download full report (6.4mb PDF)
 

strategic review, business model and strategy - read more

Strategic review, business model and strategy - read more



Chief Executive’s
strategic review

An interview with Michael Sharp
read more...



Key downloads

 
 

Business model
Understanding our approach to business
read more...



Key downloads

 
 

Strategy at a glance
Building a leading international, multi-channel brand
read more...



Key downloads

 
 

Business model

Understanding our approach to business

Hover on each of the four areas in the outer circle to find out more.

Business Model
Who is our customer
A family department store with something for everyone

We put our customers at the heart of everything we do. We are a family department store that operates at the heart of the community. Our customer base reflects our family orientation, spanning a broad range of age groups and demographics in line with the markets in which we operate. Our breadth of appeal is a key strength.

Who is our customer
How we buy
A diverse supply chain

Our sourcing strategy is based on “right product, right country”. Our many years of direct sourcing have resulted in long-standing relationships with suppliers around the world. This helps us to meet our customers’ expectations that every one of our products is manufactured in a factory that is socially ethical and quality assurance compliant.

How we buy
How we sell
Giving customers more ways to browse, discover and buy

We are meeting the expectations of our customers around the world for more ways to shop. Stores will remain the largest sales channel for the foreseeable future and the Debenhams brand currently trades through 238 stores in 29 countries. Non-store sales channels are growing quickly and accounted for 13.2% of GTV in 2013. These include online, mobile, catalogues and telephone ordering. An increasing number of customers are enjoying a multi-channel shopping experience through which a single purchase uses two or more channels.

How we sell
What we sell
A unique, differentiated and
exclusive proposition

Our proposition is unique through its combination of own brands, designer brands, international brands and concessions. It is differentiated through being both multi-brand and multicategory, with each brand clearly targeting a defined customer or end use. And it is exclusive through our core and designer own brands which account for nearly half of everything we sell. Our offer also provides balance and resilience through its 50/50 mix of clothing and non-clothing sales.

What we sell
back to home page

Strategy at a glance

Building a leading international, multi-channel brand

Hover on each of the four areas to find out more.

