Debenhams boss to unveil radical refashioning of shops
By Ashley Armstrong, Retail Editor
The new boss of Debenhams will unveil plans this week to overhaul the retail chain’s 165 shops and cull some in-house brands in a bid to lure shoppers back to its stores.
Sergio Bucher, a former Inditex director who joined from Amazon’s fashion arm in October, is expected to announce a significant investment to boost the number of restaurants and beauty services, such as brow grooming and blow-dry bars, in Debenhams stores.
Debenhams move comes amid mounting evidence that consumers are allocating more free time and disposable income to eating out and holidays, at the expense of shopping at traditional retailers. The continuing rise of online shopping compounds the challenge for high street stores.
Debenhams chairman Ian Cheshire said at the World Retail Congress in Dubai earlier this month that retailers were having to adapt to millennial mobile-savvy shoppers: “The next generation is behaving differently, spending differently and interacting differently”, he said. “To them it is experience, not stuff that matters.”
Debenhams is expected to record a 3pc lift in half-year sales to £1.6bn but a 6pc slip in half-year profits to £88.2m as the department store chain struggles to wean itself off discounting. Over Easter, Debenhams has been offering 30pc off furniture and a much as 70pc on women’s occasionwear to boost sales.
The department store is expected to also review its Designers by Debenhams brands, which includes RJR by John Rocha, J by Jasper Conran and Star by Julien McDonald, amid City commentary that they no longer carry the same weight with shoppers.
Industry experts have claimed that while one-off department stores like Selfridges and Liberty remain destinations for tourists, regional department stores are haemorrhaging shoppers as the internet has meant that the everything-under-one-roof concept has fallen out of fashion.
In the US, department store chain Sears has recently warned that there was “substantial doubt” it could continue while Macy’s is shutting 100 of its shops.
Last year UK department store footfall slumped by 2pc, putting Debenhams’ expensive multi-storey shops under strain.
Analysts expect Mr Bucher to afford the revamp of Debenhams’ beauty halls by making some head office cost-savings, but sources say it is unlikely that the group will announce a raft of shop closures.
All but one of Debenhams 165 shops remains profitable and the company has long-leases that are an average of 20 years long, which Mr Bucher has privately admitted would be too expensive for the retailer to exit.
Instead, Debenhams is hoping to turn its shops into destinations by adding more services and restaurants. The company has already added a number of Patisserie Valerie, Costa and Joe and The Juice cafes to its stores, which has increased the amount of time shoppers spend in stores.
In addition Debenhams also plans to refine its beauty offer after hiring Nicky Kinnaird, founder of upmarket beauty chain Space NK, to its board. Debenhams already controls a third of the UK beauty market and generated £1m in online sales alone when it exclusively launched millennial favourite Kat von D’s make-up products in the UK.
Debenhams sources believe that Mr Bucher will prioritise online exclusive beauty launches, which help to win over younger make-up lovers.
The Swiss-Spanish boss will also lean on his experience at Amazon to boost Debenhams’ online business while ensuring that its stores don't become just click and collect counters for online orders. Around 25pc of click and collect visits lead to further purchases.
“Sergio Bucher has not taken the chief executive job to just tinker with the current strategy, in our view” said Investec analyst Kate Calvert. “With over a decade of profit erosion, something more radical is needed given the structural challenges Debenhams faces in the mid-market.”
Virtually all of Britain’s department store chains have undergone a series of boardroom reshuffles recently. John Lewis named Paula Nickolds as its first female managing director last year, taking over from company lifer Andy Street. Ms Nickolds earlier this month said the industry was undergoing “profound change”.
Meanwhile, House of Fraser is still without a chief executive after Nigel Oddy quit the Chinese-owned chain last November. House of Fraser is expected to record positive annual underlying profits next week despite a slump in its womenswear division.