Debenhams’ Christmas trading update yesterday brought a sobering end to the festive season on the high street.
A lacklustre sales performance in the run-up to and immediate aftermath of Christmas forced the retailer to issue a profit warning for its 2018 financial year.
Debenhams attributed its performance to the volatile and highly promotional trading environment in the UK. However, if macro conditions are to blame, why did Next – which operates in many of the same locations and has a similar customer profile to Debenhams – paint a different picture when it reported on Tuesday?
Next surprised everyone yesterday by revealing that full-price sales rose over Christmas, thanks in large part to the cold winter weather. And that was full-price sales specifically, so the rise cannot be attributed to Next’s decision to take part in Black Friday for the first time this year.
Although it remains cautious about wider trading conditions, in welcome news for other fashion retailers Next said it expects some of the headwinds it has been experiencing as a result of cost price inflation to ease this year.
Debenhams’ offer needs to be differentiated, more compelling and less promotion driven
In fairness, Debenhams has admitted that its problems do not all stem from the macro environment. Following its trading update, chief executive Sergio Bucher blamed a sluggish performance in its gifting department for tumbling sales, and said the department store needed to focus on more premium and innovative products next year.
But this is only the tip of the iceberg. Debenhams’ overall offer needs to be differentiated, more compelling and less promotion driven.
Last year, Bucher vowed to cut the number of discounts the department store runs, but he failed to put his money where his mouth is when trading got tough. Its stores are also in need of a facelift. Improved navigation and visual merchandising are a must to lure shoppers through the doors.
After missing a beat and neglecting its “heartland” product last year, Next has managed to sharpen up its act and get back on track. As 2018 is likely to be another challenging year for fashion retail, Debenhams needs to do the same, and fast.