Business Model
Focusing
on UK retail
Delivering a compelling customer proposition
Increasing availability and choice through multi-channel
Expanding the brand internationally
Sustainable value
Focusing on UK retail
Strategic priorities
  • Addressing the challenge of lower footfall
  • Continued investment in store modernisations
  • Opening new stores to grow sales and market share
Performance 2013
  • UK like-for-like sales under pressure in highly competitive market
  • 12 stores modernised
  • Transformation of Oxford Street into international flagship on plan
  • Model store programme to improve instore standards now well established
  • New stores in Chesterfield and Lichfield, adding 75,000 sq ft of new space
  • New store pipeline stands at 16 over next four years
Challenges in delivering
  • Highly competitive marketplace, weak consumer environment
  • Declining high street footfall due to channel shift to online
  • Ongoing inflation in store costs
  • Limited availability of sites for new stores
Sustainability in action
  • Store waste reduced by 200 tonnes, 91% diverted from landfill
  • New building management system providing better dataon electricity usage
  • Increasing use of rail transport from distribution centres (DCs) to Scottish stores; 20% of inbound freight containers now shipped to Sherburn DC by rail
  • All faulty/damaged products collected by charity partner for repair and resale
  • Store charitable work now consolidated into the Debenhams Foundation
Expanding the brand internationally
Strategic priorities
  • Increasing the number of international franchise stores
  • Growing sales from owned international assets
  • Expansion of international online
Performance 2013
  • Six new franchise stores opened in year, including two new markets, and 12 stores closed
  • Good performance from Magasin du Nord with like-for-like sales up 7.2% in DKK, 6.0% in GBP
  • Magasin website operational since September 2012
  • International online growing quickly from a small base, delivering to 66 countries outside the UK
  • Awarded “International Growth Initiative of the Year” for overall international expansion
Challenges in delivering
  • Essential to have right franchise partner in each market
  • Successfully managed Cypriot banking crisis but ongoing monitoring of performance
  • Republic of Ireland market continues to be a challenge
  • How to gain momentum for online in markets where we have no store presence
Sustainability in action
  • Overseas distribution hub in Singapore now fully operational, generating cost savings, lower emissions, better working capital usage and freeing up capacity in the UK DCs
  • Strong response rate from employees in Republic of Ireland in employee engagement survey
Delivering a compelling customer proposition
Strategic priorities
  • Developing our brand and product strategy
  • Communicating the proposition under our “Life Made Fabulous” campaign to drive sales and improve brand perception
Performance 2013
  • Market share growth in key product categories
  • Sales density trials in womenswear showed useful results
  • New Designers at Debenhams include Stephen Jones, Patrick Grant and Todd Lynn
  • First Christmas brand advertising campaign for six years
  • Brand awareness at all time high
  • Single customer view launched to enable more personalised communication
Challenges in delivering
  • Safeguarding sustainability of supply chain including need for more flexibility and shorter time to market
  • Ongoing cost price inflation due to higher labour rates in Asia
  • Ensuring effectiveness of brand and marketing programmes
Sustainability in action
  • New third party supplier monitoring partners appointed
  • Signatory to Bangladesh accord
  • Ethical compliance team strengthened in UK, Hong Kong and Bangladesh
  • Bangladesh sourcing office opened
  • Increase in number of unannounced factory visits
Increasing availability and choice through multi-channel
Strategic priorities
  • More choice, made easy to choose and easy to get
  • More ways to browse, discover and buy
  • Shopping experiences that recognise, reward and put customers in control
Performance 2013
  • Strong growth in online sales, up 46.2%, representing 13.2% of total sales
  • Online market share up 70bps to 3.6%
  • Visitors up 36% to 241 million
  • Sales from mobile devices up over 200%
  • All own bought fulfilment brought in-house
  • 270bps reduction in UK online costs as percentage of sales due to scale and efficiency improvements
  • Awarded “Retail Technology Initiative of the Year” for Endless Aisle
Challenges in delivering
  • Recovering higher proportion of fulfilment costs
  • Optimising natural search to reduce cost of customer acquisition
  • Offering enhanced range of delivery options
  • Providing additional payment methods
Sustainability in action
  • Number of parcels per order reduced as all own bought fulfilment in-house, reducing parcel miles and delivery costs
  • Increasing number of Click & Collect parcels are being transported to stores on our own fleet, reducing parcel miles for each delivery
  • Working to reduce amount of packaging used in online fulfilment
back to home page
 
A leading international, multi-channel brand

Welcome

Debenhams is a leading international, multi-channel brand with a proud British heritage trading out of 238 stores in 29 countries and online in 67 countries.

We offer our customers around the world a unique, differentiated and exclusive mix of own brands, international brands and concessions.

Scroll down to see the four pillars of our strategy

Essential read

Strategic review, business model and strategy - read more



Chief Executive’s
strategic review

An interview with Michael Sharp
read more...



Key downloads

 
 

Business model
Understanding our approach to business
read more...



Key downloads

 
 

Strategy at a glance
Building a leading international, multi-channel brand
read more...



Key downloads

 
 
 
 

Focusing on
UK retail

Our stores in the UK will remain our largest single sales channel for the foreseeable future although their role is changing. We are investing in the modernisation of older stores and building new stores in target markets where we can deliver an acceptable level of return. The case for new stores is clearly demonstrated by our experience in Chesterfield, one of two new stores opened during 2013.

Strategy at a glance

Strategy at a glance

Building a leading international, multi-channel brand

Hover on each of the four areas to find out more.

