- Brexit and just in time business model contributed to demise
- Cost of living crisis also major impact
Made.com has announced today that it has gone into administration. The brand and website have been snapped up by Next but that will not save the jobs of the 500 current employees. Here Dr Gordon Fletcher, retail expert from the University of Salford Business School looks at what went wrong and what might happen next.
Dr Fletcher said: “The story of Made.com is brief. Commencing in 2010 its aspiration was to become the online IKEA. Finding particular favour with millennials and Gen-Z entering the world of work with newfound disposal incomes.
“Made.com represented a particular preference for a retro-aesthetic that worked for these consumers who did not want to invest in mid-century antiques and were working with the confined space of rented flats.
“The brand really took off during the pandemic as more households shifted to flexible and home working.
“Currently the explanation for Made.com’s demise is the downturn after the pandemic. There is certainly evidence that many online brands are needing to urgently realign in the wake of the pandemic – and evidence that the wholesale move to online retail was only a temporary experience. However, with behind-the-scenes observations that the company was a “car crash” points to a wider set of issues.
“Using a just-in-time production model and working with over 200 suppliers in the supply chain brings many challenges for even the largest organisations. Even last year, with increased demand the company was warning that Brexit was making its supply chain more fragile. One of the major responses at this time was to increase its warehousing footprint and as a result its operating costs. Then the cost-of-living crisis has emerged in the wake of the pandemic. Millennials and Gen-Z consumers, like so many others, are tightening their belts too. For those that still have disposal incomes they are thinking about new post-pandemic experiences and travelling rather than feathering their rented nests.
“Whether customers will receive refunds is still up in the air. Other assets will be sold off by the administrators, but this will not be a last-minute rescue by Frasers Group – breaking a pattern that has become an almost expected outcome with recent retail failures.”