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Drapers Comment: For Debenhams, a change is as good as a rest

You have to feel for Michael Sharp. As Black Friday and the all-important Christmas trading period loom, he is faced with calls for his head to roll over Debenhams’ weak trading.

Debenhams chief executive Michael Sharp

Debenhams chief executive Michael Sharp

And it’s hard to argue with the shareholders making those calls: Sharp doesn’t seem to get the extent to which Debenhams’ discounting culture has damaged its image – perhaps irreparably. It certainly seems like time for a change of guard.

Sharp inherited a number of legacy issues when he took over from Rob Templeman as chief executive in 2011. It is difficult to remember a time when Debenhams wasn’t an aggressive discounter. In the years after investors CVC, Merril Lynch and TPG took the company private in 2003, it began introducing more and more small-scale promotions alongside its traditional Spectaculars and Blue Cross events, eroding its margins and rotting the brand. It has also suffered from the market’s embrace of deeper and longer discounting to stimulate sales following the credit crunch in 2008.

A profit warning in March 2013 was followed by another at the end of that year after Debenhams’ promotions failed to attract the volume of shoppers it was expecting in the run-up to Christmas. Sharp was forced to admit the increased intensity of its promotional activity in the run-up to Christmas had “caused confusion” among customers. He has since steered the retailer away from running those smaller promotions, but he maintains that the bigger Sale events are “part of Debenhams’ DNA” and customers like them.

However, the first few months of 2014 proved equally challenging. In April of that year, Sharp outlined four strategic moves designed to put the brakes on the decline. One of these was “delivering a compelling customer proposition”, which included a refocusing of its promotional strategy. Sharp warned change would not be brought about in one season.

Last week I wandered into the refurbished Oxford Street flagship and bought a top from Savannah Miller’s new collection for Debenhams (at full price). I wasn’t bombarded with offers. I had a look online and, here too, there was an absence of red, on the homepage at least. So there are signs of change.

Brands may find Debenhams’ discounting distasteful, but for many the sheer volume of shoppers it attracts – particularly online – makes it an irresistible partner. One brand stocked on its website tells me they wouldn’t have gone near Debenhams five years ago, but they couldn’t argue with the numbers. Debenhams.com had 276m visits in 2014.

The problem for Sharp is that, while Debenhams has reduced the breadth of the promotions and put less stock in its Sales, to the consumer it still looks like it is discounting heavily. Many customers love this, but others are increasingly put off. And of course a high volume of traffic in stores or online does not necessarily translate into profits. Sharp doesn’t seem to understand the urgent need to address this, and now the City is running out of patience.

In a crowded market, Debenhams has lost its USP, while its competitors have been gaining ground. Like its large rival Marks & Spencer, it is struggling to find a place among more relevant competitors, including John Lewis, House of Fraser, Selfridges, Next and Amazon. It needs the discipline to stop discounting, to decide where it wants to sit in the market and act accordingly. Whatever the decision, a change in management can only do it good.

Readers' comments (4)

  • The year it all changed 2003, at this point it was actually performing pretty well and had clear direction under Belinda Earl, it was starting to encroach into John Lewis territory and then the private equity guys started to take interest in it, they made there pound of flesh,stripping the life out of it and so be it. When RT left it felt a bit like when Labour left office, i'm surprised he didn't leave MS a note saying there's no money left or more to the point no value left and certainly no direction to generate value. Perhaps we are finally starting to see the beginning of the end game but it still has a long way to go, either a slow death or a slow rise.

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  • It is a shame that Debenhams has to listen to its shareholders! The re-fit of Oxford Street is fantastic. The product on offer has improved dramatically and the pricing strategy is excellent in a highly competitive market. The high street doesn't need another John Lewis or another M&S. Why does nobody talk about the positive things which Debenhams does?

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  • The reason nobody talks about the positive things about Debenhams is that there is currently nothing positive to talk about. Yes the Oxford Street store is good, but that doesn't mean the brand is good. It isn't. My home town has a typical Debenhams - A Grace Brothers Style Dump stuck in 1983, permanently on sale.

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  • I was in the Oxford St store yesterday, i haven't been in for sometime, i only visited the Menswear Dept, firstly it had moved to make way for a champagne bar !!!! and secondly i have to say i was shocked at the state of it. The formal and semi formal still just about looks ok, Jasper Conran probably the best of a tired bunch however the casualwear was appalling, Jack Jones being the only exception. I have never seen the in house casualwear brands looking so rudderless and tired, the quality is appalling and the only trend was price, it's clearly being bought to markdown As a Department store, they have the chance to go back to basics. Ditch 80% of own buy house brands, designers at Debs is a one trick pony now, bring in new branded product and stop thinking that they now have any chance of competing with the likes of Next or Primark, buy less and sell higher and start to gain customer confidence, re brand the in house buys and just bring in some great quality basics a bit like JL did and re build from there because looking at the product it is a case of total re build from the roots up.

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