Business Model
Focusing
on UK retail
Delivering a compelling customer proposition
Increasing availability and choice through multi-channel
Expanding the brand internationally
Sustainable value
Focusing on UK retail
Strategic priorities
  • Addressing the challenge of lower footfall
  • Continued investment in store modernisations
  • Opening new stores to grow sales and market share
Performance 2013
  • UK like-for-like sales under pressure in highly competitive market
  • 12 stores modernised
  • Transformation of Oxford Street into international flagship on plan
  • Model store programme to improve instore standards now well established
  • New stores in Chesterfield and Lichfield, adding 75,000 sq ft of new space
  • New store pipeline stands at 16 over next four years
Challenges in delivering
  • Highly competitive marketplace, weak consumer environment
  • Declining high street footfall due to channel shift to online
  • Ongoing inflation in store costs
  • Limited availability of sites for new stores
Sustainability in action
  • Store waste reduced by 200 tonnes, 91% diverted from landfill
  • New building management system providing better dataon electricity usage
  • Increasing use of rail transport from distribution centres (DCs) to Scottish stores; 20% of inbound freight containers now shipped to Sherburn DC by rail
  • All faulty/damaged products collected by charity partner for repair and resale
  • Store charitable work now consolidated into the Debenhams Foundation
Expanding the brand internationally
Strategic priorities
  • Increasing the number of international franchise stores
  • Growing sales from owned international assets
  • Expansion of international online
Performance 2013
  • Six new franchise stores opened in year, including two new markets, and 12 stores closed
  • Good performance from Magasin du Nord with like-for-like sales up 7.2% in DKK, 6.0% in GBP
  • Magasin website operational since September 2012
  • International online growing quickly from a small base, delivering to 66 countries outside the UK
  • Awarded “International Growth Initiative of the Year” for overall international expansion
Challenges in delivering
  • Essential to have right franchise partner in each market
  • Successfully managed Cypriot banking crisis but ongoing monitoring of performance
  • Republic of Ireland market continues to be a challenge
  • How to gain momentum for online in markets where we have no store presence
Sustainability in action
  • Overseas distribution hub in Singapore now fully operational, generating cost savings, lower emissions, better working capital usage and freeing up capacity in the UK DCs
  • Strong response rate from employees in Republic of Ireland in employee engagement survey
Delivering a compelling customer proposition
Strategic priorities
  • Developing our brand and product strategy
  • Communicating the proposition under our “Life Made Fabulous” campaign to drive sales and improve brand perception
Performance 2013
  • Market share growth in key product categories
  • Sales density trials in womenswear showed useful results
  • New Designers at Debenhams include Stephen Jones, Patrick Grant and Todd Lynn
  • First Christmas brand advertising campaign for six years
  • Brand awareness at all time high
  • Single customer view launched to enable more personalised communication
Challenges in delivering
  • Safeguarding sustainability of supply chain including need for more flexibility and shorter time to market
  • Ongoing cost price inflation due to higher labour rates in Asia
  • Ensuring effectiveness of brand and marketing programmes
Sustainability in action
  • New third party supplier monitoring partners appointed
  • Signatory to Bangladesh accord
  • Ethical compliance team strengthened in UK, Hong Kong and Bangladesh
  • Bangladesh sourcing office opened
  • Increase in number of unannounced factory visits
Increasing availability and choice through multi-channel
Strategic priorities
  • More choice, made easy to choose and easy to get
  • More ways to browse, discover and buy
  • Shopping experiences that recognise, reward and put customers in control
Performance 2013
  • Strong growth in online sales, up 46.2%, representing 13.2% of total sales
  • Online market share up 70bps to 3.6%
  • Visitors up 36% to 241 million
  • Sales from mobile devices up over 200%
  • All own bought fulfilment brought in-house
  • 270bps reduction in UK online costs as percentage of sales due to scale and efficiency improvements
  • Awarded “Retail Technology Initiative of the Year” for Endless Aisle
Challenges in delivering
  • Recovering higher proportion of fulfilment costs
  • Optimising natural search to reduce cost of customer acquisition
  • Offering enhanced range of delivery options
  • Providing additional payment methods
Sustainability in action
  • Number of parcels per order reduced as all own bought fulfilment in-house, reducing parcel miles and delivery costs
  • Increasing number of Click & Collect parcels are being transported to stores on our own fleet, reducing parcel miles for each delivery
  • Working to reduce amount of packaging used in online fulfilment
back to home page

strategy in action – read more

...The case for stores

Stores are central to our strategy but their role is changing. They are not only a physical point of sale for products which customers want to see, touch and feel. They are also a collection and return point for multi-channel orders and they unlock sales in multi-channel catchments.

