Former Amazon Fashion boss Sergio Bucher has unveiled his new strategy for Debenhams, with the aim of adding £1bn to top line sales by getting shoppers to visit its stores and website more regularly.
Presenting the long-awaited strategy to the press on Thursday, Bucher described himself as an unusual mix of Swiss and Spanish with a “love for numbers and processes, combined with a creative outlook and international mindset”.
He said he is employing Amazon’s test-and-learn philosophy to make sure there are good returns on any investments made.
Bucher said the strategy, which is called Debenhams Redesigned and focuses on experiential shopping, digital growth and driving efficiency, would set the department store group “on course for a profitable and sustainable future”.
Since he joined Debenhams six months ago, Bucher has led a comprehensive evaluation of the business. The review revealed that, while its 19 million customers valued the wide choice available and popular “big event” promotions, it can be difficult to shop with too much clutter, confusion around the frequency of promotions and employees who spend too much time on back-office functions and not enough time serving customers.
“Some of our stores look old and tired, online is not as good as it could be and we have too many promotions,” he admitted.
His resulting strategy aims to focus on three core areas of “destination, digital and different”, which will be formed around offering more experiences like beauty services, improving the mobile and digital offer, and adding new brands to its portfolio.
“We have 97% brand awareness and 19 million customers and hold a market leading position in 14 categories, including beauty and occasionwear. We also have a profitable international business unlike many of our competitors and a quarter of the units we sell are sold overseas.”
But he did acknowledge there were areas that needed addressing, quoting one customer who said: “Debenhams is like a treasure hunt, there’s some great stuff – but you have to look for it.”
“We want to evolve from a push model to a pull one, where the customer informs the product range,” he explained. The retailer will decide which brands and products to stock in each of its stores based on the online sales in their catchment areas.
The research found that Debenhams’ average customer currently shops with the retailer two to three times per year, with the most regular shoppers visiting 12 times.
“If we could persuade customers to visit one more time, we’d add £1bn to the top line,” he said, echoing an observation made by Marks & Spencer chief executive Steve Rowe last year.
Principles by Ben de Lisi
The plans for fashion
Debenhams has previously stated its intention to shift some focus away from fashion to the faster-growing beauty market, which currently accounts for around 25% of total sales. Within fashion, Bucher said that, while customers view its long-standing Designers at Debenhams ranges as an asset, the collections have “lost some currency over time”.
“We want to breathe new life into it by adding new brands [like Studio by Preen] and phasing out those which no longer have relevance,” he said, but refused to provide any further detail.
Debenhams is also looking to bigger opportunities within lingerie, footwear and accessories, as well as introducing new ranges from international brands and retailers like Mango. The retailer launched an own-bought range of Mango womenswear into eight stores earlier this year and it debuted online today.
“Not many retailers have the space for a compelling offer across accessories, footwear and lingerie but we do,” he said, adding that he wants to take learnings from the beauty halls into this area.
Debenhams will “declutter” stores by reducing stock options by around 10% across all clothing. The wait time for stock replenishment will be reduced from eight days to two. The faster replenishment will lead to less discounting as the business will be able to get the right product to the right place, Bucher said.
“Promotions are part of retail life and our customer loves them, but they were too frequent. In future expect less but better, more targeted offers.”
Debenhams is also launching its first outlet stores in order to free up floor space across its network for new season stock.
Bucher said Debenhams is “very happy” with its partnership with Sports Direct, which has concessions in seven Debenhams stores, and the two retailers will work together to “review the best path forward”.
Betting on beauty
Building on growing successes in beauty driven by exclusive launches with the likes of Kat Von D and Make Up For Ever, Bucher wants Debenhams to become the market leader when it comes to premium beauty, offering “the most exciting beauty hall in the market” and using technology to offer a personalised experience.
He is also looking to expand its reach in beauty services such as brow bars, nail bars and blow dry bars, playing on Debenhams’ proximity to its shoppers, as stores are located on average less than 20 minutes’ drive from customers’ homes.
Longer-term plans could involve introducing beauty services within customers’ homes, such as blow dry or make-up services with partners. Beauty services typically offer higher margin than beauty products and encourage repeat business, Bucher said.
Another thing Bucher is looking to capitalise on is the lucrative business of click-and-collect, which sees customers typically spend 20% more when they pick items up in stores.
In autumn, the retailer will start the first trial linking click-and-collect with personal shopping and styling, with some potential strategic partnerships, to further combine convenience with experiential retail.
The retailer announced it is considering the future of up to 10 UK stores over the next five years that could become unprofitable, although only one is currently loss-making. Some of these could be repurposed as outlet stores, starting later this year.
“To be honest, having one unprofitable store in a portfolio is less than any other business I have worked in and it still makes a contribution,” he said. “That is not the biggest thing I have to think about.”
The business has also started consultations to close one central distribution centre run by DHL and around 10 smaller regional warehouses. The group will exit some “low-profit” international markets, but details of this will not be released until October.
In order to improve customer experience in-stores the firm is moving around 2,000 staff to customer-facing roles. That equates to around five more customer service staff in small stores and up to 50 in larger stores.
“We want to improve the look and feel, as well as the way we operate and provide services,” said Bucher.
He said he believes the future lies in ”social shopping”, which sees shopping as a “fun and sociable activity” undertaken with friends and family, wrapped around a set of mobile experiences.
Most of the retailer’s £450m cap ex investment in the new strategy over the next three years will be spent on updating its digital systems and replatforming its online and mobile sites.
Debenhams wants to move the 1.2 million members of its beauty club from plastic cards onto mobile. It also wants mobile technology to prompt shoppers with tailored promotions when they are in store.
He is also making his presence felt within the culture of the business, aiming to move from an opinion-led, risk-averse environment to one that is data-informed and tech-savvy, as well as creative, agile and innovative.
Only time will tell whether his strategy and attempts to change the way Debenhams operates will pay off.