Department store group Debenhams has unveiled its turnaround strategy today that includes the possibility of up to 10 store closures and an increased investment in digital technology and in-store experience.
The “Debenhams Redesigned” plan was revealed as CEO Sergio Bucher, who joined the group from Amazon last year, reported its latest set of interim results which included a 3% increase in like-for-like sales. Group revenue was up 1.8% in the 26 weeks to 4 March at £1,351.1m, while operating profit was down 5.7% at £93.9m.
Bucher said the group had “no tail of loss makers” in its 176-strong store estate but it would consider closing up to 10 over the next five years should they not meet “required return thresholds”. It also plans to close one central warehouse and 10 smaller distributions centres and hopes to redeploy the circa 2,000 staff affected to customer-facing roles.
Its stores will be transformed at the business plans to put itself at the forefront of “Social Shopping” with more in-store experiences and events and a “step-changed” food and drink offer. It is also shaking up its brand offer.
Underperforming brands will be dropped and it will improve its offer in categories such as fashion accessories and lingerie, while in beauty in has revealed an ambition to create a £1bn business. It plans to improve its beauty services offer and wants to become the number one destination for premium beauty. The retailer already claims to be number one for premium make-up and number two for premium beauty overall.
Its in-house Designers @ Debenhams portfolio will be shaken up to make it more relevant and it will fundamentally change the way it develops brands by first building them for online customers and then editng in-store ranges based on feedback.
Digital will be at the centre of the group’s strategy and Bucher said he plans to remove the barriers between online and offline and will unify its business via mobile, which has driven much of the 14.6% growth in its online sales during the last half-year period (mobile sales were up 64%).
“In order to give us the capability to deliver our strategy, we intend to invest in upgrading our technology platform. We will unify our business via mobile, ‘mobile @everywhere’, to connect with our customers via the device they always have with them,” the company said.
The plan was created following extensive research carried out with 16,000 shoppers (both customers and non-customers), which highlighted the importance of “leisure” as part of the retail experience. More than two-thirds of the women and more than half of the men surveyed said leisure was more important or as important as convenience.
“Our customers are changing the way they shop and we are changing too. Shopping with Debenhams should be effortless, reliable and fun whichever channel our customers use. We will be a destination for “Social Shopping” with mobile the unifying platform for interacting with our customers,” said Bucher.
“If we deliver differentiated and distinctive brands, services and experiences both online and in stores, our customers will visit us more frequently and, having simplified our operations to make us more efficient, we will be able to serve them better and make better use of our resources,” he added.