We are investing in our stores to support multi-channel growth through new instore ordering points which focus on self-service and access to choice and giving our Click & Collect facilities a stronger presence, with new collection points and new branding for increased visibility.

The case for opening new stores is demonstrated by Chesterfield which trades from 45,000 sq ft on a retail park and opened in September 2012. It is a store that is fully configured to operate in a multi-channel environment.

In Chesterfield’s first year we have seen sales in the local area more than triple. The store itself has contributed the largest portion of this growth. Importantly, other stores where our Chesterfield customers may have shopped prior to opening have seen only a limited amount of deflection, suggesting that the overwhelming majority of store sales have been incremental.

We have also seen online sales in the Chesterfield area double, which demonstrates the close correlation between store sales and online sales.

We are scheduled to open 16 new stores in the UK during the next four years, starting with four in 2014. Many of these are located on retail parks, just like Chesterfield. Lease lengths on these new stores are generally shorter than we would have signed in the past and those on retail parks usually have a break clause. These variations ensure we have sufficient flexibility to meet the changing role of stores in a multi-channel world.

Back to strategy overview
 
 
 

Delivering a compelling customer proposition

A key feature of our offer is the balance and resilience provided by a 50/50 split of sales between clothing and non-clothing categories. Non-clothing includes footwear, handbags, swimwear, men’s accessories, homeware, furniture and our strong premium beauty offer which encompasses some of the world’s leading brands. Like our clothing ranges, we offer customers a broad choice of own core brands, Designers at Debenhams, international brands and concessions across a good/better/best price architecture. Non-clothing is an area ideally suited to large space retailers like Debenhams and is also seeing very strong growth online.

Strategy at a glance

Strategy at a glance

Building a leading international, multi-channel brand

Hover on each of the four areas to find out more.

Business Model
Focusing
on UK retail
Delivering a compelling customer proposition
Increasing availability and choice through multi-channel
Expanding the brand internationally
Sustainable value
Focusing on UK retail
Strategic priorities
  • Addressing the challenge of lower footfall
  • Continued investment in store modernisations
  • Opening new stores to grow sales and market share
Performance 2013
  • UK like-for-like sales under pressure in highly competitive market
  • 12 stores modernised
  • Transformation of Oxford Street into international flagship on plan
  • Model store programme to improve instore standards now well established
  • New stores in Chesterfield and Lichfield, adding 75,000 sq ft of new space
  • New store pipeline stands at 16 over next four years
Challenges in delivering
  • Highly competitive marketplace, weak consumer environment
  • Declining high street footfall due to channel shift to online
  • Ongoing inflation in store costs
  • Limited availability of sites for new stores
Sustainability in action
  • Store waste reduced by 200 tonnes, 91% diverted from landfill
  • New building management system providing better dataon electricity usage
  • Increasing use of rail transport from distribution centres (DCs) to Scottish stores; 20% of inbound freight containers now shipped to Sherburn DC by rail
  • All faulty/damaged products collected by charity partner for repair and resale
  • Store charitable work now consolidated into the Debenhams Foundation
Expanding the brand internationally
Strategic priorities
  • Increasing the number of international franchise stores
  • Growing sales from owned international assets
  • Expansion of international online
Performance 2013
  • Six new franchise stores opened in year, including two new markets, and 12 stores closed
  • Good performance from Magasin du Nord with like-for-like sales up 7.2% in DKK, 6.0% in GBP
  • Magasin website operational since September 2012
  • International online growing quickly from a small base, delivering to 66 countries outside the UK
  • Awarded “International Growth Initiative of the Year” for overall international expansion
Challenges in delivering
  • Essential to have right franchise partner in each market
  • Successfully managed Cypriot banking crisis but ongoing monitoring of performance
  • Republic of Ireland market continues to be a challenge
  • How to gain momentum for online in markets where we have no store presence
Sustainability in action
  • Overseas distribution hub in Singapore now fully operational, generating cost savings, lower emissions, better working capital usage and freeing up capacity in the UK DCs
  • Strong response rate from employees in Republic of Ireland in employee engagement survey
Delivering a compelling customer proposition
Strategic priorities
  • Developing our brand and product strategy
  • Communicating the proposition under our “Life Made Fabulous” campaign to drive sales and improve brand perception
Performance 2013
  • Market share growth in key product categories
  • Sales density trials in womenswear showed useful results
  • New Designers at Debenhams include Stephen Jones, Patrick Grant and Todd Lynn
  • First Christmas brand advertising campaign for six years
  • Brand awareness at all time high
  • Single customer view launched to enable more personalised communication
Challenges in delivering
  • Safeguarding sustainability of supply chain including need for more flexibility and shorter time to market
  • Ongoing cost price inflation due to higher labour rates in Asia
  • Ensuring effectiveness of brand and marketing programmes
Sustainability in action
  • New third party supplier monitoring partners appointed
  • Signatory to Bangladesh accord
  • Ethical compliance team strengthened in UK, Hong Kong and Bangladesh
  • Bangladesh sourcing office opened
  • Increase in number of unannounced factory visits
Increasing availability and choice through multi-channel
Strategic priorities
  • More choice, made easy to choose and easy to get
  • More ways to browse, discover and buy
  • Shopping experiences that recognise, reward and put customers in control
Performance 2013
  • Strong growth in online sales, up 46.2%, representing 13.2% of total sales
  • Online market share up 70bps to 3.6%
  • Visitors up 36% to 241 million
  • Sales from mobile devices up over 200%
  • All own bought fulfilment brought in-house
  • 270bps reduction in UK online costs as percentage of sales due to scale and efficiency improvements
  • Awarded “Retail Technology Initiative of the Year” for Endless Aisle
Challenges in delivering
  • Recovering higher proportion of fulfilment costs
  • Optimising natural search to reduce cost of customer acquisition
  • Offering enhanced range of delivery options
  • Providing additional payment methods
Sustainability in action
  • Number of parcels per order reduced as all own bought fulfilment in-house, reducing parcel miles and delivery costs
  • Increasing number of Click & Collect parcels are being transported to stores on our own fleet, reducing parcel miles for each delivery
  • Working to reduce amount of packaging used in online fulfilment
back to home page

