Where did it all go wrong for Debenhams? And which High Street giant could be next?

IT was taken out of the clutches of administration almost as soon as it entered it yesterday morning - but uncertainty still looms large over the future of one of Britain’s biggest department store chains, and its Yorkshire shops, as lenders seized control of Debenhams.
Retail consultant Kate Hardcastle is pictured on Briggate, Leeds, talking about the High Street. Picture: Simon HulmeRetail consultant Kate Hardcastle is pictured on Briggate, Leeds, talking about the High Street. Picture: Simon Hulme
Retail consultant Kate Hardcastle is pictured on Briggate, Leeds, talking about the High Street. Picture: Simon Hulme

And while blame for the demise of the once successful chain has been squarely put on the shoulders of the “pale, male and stale boardroom” by one Yorkshire-based retail consultant, experts have been left pondering which of our High Street giants is next.

Meanwhile, Sport Direct tycoon Mike Ashley, who yesterday morning upped his offer for a buy-out of the debt-stricken chain to £200m just before a pre-pack administration deal with lenders was announced, has called the process a “national scandal” and called for it to be reversed.

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Administrators at FTI Consulting were appointed to the retailer at just before 10am and immediately sold the group’s operating companies to a new entity owned by its lenders - wiping out the value of all shares.

The deal has saved Debenhams - but for how long?The deal has saved Debenhams - but for how long?
The deal has saved Debenhams - but for how long?

Although it will continue trading, Debenhams, which has 14 stores in the region, will push ahead with plans to shut 50 as-yet-unnamed stores over the next three to five years. A spokesperson yesterday would not confirm if restructuring plans would affect staff at any of the Yorkshire stores, or its distribution centre in Leeds.

Retail consultant Kate Hardcastle said where Debenhams went wrong was “too much thinking from the inside”.

“Decisions were made for ease of trade and not for the very fast-paced changing consumer, who had no patience for any organisation who wanted to do it their way,” she said. “The tail was completely wagging the dog.

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“If I went into Debenhams in Wakefield, or White Rose in Leeds, I know my Debenhams customer, and the things they were trying to do just weren’t going to suit their existing customer.

“They were in the same half-way house that Marks and Spencer are in, trying to attract new customers, but at the same time being dismissive of the existing ones.

“You only start to see different thinking when you are talking about Primark.

“The middle market is dying. BHS has gone, M&S and John Lewis are struggling. You have to stand for something, and it has to be value not discount. Primark offers something that transcends demographics.

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“Then we have these pale, male, stale boardrooms, trying to trade in 1980s mentality - and that is where Debenhams went wrong.”

But there is some positivity to take from the move, Mike Cartwright, from West & North Yorkshire Chamber of Commerce, which area covers six stores, said.

“While there are still lots of tough decisions to be made in regard to the chain’s situation – and yet more uncertainty for the staff – let’s hope that something good emerges, with the retention of the brand and as many jobs as possible being kept.

“Stability and reassurance will be the watch-words for staff, although with 50 stores set to close, that won’t be the case for everyone. The face of retail and the high street will continue to change in the future.”

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That change could come via Leeds-founded Marks and Spencer, Ms Hardcastle said, where cost cutting tactics intended to stop its decline, could have the opposite effect.

Ms Hardcastle said: “They are doing things like taking away the biscuits with the hot drink in the cafe. That is crazy.

“Marks and Spencers has to become a leaner organisation. If you cut costs at the very core of your unique selling point, you are taking the soul away from what you do.”

Sheffield currently has two Debenhams stores - one on the rejuvenated city centre hotspot The Moor, and a second site in Meadowhall, which has recently undergone renovation.

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Richard Wright, director of policy and representation at Sheffield Chamber of Commerce and Industry said although he “wouldn’t be surprised” if further store closures were announced, his feeling was that the chain is now more secure than before the pre-pack.

“That doesn’t mean that the stores that stay open will not have to look at themselves - many have far too big a footprint what will be needed in the future,” he said.

“Looking at what data I can see, and providing there is a successful outcome to the pre-pack, I do think that the main city stores and stores in the big shopping malls with high footfall will stay open.

“From a Sheffield point of view they have recently spent a lot of money in the Meadowhall one, but will probably want to reduce the floor area of the one in the city centre.”

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He laid blame at the rise of online shopping - but pointed out that even now, some of the big online organisations, such as Asos, which has a huge warehouse in Barnsley, “are struggling”.

Mr Wright said: “Currently about 25 per cent of all sales is online but could rise to more than 40 per cent. My sympathy is with the smaller towns- we’ve already seen closures of many brands in places like Doncaster, Rotherham, Barnsley and Worksop.

“This could take five years to work through - and it’s nothing to do with Brexit. It’s all about delivering what the customer needs which is the basis of all business.”