Headed for administration, what went wrong with Ted Baker?

Ted Baker has announced that its European retail and online arm is calling in administrators, putting nearly 1,000 jobs at risk. This is just the latest casualty in a brutal few years for British fashion retail. 

The brand, once a darling of the high street and known for its quirky prints and playful aesthetic, has suffered from a confluence of crises, highlighting the broader challenges facing the retail industry in the post-pandemic era.

To understand Ted Baker’s impending administration in the UK and Europe, we take a closer look at the broader trends that have reshaped the high street retail industry.

A patchy history

Not unlike the headline-grabbing WeWork, whose meteoric rise was suddenly overshadowed by allegations of misconduct against its founder, Ted Baker’s playful exterior couldn’t hide a series of similar internal issues. In 2019, the company’s founder Ray Kelvin stepped down following allegations of inappropriate behaviour. Kelvin strongly denied the accusations of “forced hugging”, but it became a scandal that tarnished the brand’s image. 

This was followed by a string of attempted rescues. Acquisitions by Authentic Brands Group (ABG) and the company’s own holding company, No Ordinary Designer Label (NODL), aimed to steady the ship. However, these efforts were hampered by significant financial difficulties. 

According to the last accounts filed at Companies House, NODL reported a pre-tax loss of £43 million in the year to January 2022, despite sales of nearly £320 million. In February, the company severed relationships with AARC, which was operating its UK and Europe retail stores and online ecommerce business, pointing towards rough waters for the brand.

John McNamara, chief strategy and transition officer for Authentic Brands Group, admitted, “The damage done during a period under AARC in which NODL built up a significant level of arrears was too much to overcome.” 

Pandemic pressures and consumer culture

The pandemic accelerated the decline of brick-and-mortar retail and pushed more consumers towards online shopping than ever before. In the thick of the pandemic lockdown, 2020 saw the highest number of retail administrations in the UK since the recession of 2008, with clothing and footwear brands at the forefront. 

While many brands pivoted their strategies to focus on ecommerce, Ted Baker seems to have faltered in this crucial adaptation. AARC’s significant debt further hindered Ted Baker’s ability to flourish in the exceptionally competitive world of online retail.

This COVID crisis also brought about a shift in workplace culture that has directly impacted brands like Ted Baker, whose offerings are heavily skewed towards a dressier aesthetic. 

The death of office fashion

The decline of office wear has dealt a significant blow to Ted Baker. The pandemic-induced shift to remote working has rendered the traditional office uniform – crisp suits, pencil skirts, and even pricey floral patterned shirts – largely obsolete. 

A recent report by Retail Week found that office wear sales have plummeted by 67% since the pandemic began. This shift contributed to the losses for brands like Ted Baker, whose playful and quirky designs were often ideal for a more relaxed office environment. 

Similarly, a recent survey by YouGov revealed that only 7% of British workers wear ‘business attire’ to work in their post-pandemic office life. The rise of athleisure wear has further blurred the lines between work and casual attire. Consumers prioritise comfort and versatility in their clothing choices, a trend that doesn’t necessarily align with Ted Baker’s offerings.

While the decline of office wear has created a void, it hasn’t been filled by a resurgence of interest in Ted Baker’s signature style – particularly not with Gen Z, whose global spending power is estimated to be around £450 billion, with an average of £8,894 per consumer.  

Young shoppers can now find trendy pieces with a similar aesthetic at a fraction of the price, eroding Ted Baker’s market share. How? Through canny use of resale platforms…

The rise of pre-loved fashion

The rise of online resale platforms like Vinted and Depop has provided a more affordable alternative for younger consumers seeking unique pieces. These platforms offer a treasure trove of pre-loved clothing, often at a fraction of the cost of new items. 

For brands such as Ted Baker needing to increase their market appeal to a new generation, it can be hard to compete with the affordability and perceived “uniqueness” of pre-loved clothing found on resale platforms.

Consumers have become more conscious of sustainability and ethical practices within the fashion industry. Fast fashion giants, long criticised for their environmental impact and exploitative labour practices, are facing growing scrutiny. 

Ted Baker, of course, may not be thought of in the same breath as Shein or ASOS. But, even for more prestigious brands, there’s been an increasing consumer movement away from buying new clothing. Particularly when it comes to collared shirts for workwear.

The future of Ted Baker: can the business adapt?

While the future of Ted Baker’s European operations stands on shaky ground, the brand does still have a chance to adapt. The company’s existing licensing deals (such as with Next) are unaffected, and more may be set up depending on how the administration process goes. Ted Baker also still has a presence in the US, Asia, and the Middle East. 

The current situation serves as a stark warning for the majority of remaining traditional retailers, and a notice to be proactive and to roll with the times before it is too late. The company may yet emerge from this administration process – but it can only do so by acknowledging the changing world around it and adapting accordingly.

To truly make its comeback and survive long-term, Ted Baker will need to adapt to recent shifts in style, culture, and sustainability. It may need to embrace online sales even further, develop a sustainable production process, and offer a unique value proposition to compete with the resale market.

The brand’s playful and quirky aesthetic still holds appeal. But, it needs to be presented in a way that resonates with a more conscious and cost-savvy consumer. Whether Ted Baker can successfully navigate this crisis and reinvent itself for a new era remains to be seen.