strategy in action – read more

...Putting our best foot forward

One of the non-clothing categories which we are targeting for growth is footwear. We saw good traction during 2013 with our market share of women’s, men’s and children’s footwear up 10bps, 40bps and 30 bps respectively.

There is plenty more to do and our ambition is to double our footwear share over the next five years by closing the gap between our footwear share of 2.6% and our clothing market share of 5.5%.

Our shoe offer has been transformed in recent years as we have developed own brand ranges. In particular we have expanded our Designers at Debenhams shoe choice, especially for women, as we seek to emulate the success that many of the luxury brands have achieved in accessories. We have also seen good results from the Faith brand which was acquired out of administration in 2010.

New third party brands have also been added to our offer, including the UK’s leading shoe brand Clarks.

Footwear is a category that sells extremely well online, accounting for nearly 25% of all UK footwear sales (source: BRC-KPMG Online Retail Sales Monitor, August 2013). Our online footwear share increased by 100 basis points to 3.3% in 2013 and 32% of our total own bought footwear sales are now online. Footwear is a great example of how online is enabling us to widen our product and price ranges for all customers.

Our marketing campaign has been strengthened to support footwear more overtly – including a dedicated shoe and bag brochure for each new season.

Back to strategy overview
 
 
 

Increasing availability and choice through multi-channel

Our multi-channel strategy is predicated on “following the customer”. Customers are firmly in control of the way they want to shop. We can’t wrest that control from them so we must develop the most profitable way to provide the products and services they want. Fortunately we are very well positioned to take advantage of the growth of multi-channel because of who we are: our width of choice, our exclusive brands and the role all our channels can play – including our stores – in following the customer.

Strategy at a glance

Strategy at a glance

Building a leading international, multi-channel brand

Hover on each of the four areas to find out more.

