Could any of Norfolk's Debenhams stores face the axe?
PUBLISHED: 11:46 25 October 2018 | UPDATED: 08:58 26 October 2018
© ARCHANT NORFOLK 2009
Britain’s ailing high streets have been dealt another blow as Debenhams has announced it will be closing 50 stores across the UK.
Eleanor Pringle talks to Norfolk’s retail experts on what brought the department store chain to its knees, and how it can survive.
Debenhams, John Lewis, House of Fraser – they were once the pillars of every high street.
But department stores are now trembling under the pressure of competing with online retailers, while paying rising rents and rates on their bricks-and-mortar stores and the people to staff them.
And since the announcement that Debenhams will close 50 of its 166 stores over the next five years, with the loss of 4,000 jobs, doubts have naturally settled on whether the shops at risk could include any of its three Norfolk branches in Norwich, Great Yarmouth and King’s Lynn.
Retail experts have said the chain needs to take action to remodel its offer to shoppers – and quickly.
Professor Ratula Chakraborty of the University of East Anglia believes that in a saturated market, only the best will survive.
She said: “Departmental stores need to improve their presentation, re-invent, re-fit and re-establish themselves in the minds of people. There is no room for complacency any more.”
She questioned whether the chain’s 2017 plan of returning to destination store status had paid off, adding: “It does not have a point of difference. Its plan to provide differentiated and distinctive brands has not worked either. The future looks bleak for Debenhams.”
She added: “Debenhams should learn from the likes of the young and successful brands, as well as controlling rental costs and achieving clarity in its choice of product lines. This would give it an identity and resist being everything to everybody.”
Retailers up and down the high street are wrestling with the challenge of enticing shoppers away from buying online, with many putting their faith in becoming experience-led – in other words, offering services and activities which cannot be replicated or undercut by a website.
For that reason, Debenhams’ store of the future in Watford, which it unveiled earlier this month, includes a gin bar and has given over 15% of its floor space to a beauty hall.
Meanwhile, Jarrold in Norwich has invested in the past year in a deli wine bar and restaurant as a way to keep shoppers in store longer.
Dr Kishore Gopalakrishna Pillai, a retail and marketing professor at UEA, said: “Debenhams is lagging behind in investment which has not kept up with the retail market, not only in consumer experiences but also in online sales.”
The need for an improved consumer experience goes beyond the shop premises, however, and into its wider location – which could put the flagship Norwich store in a strong position.
Adrian Fennell, a partner with Roche Chartered Surveyors specialising in retail and leisure, said: “If you look at Norwich the shopping experience has evolved; with wifi keeping people in longer, and experiences like meals or theatre.
“In secondary towns, shops are necessity stores, so it’s difficult to maintain that department store concept in a smaller town. You’ve got higher associated costs and they’re not getting the custom.”
Mr Fennell said the space demands from retailers were changing, with fewer seeking the three- and four-storey buildings that were once taken as standard, and many landlords having to face splitting their units.
Further tenants could be found in the growing leisure industry, while in high streets top floors could be used for residential purposes.In shopping centres where this is not possible, the likes of cinemas or gyms could take over, said Mr Fennell.
House of Fraser is already pulling out of major locations, having announced the closure of Manchester’s oldest department store in January.
Competitors John Lewis has also been on thin ice, following a shock announcement that profits had plummeted 99% in the six months to July 28, with chairman Sir Charlie Mayfield blaming Brexit and squeezed profit margins in the “most promotional market” for decades.
The signs from the major retailers, including Marks and Spencer, are that they will scale back their store portfolio and concentrate on making those they do retain into destination stores.
For Debenhams, the warning signals had been growing. It announced three profit warnings in the first half of 2018, after a turnaround strategy revealed the year before fell flat.
Yesterday, the company revealed its biggest loss year, of £491.5m as it struggled to stand out in a saturated market.
Prof Chakraborty said: “What might happen is the best will flourish and a few will disappear or scale back enormously and that might be the best for all.”