchers currently in circulation to cover only 50% of a purchase – so you actually need to spend double the amount of the voucher to make sure you use the lot. In this sense, it’s worth considering buying things you might not be able to take back in the first place (e.g. fragrance, cosmetics – maybe underwear). 

And finally, my personal tip: if you’ve got a voucher for any of the retailers we’ve heard about this week, spend it quickly if you can as it could soon become worthless.