Business Model
Focusing
on UK retail
Delivering a compelling customer proposition
Increasing availability and choice through multi-channel
Expanding the brand internationally
Sustainable value
Focusing on UK retail
Strategic priorities
  • Addressing the challenge of lower footfall
  • Continued investment in store modernisations
  • Opening new stores to grow sales and market share
Performance 2013
  • UK like-for-like sales under pressure in highly competitive market
  • 12 stores modernised
  • Transformation of Oxford Street into international flagship on plan
  • Model store programme to improve instore standards now well established
  • New stores in Chesterfield and Lichfield, adding 75,000 sq ft of new space
  • New store pipeline stands at 16 over next four years
Challenges in delivering
  • Highly competitive marketplace, weak consumer environment
  • Declining high street footfall due to channel shift to online
  • Ongoing inflation in store costs
  • Limited availability of sites for new stores
Sustainability in action
  • Store waste reduced by 200 tonnes, 91% diverted from landfill
  • New building management system providing better dataon electricity usage
  • Increasing use of rail transport from distribution centres (DCs) to Scottish stores; 20% of inbound freight containers now shipped to Sherburn DC by rail
  • All faulty/damaged products collected by charity partner for repair and resale
  • Store charitable work now consolidated into the Debenhams Foundation
Expanding the brand internationally
Strategic priorities
  • Increasing the number of international franchise stores
  • Growing sales from owned international assets
  • Expansion of international online
Performance 2013
  • Six new franchise stores opened in year, including two new markets, and 12 stores closed
  • Good performance from Magasin du Nord with like-for-like sales up 7.2% in DKK, 6.0% in GBP
  • Magasin website operational since September 2012
  • International online growing quickly from a small base, delivering to 66 countries outside the UK
  • Awarded “International Growth Initiative of the Year” for overall international expansion
Challenges in delivering
  • Essential to have right franchise partner in each market
  • Successfully managed Cypriot banking crisis but ongoing monitoring of performance
  • Republic of Ireland market continues to be a challenge
  • How to gain momentum for online in markets where we have no store presence
Sustainability in action
  • Overseas distribution hub in Singapore now fully operational, generating cost savings, lower emissions, better working capital usage and freeing up capacity in the UK DCs
  • Strong response rate from employees in Republic of Ireland in employee engagement survey
Delivering a compelling customer proposition
Strategic priorities
  • Developing our brand and product strategy
  • Communicating the proposition under our “Life Made Fabulous” campaign to drive sales and improve brand perception
Performance 2013
  • Market share growth in key product categories
  • Sales density trials in womenswear showed useful results
  • New Designers at Debenhams include Stephen Jones, Patrick Grant and Todd Lynn
  • First Christmas brand advertising campaign for six years
  • Brand awareness at all time high
  • Single customer view launched to enable more personalised communication
Challenges in delivering
  • Safeguarding sustainability of supply chain including need for more flexibility and shorter time to market
  • Ongoing cost price inflation due to higher labour rates in Asia
  • Ensuring effectiveness of brand and marketing programmes
Sustainability in action
  • New third party supplier monitoring partners appointed
  • Signatory to Bangladesh accord
  • Ethical compliance team strengthened in UK, Hong Kong and Bangladesh
  • Bangladesh sourcing office opened
  • Increase in number of unannounced factory visits
Increasing availability and choice through multi-channel
Strategic priorities
  • More choice, made easy to choose and easy to get
  • More ways to browse, discover and buy
  • Shopping experiences that recognise, reward and put customers in control
Performance 2013
  • Strong growth in online sales, up 46.2%, representing 13.2% of total sales
  • Online market share up 70bps to 3.6%
  • Visitors up 36% to 241 million
  • Sales from mobile devices up over 200%
  • All own bought fulfilment brought in-house
  • 270bps reduction in UK online costs as percentage of sales due to scale and efficiency improvements
  • Awarded “Retail Technology Initiative of the Year” for Endless Aisle
Challenges in delivering
  • Recovering higher proportion of fulfilment costs
  • Optimising natural search to reduce cost of customer acquisition
  • Offering enhanced range of delivery options
  • Providing additional payment methods
Sustainability in action
  • Number of parcels per order reduced as all own bought fulfilment in-house, reducing parcel miles and delivery costs
  • Increasing number of Click & Collect parcels are being transported to stores on our own fleet, reducing parcel miles for each delivery
  • Working to reduce amount of packaging used in online fulfilment
back to home page

strategy in action – read more

...The rise
of mobile

Our customers are increasingly “mobile”. In 2013, 40% of our 241 million online visits came through tablets, smartphones and the instore ordering kiosks and these devices accounted for 25% of our £366 million online sales. Much of this growth came from tablets where visits increased by over 200%. Tablet customers also spend more, with the highest average order value of all channels. We have developed specific content for each mobile channel which reflects the part of the shopping journey customers use them for most.

