Debenhams’ new management team must focus on cost cutting, product and store innovation to secure its future in the market, industry insiders have told Drapers.
Debenhams’ lenders paid £101.8m and took on £520m of debt and pension obligations for the group in a pre-pack administration deal on 9 April. Having secured the refinancing, Debenhams chief executive Sergio Bucher is now set to leave the retailer. Drapers understands he will be replaced by interim chairman Terry Duddy.
The lenders are also poised to appoint Stefaan Vansteenkiste of professional services firm Alvarez & Marsal as chief restructuring officer.
“Terry is a seasoned retailer who should be able to steady the ship,” said Victoria Nightingale, director at headhunter Barracuda Search. “Given the businesses he has worked for previously [Dixons, Argos and Home Retail Group] he has a good grasp of multi-site retailing and how to engage with customers. This will be key to try to get Debenhams back on track.”
Recruitment sources have told Drapers Debenhams’ new leadership should be made up of fashion retail experts.
“They need to bring in experienced retail people from the right background,” said managing director of executive search company, Retail Executives, Richard Hollister. “Before, they brought in so many people from Carphone Warehouse who didn’t know fashion and didn’t know the right products for that marketplace.”
“Debenhams’ offering isn’t relevant, and they need to get some more current brands.”
Product expertise will be essential, experts believe.
“Debenhams needs to focus and improve its fashion offer, because it can do beauty and gifting relatively well already,” said one industry veteran.
“It needs to carve out a niche in the men’s market because it is not strong enough. It could start by creating a better sportswear offer.
“It also needs to get new brands and designers in. It has relied on Designers at Debenhams for too long [own-brand labels include Principles, Star by Julien Macdonald, J by Jasper Conran, H! by Henry Holland, No 1 Jenny Packham]. It needs to keep re-energising its product offering.”
The head of wholesale at one brand agreed: “The brand mix is currently lots of own label, which feels very tired. Debenhams is a jack of all trades and a master of none. It is trying to offer products to a teenager, to a retiree, and to everyone in between. It needs to focus on its core consumer and play to its strengths.”
Debenhams’ partnership with Chinese sourcing giant Li & Fung, announced in February, may factor in any efforts to make product more relevant.
Retail veteran Andrew Jennings said: “Many brands are appealing to the customer of yesterday, rather than today and tomorrow. The brands don’t have a point of view for a modern customer. Debenhams as a whole does not have a point of view or personality. The product offering, music and ambience all need to be refreshed.
“Innovation and differentiation are what set retailers apart. Debenhams now has the opportunity to revolutionise, modernise and add personality to its stores.”
One supplier agreed that the stores needed a revamp: “The current store portfolio is too big and the stores look tired. Debenhams needs to invest in that experience and make stores a destination. They need to be fun places to shop.”
Debenhams is preparing to launch a company voluntary agreement (CVA) to close stores and cut costs. Store closures are expected to begin after Christmas and Debenhams has said 50 will be affected- although one property source indicated it could be more: “A consensus seems to be that it will be 50, but in reality, 50 closures won’t be enough if you’re looking at it with a long-term view.”
In light of the expected CVAs at Arcadia and Monsoon, landlords could take a firm stance with Debenhams to protect themselves, another property source added.
“With Arcadia queuing up behind, Debenhams might have to be made an example of. At some point somebody has got to question the validity of a CVA.”
Debenhams declined to comment.