The Dutch mid- premium range brand filed for bankruptcy in Netherlands in Monday due to “a chain of events that accelerated severe cash flow issues” according to them.
Let's take a look together into some of the marketing decision and commercial and operational decisions the company made to grow and what caused this situation.
Below is the case study timeline on actions Scotch & Soda took since 2008 which had big impact on its business operations.
Based on this timeline and statistics we can notice that Scotch & Soda started to have issues when they started outsourcing and partnering up with other companies to take over control over design, production and distribution in hope to reduce costs on their side.
They stated that they started struggling with finances in July 2022 due to impacts business took because of the Covid epidemic and Ukraine war.
At that moment they they licensed StitchD to take over underwear and sock design, production and distribution, Bos Group for shoe design, production and distribution and then 3-6 month later started looking into the possibilities to sell.
This case study also reflect back on the points discussed in the post on how to do marketing during financially challenging times ( https://contact00158.wixsite.com/consulting/post/fashion-marketing-during-recession ), because the mid-range brands tend to be impacted the most as their customer base is mainly with a middle class income.
Another important point to know is that in the Netherlands, the government has a right to get involved and temporarily take over some parts of your business in the event you run into financial trouble if they believe some things were done executed well. So could be that this also played a part in this decision to file for bankruptcy.
Nevertheless, Scotch & Soda gave a statement:
“Despite this situation, all efforts are aimed at enabling the company to continue its activities in the Netherlands and in its Dutch stores, while the bankruptcy trustee will look for a permanent solution that benefits all stakeholders.”
Scotch & Soda's 32 stores in 21 cities in the Netherlands will remain open “as usual for the foreseeable future”.
The company added that the bankruptcy does not affect its entities outside of the Netherlands. “These are not bankrupt,” they said.
Do you have any opinion on the unraveling of this chain of events? What are the precautionary measures which could have been taken into account or what is the best way to handle this situation in its current state- post in the comments below.
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