Aquascutum scarf, showing its club check
Image via Wikipedia
Aquascutum, venerable maker of stylish raincoats for over 150 years, is in administration. As this is the second time in almost as many years that it is in stormy financial waters, it may be said that they are better at shielding you from water than they are at protecting themselves. At time of typing, YGM, the Hong Kong based owners of Aquascutum’s Asian rights are exploring the possibility of buying the entire brand.
Sadly, one suspects this may result in downward pressure on quality in order to restore margins, and a general exploitation of the brand. As an owner of Aquascutum raincoats and overcoats, I would personally regret such an outcome. But are there any other possibilities? And why has Aquascutum been unable to be profitable?
The latter issue is fairly easy to understand. Aquascutum has always been an mid-to-upper market player, heavily focused on the rainwear segment. That is the model that kept in business for so many decades but it is no longer sustainable for two very simple reasons; fewer men wear raincoats regularly and the middle-market in general has been squeezed in favour of a polarisation of sales towards either niche high-end luxury brands or bargain basement low-cost retailers. This reflects the current development path of our societies in general. Aquascutum has been stuck in a no-man’s land.
It has tried various strategies to escape this trap, but they have been highly contradictory and poorly followed through. For instance, it spent a lot of money developing non-rainwear lines, but never marketed them aggressively. And it attempted to position itself as a luxury brand while having more discount outlets in its portfolio than it has proper shops, not to mention the less-than-stellar concessions it has in too many middling department stores.
It has never been able to decide what it really wants to be, diluting the brand’s identify in the eyes of consumers across the world.
A rescue strategy will have to make some fundamental decisions: do they want to take Aquascutum upmarket? Or do they want to make it a mass market brand?
In my opinion, it would find life as a mass market brand impossible. Theoretically, production could be aggressively offshored, more lines added and an attempt made to milk any latent value in the brand to the general consumer by having a small halo line of top quality products above a large range of far less impressive merchandise. This is the Burberry school of brand development. It has worked for them (more or less), but it is expensive and risky, especially with Burberry already a large presence in the same marketplace. I fear Aquascutum has simply left it too late to compete with them in this arena.
It would be better served by shrinking and focusing on a pure luxury identity. Keep production in England, focus on rainwear/outerwear/related items, drastically reduce the number of discount outlets & department store concessions, and ensure the one or two full retail locations that remain exude quality, brand pedigree and personalised service. Turnover would be a lot lower, but margins could be restored and the brand might have a fighting chance. Aquascutum now needs to be aspirational luxury to survive.
Are there any other options? Has Aquascutum simply left it too late? And is there life left in the middle class, mid-market segment generally?
I like Aquascutum, but the coats are no more effective at keeping you dry than any cheap coat from a mass-market retailer. Likewise, the coats are not “luxury” per se, given the workmanlike nature of their products and the cheap materials. Poly-cotton is poly-cotton, regardless of the name on the tag. Their best option is to copy Barbour or Albam and attempt to sell themselves as (curiously expensive) utilitarian British heritage fashion. You mention the outlets being a problem, but I think the greater popularity of the outlets are an indication of where Aquascutum needs to position itself. Nobody wants to pay £500 for a sheet of poly-cotton with a few buttons sewn on, but £250 is more reasonable. Can they improve their manufacturing productivity to the point where a coat can sell for £200 and still be profitable? The material should cost less than £50 per coat, and the construction is simple, so I believe they could. Adding a few additional colours would also help.
Unfortunately, or fortunately, in fashion designs can not be copyrighted, so Aqua is trading on brand-value alone. Instead of trading on “luxury”, which is essentially a signalling game that they can’t win, they need to focus on stylish utility. If I owned a brand, I’d dream of it being the Aston Martin of brands; but for generating profit without compromising quality, BMW is a better model.
This is a great TED talk on the issue: Johanna Blakely: Lessons from fashion’s free culture. http://www.youtube.com/watch?v=zL2FOrx41N0
One of the issues mentioned is the need for “fashionistas” to stay ahead of the masses. So, once the basic design for a raincoat has been copied and made available cheaply, the upmarket customer does not want to be seen wearing one—lest they be mistaken for a prole. The problem with heritage brands is that they don’t innovate. Their products are indistinguishable from the cheaper copies. Since luxury is largely about signalling….
Great input, thank you! I’ll watch the TED talk shortly.
I fully agree that the luxury moniker is largely about markerting a brand (and therefore about signalling). That was the context for my thinking that Aquascutum would be well served by chasing that niche. It can’t go down the fashion road because, as you say, it’s products change much more incrementally. It can’t go down the cheap mass market route, because someone else will always be able to make raincoats cheaper and they’ll get crushed by the better-funded competition. What’s left? Deliberately deciding to chase a dream, I’d suggest. Whether it’s a Beemer dream or an Aston dream doesn’t really matter because currently Aquascutum is more like Rover, who got stuck trying to be both Ford and BMW and in the end appealed to neither market.
I do like your concept of them chasing the Barbour image, esp. the “curiously expensive” line.