At the start of the week it was confirmed that Mike Ashley's Frasers Group had sold the IP and trademarks of Manchester-based Missguided to Chinese giant Shein.
While the value of the deal is yet to be revealed, the owner of House of Fraser and Sports Direct did confirm that it would be keeping Missguided's real estate and employees which have now been integrated into its fashion division.
The deal came after Missguided was rescued out of administration by Frasers Group last year. It was bought for £20m in June 2022 after it racked up debts of over £80m.
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READ MORE: Missguided sold to Shein by Mike Ashley's Frasers Group
Now, an expert at a leading North West business school has detailed the reasons behind why Frasers Group made this deal, the risks involved and the impact it could have on Manchester.
Heiner Evanschitzky, professor and chair of marketing at Alliance Manchester Business School, said: "It is noteworthy that Shein only bought the IP and trademarks from Missguided, not the 'legacy' of physical stores and distribution. This is in-line with a raft of recent takeovers in the fashion industry where the focus was on the brand and not the physical infrastructure.
"There is an irony to this deal as it was Frasers Group that snapped-up online fashion brands like Missguided and I Saw It First just over a year ago in a bid to create a 'house of brands' to improve efficiency and make individual brands profitable. However, it's found that this can't be easily achieved without help from Shein.
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"We have to consider this takeover in the context of the current macro-economic climate with dampening consumer demand, high inflation and the cost-of-living crisis, all driving consolidation in the market. Beyond the Missguided sale, Frasers Group's move to team-up with one of the leading online fast-fashion retailers undoubtedly signals an emerging trend: the boosting of online presence with an established partner while also keeping a store presence in the physical world. The online partner brings a huge customer-base while the multichannel retailer ensures a presence on the High Street.
"There will be reputational risks for Frasers to consider, given that as Shein epitomises the cheap fast fashion business model, with all its associated downsides like labour conditions in factories, supply chain practices and environmental pollution. For the Greater Manchester region, it is important to ensure that strong online fashion retailers remain headquartered here.
"One risk is that investors load brands with debt and sell them on, or worse, they fall into administration, with the loss of jobs as a consequence. Further, if Manchester wants to keep on playing a leading role in the fashion industry, there needs to be a critical mass of brand with a strong presence in the region."