New ownership a hazard for brands?

NATIONAL: The recent sale of womenswear chain Witchery to a private equity firm raises the spectre of brand erosion as a result of ownership switches, industry commentators have warned.
The warning follows last month's announcement that Gresham Private Equity is to buy Witchery's 75 stores from the Lew family for an undisclosed sum.
The sale added the retailer to a growing list of private equity buyouts; with Myer leading the fray with its sale to Newbridge in June and The Queensland-based Colorado Group in the midst of negotiations with Affinity Equity Partners over its $430 million bid. South Australian department store chain Harris Scarfe is also rumoured to be looking for a similar arrangement.
Witchery declined to comment on either the sale or its appointment of incoming CEO Ian Nairn - the former head of UK brand Laura Ashley - however Gresham has confirmed it plans to dramatically expand the Witchery retail concept, with accessories-only stores also a possibility.
The move has been treated with caution by commentators, with Anouk Darling, general manager of Sydney branding consultancy Moon Design, warning the change of leadership should be handled with care.
Darling said she had been told Lew has been very "hands-on" in his approach to the business, having a hand in everything from design and range selection through to communications.
"If this is the case, the challenge will be to fill that gap with someone who has the same passion and insight, and the jurisdiction to make key decisions," Darling said.
Citigroup Investment Research disagreed, arguing that while private equity ownership tended to concentrate on financials, this did not necessarily lead to brand erosion.
"Ultimately it's about reliability of product and certainly improving the back end operations of a company can enhance that," Citigroup retail sector senior analyst Craig Woolford said.
Recent years have seen the departure of strong figureheads result in loss of design direction for a number of brands, including Oroton -which acquired Marcs but lost designer Marc Keighery, with mixed results - and surf brand Mambo, which some argue has struggled since its acquisition by Gazal Corporation.
Bur the Australian Centre for Retail Studies (ACRS) said that whether bought out by private equity hands or a larger fashion entity, transition periods were always a "period of vulnerability for any brand".
"However, as far as I'm aware Gresham's intention is to maintain the integrity of the brand as much as possible. Why fix something if it's not broken?" said ACRS executive director Lenore Harris.
"Often the addition of fresh talent and a new skill set can breathe new life into a brand," she added; a view epitomised by fashion retailer Sportsgirl's innovative approach to design innovation, through high profile collaborations.
Meanwhile, speculation is mounting the sale of Witchery, a brand modelled on Spanish success story Zara - to which Peter Lew has held the Australian license for several years - is part of a wider agenda.
If Lew were to bring Zara to Australia, the positioning of both brands could cause cannibalisation in the market, Darling confirmed.
"If I were Gresham I'd be concerned about how Zara could change the retail landscape and its effects on the future growth of Witchery."
Regardless of such speculation, Gresham faced a challenge in maintaining the integrity of the Witchery brand, she said.
"Brands that have longevity usually have a unique DNA that sits with their people and vision; quite often the time isn't taken by the new owners to truly understand what sits at the heart of the business."