House of Fraser : the new adventurer of internationalization

Launched in 1849 under the reign of Queen Victoria, House of Fraser has become the biggest department store in the United Kingdom and Northern Ireland with about 60 points of sale in 2015 set up in this area. This multichannel company has only one desire which is to create a global fashion business thanks to their luxury products such as famous ready-to-wear, accessories, shoes or fragrances. For instance, it commercializes famous brands:"Prada, Hermès, and Chanel". The company has a strong marketing, purchasing, merchandising and advertising strategy as well. It is a strong professional structure totally dedicated to its customers and it has been awarded “retailer of the year”, in 2014. Plus, the company is recognized by the most famous retail magazine in the fashion industry called Drapers.

 House of Fraser's doorway, in Nanjing.

On 23^rd April 2015, the official announcement of internationalization of House of Fraser was unveiled, in London, at the occasion of their first historical conference called “Business Engagement Event”. In fact, the company is about to open three new department stores in China: one in Nanjing, another in Chongqing and the last one in Xuzhou with an average of 200,000 square feet. The openings are foreseen for 2016.  Nowadays, it is really important to be focused on Chinese demand which is linked directly to their buying power capacity. By 2018, Asia is set to become the world’s largest fashion area, the economists say.

What’s more, it is primordial to “create intangible value”, “deliver business clarity” and that “brand with history has a head start” according to remarks made by House of Fraser's brand director, Tony Holday, during the conference. In order to succeed in launching new stores abroad the company has increased its total marketing spending, as well as its brand partnerships. The employees of House of Fraser have analysed the supply chain in China and they have planned a coherent logistic strategy with this new market. In addition, the website has been redesigned and House of Fraser has started to provide services such as call centers and free WiFi in-store.  Also, the development of e-commerce is truly important to increase the turnover which was up to £784.9 million, in January 2015. E-commerce is a brand new way of commercialization which has developed with the technological revolution over the last ten years. This process allows consumers to order online goods and services.  For instance, the orders of consumers online, in China, have rocketed from ¥128.2, in 2008, to ¥2,789.8 , in 2014!

Besides, the better choice for the company was not to select cities such as Hong Kong or Beijing because there already is an intense competition so that the potential turnover would have been too low. This decision was encouraged by Yuan Yafei, Sanpower's CEO which bought House of Fraser in April 2014. A distribution center has been set up in Nanjing; however, even if it represents a big step in the process of internationalization of House of Fraser the headquarters will remain at Baker Street, in London. Also, other companies tried to negotiate with the head office of the company in order to acquire it, such as Les Galleries Lafayette which is the equivalent of its “Anglo-Saxon fellow”, in France. But, finally, they stopped the negotiations, in January 2014, because both companies couldn’t find an agreement at all.

House of Fraser is already exporting its business in Middle East and it is setting up a store just next to Abu Dhabi in Yas Island, more precisely. Those launches are really challenging for the company which is looking for an exceptional return on investment, as soon as possible. Moreover, the headquarters plan to open a new store in Australia, by 2016, too. If we focus ourselves on financial statements it is obvious that the company will earn a great amount of money but we will note the real results within one or two years at the earliest.

Charlotte. L