Prestat - a fancy British chocolatier - has closed its historic Piccadilly store after more than a century of operation. This closure forms part of Prestat’s insolvent status - the company’s inability to pay its debts.

What the company is therefore doing is selling its brand to another luxury chocolate maker (L'Artisan Du Chocolat) for a nominal amount. A company’s brand is distinct to the company itself, representing the name, logo, reputation, customer goodwill, etc. This sale under insolvency is known as a prepack administration sale, as the company’s brand is being immediately sold to another company as a package.

Prestat’s collapse, despite its longstanding reputation (being the chocolatier to inspire Roald Dahl), has collapsed under the same mounting pressures afflicting premium food retailers in the UK. Surging commodity costs (record cocoa prices), weak UK economic growth, and poor market positioning had wiped out Prestat’s already thin margins. Instead, Prestat will now shift to an online-only model, reflecting the switch by heritage brands to digital operations with lower overhead costs. As such, 100 employees will be affected, with it being unclear whether these employees will be shifted to L'Artisan Du Chocolat or out of a job entirely.

What does this mean for retail, and more specifically luxury retail, operators?

• There is an ever-increasing pressure on premium brands to justify rising high-street rent prices when compared to an online distribution model

• Heritage brands face increased vulnerability trying to justify premium pricing amidst weak consumer confidence and a fall in discretionary incomes

• Foreign-owned UK retail businesses will have to re-assess operating in an underperforming market when better options may present internationally