Your browser is no longer supported. For the best experience of this website, please upgrade to a newer version or another browser.

Your browser appears to have cookies disabled. For the best experience of this website, please enable cookies in your browser

We'll assume we have your consent to use cookies, for example so you won't need to log in each time you visit our site.
Learn more

Property Special Interview: Debenhams' Rob Hadfield on why fexibility is key

For Debenhams property director Rob Hadfield, the building blocks for retail growth are still very much made of bricks and mortar.

Flexibility and lateral thinking, according to Debenhams property director Rob Hadfield, are what it takes to build a sustainable store portfolio in this still fragile post-recession environment.

Hadfield has led the department store business’s property team for the past four years and spearheaded a store expansion plan, with 10 already opened under his leadership.

On August 21 it launched its 160th in the UK, a 48,000 sq ft store at the Coliseum Shopping Park (pictured far right), which is situated alongside the Cheshire Oaks outlet centre in Ellesmere Port, and another 12 are due to open in the next five years including an 82,000 sq ft store at the Southside shopping centre in Wandsworth, a 117,000 sq ft store at Westfield’s Bradford mall and a 60,000 sq ft store at Elliott’s Field Retail Park in Rugby, Warwickshire, all scheduled for autumn 2015.

Nevertheless Hadfield believes “there’s still some headroom”, and aims to up the store count to between 200 and 240 in the UK.

But after reporting a 24.5% drop in pre-tax profits to £85.2m for the first half of its financial year to March 1, and with like-for-like sales rises still subdued at 0.7% in the 14 weeks to June 7, the company’s store expansion will have to be prudent.

Hadfield says finding the right stores and securing the best deals remains difficult as new retail development is muted. While competition between retailers for space has not significantly increased, he suggests retailers need to work more closely with landlords to tease out potential new locations.

“It’s all about our relationships with key landlords and developers to try and unlock those opportunities,” he explains. “It’s a very different approach to five years ago, which was very much [developers saying] we’ll build a shopping centre and you come and anchor it. Now, we need to be clever and think outside the box in terms of how we structure deals to suit both parties.

“It’s about trying to think laterally. If you just look at it from a typical ‘this is what we will pay and this is what we expect to get’, it doesn’t work.”

One key element of this lateral thinking includes working more closely with local authorities - which Hadfield has had to do to secure a 93,000 sq ft store at the new Friars Walk shopping centre in Newport, south Wales. The scheme is being built by Queensberry Real Estate but is funded by the local council, and is due for completion towards the end of 2015.

Debenhams is also homing in more clearly on its priority locations, rather than getting distracted by more peripheral opportunities. These priorities include areas like Kingston-upon-Thames, Bluewater in Kent, Cribbs Causeway near Bristol, Bracknell in Berkshire, Camberley in Surrey and Watford.

To ensure it can access these hotly desired locations, flexibility is key. Debenhams’ upcoming stores range in size from just 40,000 sq ft out-of-town units - which will include those at North Lincolnshire Shopping Park in Scunthorpe and Borehamwood Shopping Park in Hertfordshire, both opening next month - up to the 117,000 sq ft anchor store at Westfield Bradford. But the largest store remains the 370,000 sq ft Oxford Street flagship (pictured above).

“We’ve been trying to explore all avenues, hence the different formats,” says Hadfield. All the stores have a core fashion offer while the Designers at Debenhams range is modified to suit the local customers and shopping environment.

Another area for flexibility is on the leases agreed. Hadfield explains Debenhams has started to be more adaptable over the length of lease it will sign.

“We will still take a relatively long lease in the right location but we will push for much more flexibility as it allows us to keep evolving our portfolio,” he says. “Historically we were signing flat 25-year leases with no break, now we are signing 10- to 15-year leases or 25-year leases with a break at 15.”

But one thing Hadfield is less flexible on is the idea of dedicated click-and-collect stores - as are being rolled out by rival House of Fraser. He would prefer to have the service integrated into a larger store: “We definitely see benefits from people coming to collect things in store.”

His focus is not just on expansion either. Debenhams is sitting on 1 million sq ft of retail space, which it has deemed “under-utilised”. Akin to the problems faced by the likes of Tesco, some of the more historic locations are now too large, as more and more shoppers go online and Debenhams has to become more multichannel focused. This means finding innovative ways to limit exposure to the excess space.

“We won’t do it at any cost,” Hadfield insists. “This is about optimising our stores, not compromising them, so we won’t give up key bits of space; we will give up space we feel will not impact us detrimentally.”

The options to do this are “quite broad” and include subletting or assigning space to other retailers, taking on more concessions and agreeing deals with landlords to give space back for conversion into residential or leisure uses like gyms or hotels.

Concessions have already been agreed with the likes of Costa Coffee and Sports Direct. Costa is being trialled in six sites - Haverfordwest, Derby, Exeter, Woking, Guildford and Slough - while Sports Direct is now in two stores: Harrow and Southsea. The latter deal came after Mike Ashley’s Sports Direct took an option on Debenhams’ shares in January that gives him the right to buy a 6.6% stake in the business.

The introduction of third-party restaurant operators is also being investigated, says Hadfield.

When asked if whole stores could close, he says: “If the store is not fit for purpose in a multichannel world then possibly.” But he quickly adds: “There are no current plans to close any. We only have five stores with lease expiries in the next five years, so it’s not a particularly proactive estate in terms of being able to manage it from that point of view.”

He also clarifies there are no plans to close any of those five with lease expiries coming up.

“We’ve always been quite proactive on new stores and now we are being quite proactive on the existing estate. We are very focused on making sure we have stores that are fit for purpose in the longer term.”

Debenhams is also looking to refurbish a number of stores to make them more appealing to its target 35- to 55-year-old shopper.

The Oxford Street flagship was the first to be spruced up. The internal redesign, which included making it more multichannel-focused with digital screens, click-and-collect and a revamped cosmetics offer, was completed before Christmas with the external façade, designed by Dalziel + Pow, completed in March. Elements of this concept are now being rolled out across the store portfolio with “up to 10 high-profile stores” set for a revamp next year, although Hadfield refuses to say which.

‘We will still take a relatively long lease but we will push for much more flexibility as it allows us to keep evolving our portfolio’

He is also in charge of company-owned stores in Ireland and Denmark, where Debenhams has seven and 11 shops respectively. “Denmark is a priority for expansion over Ireland,” he says. “In Denmark we could look to get two more, but that may lead to further expansion in the region in Scandinavia.” Again he will not indicate which countries could be targeted.

Despite this potential foray into new European territories, the UK remains the key hunting ground. “You never know when the opportunities arise,” Hadfield concludes, but the focus will be on securing stores that will be sustainable as shoppers’ needs become increasingly multichannel.

Have your say

You must sign in to make a comment

Please remember that the submission of any material is governed by our Terms and Conditions and by submitting material you confirm your agreement to these Terms and Conditions. Links may be included in your comments but HTML is not permitted.