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On Saturday 15 May, the remaining stores of the bankrupt British department store chain Debenhams will close their doors for good. This marks the end of 242 years of retail history. However, the brand will not disappear altogether.
End of an era
Despite several ultimate takeover attempts last year, first by JD Sports and then by Frasers Group of controversial businessman Mike Ashley, the demise of Debenhams was inevitable. The company was groaning under an excessive debt burden. 52 stores already closed on 8 May, 25 closed on 12 May and the last 28 stores will go out of business on 15 May. In total, some 12,000 people will lose their jobs.
The closure marks the end of an era for British retail. The roots of Debenhams go back to 1778. In the 1950s, the retailer became the largest department store chain in the UK with 110 stores. The chain even wanted to double that number and continued to open new stores until 2017, although sales and profitability were already coming under strong pressure from the growth of e-commerce. The lockdowns during the corona pandemic gave the retailer the final blow, according to the BBC. The Debenhams brand lives on online: in January, Boohoo Group put 55 million pounds (62 million euros) on the table for the Debenhams brand name. Boohoo wants to make it the largest marketplace in the UK for fashion, beauty, sports and household goods.
Drastic reorganisations
Department stores – the inventors of modern retail – have been in turbulent waters for years. They are struggling with heavy real estate and staff costs, and face stiff competition from online and luxury brands setting up their own sales channels. They have struggled to introduce much-needed innovation and, as a result, have difficulty appealing to younger audiences. On top of this, visitor numbers in the major cities have fallen sharply since the outbreak of the corona pandemic.
British retailer John Lewis is trying to regain profitability by converting part of its expensive retail space into office space and cutting thousands of jobs. Industry peer Marks & Spencer has also announced a sweeping reorganisation. In Germany, the merged group Galeria Karstadt Kaufhof, parent company of the Belgian INNO, has been fighting for its survival for some time. In France, the corona crisis has cost Galeries Lafayette more than a billion euros in turnover. In the meantime, competitor Le Printemps is closing four stores. In the US, Lord & Taylor and Barney’s, among others, had already gone bankrupt, while Neimann Marcus and JCPenney had a restart.
Future opportunities
Nevertheless, this does not mean the definitive end for this once so glorious industry. Department stores that manage to reinvent themselves do have prospects for a successful future, argue authors Erik Van Heuven and Stefan Van Rompaey in their book The Future of Department Stores – a RetailDetail production.
But these department stores must make clear choices: if they seek out the luxury segment, add experience with a distinctive food offering, invest in digitisation and develop a smart marketplace strategy, they have all the trumps to grow again. “What internet platforms are doing today, department stores have always done, they were already platforms avant la lettre. There are opportunities in a ‘phygital’ model,” concludes the book.
