Arcadia’s recent entry into administration has sparked concerns about the company’s future and its impact on suppliers. Despite the administration filing being labeled a ‘light-touch’ approach, with the company’s stores and website continuing to trade under current management, the uncertainty surrounding Arcadia looms large as administrators from Deloitte search for potential buyers.

A major concern arising from the administration is the approximately £250 million worth of unpaid invoices. Nimbla, an invoice insurance business, estimates that small and medium-sized enterprises (SMEs) supplying Arcadia might face immediate non-payment of invoices, with the possibility of never recovering these sums in the long run. This situation sets off a chain reaction that puts numerous small businesses and jobs in the supply chain at risk. The collapse of Arcadia serves as a stark reminder of how defaults on trade credit can have a ripple effect, leading to further business failures.

While the challenges faced by Arcadia may have been amplified by the pandemic, they have deeper underlying causes. According to Jane Shepherdson, the former boss of Topshop during its most successful era, the company’s failure to invest and adapt to the significance of online retail has played a pivotal role. Shepherdson forecasts that an online retailer is the most likely candidate to acquire Arcadia, with the majority of its stores expected to close. She also expresses concerns regarding the supply chain, predicting that orders will likely be canceled in the near future.

Chloe Collins, a senior retail analyst at GlobalData, emphasizes the necessity of breaking up Arcadia’s brands to ensure their survival. She points out the brands’ loss of relevance over the years and their inability to innovate and invest, particularly in the digital realm. Collins believes that separate acquisitions offer the best opportunity for any of the brands to succeed, as this would allow each brand to receive the necessary attention and investment to stand out in the fiercely competitive UK market.

Potential buyers are predicted to show the most interest in Topshop and Topman. Despite losing some market share to more agile and youthful fashion retailers like Boohoo and Asos, these brands still hold potential and sentimental value for those who have grown up with them. Boohoo, in particular, is seen as a potential buyer due to the benefits it could derive from Topshop’s strong social media presence and influencer relationships. Miss Selfridge is also considered a good fit for Boohoo, although it would need to differentiate itself from the company’s other brands.

Frasers Group has expressed interest in acquiring some of Arcadia’s labels, but analysts suggest that Next and M&S would be suitable buyers for Dorothy Perkins and Burton. However, the decline in formalwear caused by the pandemic may make Burton less appealing. Wallis and Evans, on the other hand, may struggle to find a buyer due to the perception of a lack of uniqueness and inspiration.

In conclusion, the future of Arcadia remains uncertain as the search for buyers continues. The fashion industry anxiously awaits the outcome, fully aware of the potential impact on SMEs within the supply chain.

Useful links:
BBC: Arcadia collapse: Is your gift card still valid?
The Guardian: The inside story of Arcadia’s collapse