Mobile is also important because it is more than just a direct sales channel. It can have a significant influence on sales through other channels, especially stores. Industry analysis suggests that for every £1 spent on mobile, a spend of a further £10 will be influenced instore. We help customers to use their mobile devices by providing free wi-fi in all our stores.

We actively encourage our mobile customers to engage with us through our suite of apps which have been downloaded more than 6 million times. We have won a number of awards for them and they have an average customer rating of 4 stars. Apps are important not only as a tool to make shopping easier but they can also reduce the cost of customer acquisition through the use of push notifications.

Looking forward, there are many ways that mobile will enhance our multi-channel offer even further. It has an important part to play in our planned developments for Click & Collect, for example by allowing customers to “check in” when they arrive in store to collect their parcel so we can have it ready for them.

Back to strategy overview
 
 
 

Expanding
the brand internationally

The magnitude of the international department store market makes expansion outside the UK an attractive proposition for Debenhams and therefore an important strategic aim. We use a different approach for different markets, including franchise stores and international online sales. We also own stores in the Republic of Ireland and in Denmark through the country’s leading department store chain Magasin du Nord which we acquired in November 2009.

Strategy at a glance

Strategy at a glance

Building a leading international, multi-channel brand

Hover on each of the four areas to find out more.

Business Model
Focusing
on UK retail
Delivering a compelling customer proposition
Increasing availability and choice through multi-channel
Expanding the brand internationally
Sustainable value
Focusing on UK retail
Strategic priorities
  • Addressing the challenge of lower footfall
  • Continued investment in store modernisations
  • Opening new stores to grow sales and market share
Performance 2013
  • UK like-for-like sales under pressure in highly competitive market
  • 12 stores modernised
  • Transformation of Oxford Street into international flagship on plan
  • Model store programme to improve instore standards now well established
  • New stores in Chesterfield and Lichfield, adding 75,000 sq ft of new space
  • New store pipeline stands at 16 over next four years
Challenges in delivering
  • Highly competitive marketplace, weak consumer environment
  • Declining high street footfall due to channel shift to online
  • Ongoing inflation in store costs
  • Limited availability of sites for new stores
Sustainability in action
  • Store waste reduced by 200 tonnes, 91% diverted from landfill
  • New building management system providing better dataon electricity usage
  • Increasing use of rail transport from distribution centres (DCs) to Scottish stores; 20% of inbound freight containers now shipped to Sherburn DC by rail
  • All faulty/damaged products collected by charity partner for repair and resale
  • Store charitable work now consolidated into the Debenhams Foundation
Expanding the brand internationally
Strategic priorities
  • Increasing the number of international franchise stores
  • Growing sales from owned international assets
  • Expansion of international online
Performance 2013
  • Six new franchise stores opened in year, including two new markets, and 12 stores closed
  • Good performance from Magasin du Nord with like-for-like sales up 7.2% in DKK, 6.0% in GBP
  • Magasin website operational since September 2012
  • International online growing quickly from a small base, delivering to 66 countries outside the UK
  • Awarded “International Growth Initiative of the Year” for overall international expansion
Challenges in delivering
  • Essential to have right franchise partner in each market
  • Successfully managed Cypriot banking crisis but ongoing monitoring of performance
  • Republic of Ireland market continues to be a challenge
  • How to gain momentum for online in markets where we have no store presence
Sustainability in action
  • Overseas distribution hub in Singapore now fully operational, generating cost savings, lower emissions, better working capital usage and freeing up capacity in the UK DCs
  • Strong response rate from employees in Republic of Ireland in employee engagement survey
Delivering a compelling customer proposition
Strategic priorities
  • Developing our brand and product strategy
  • Communicating the proposition under our “Life Made Fabulous” campaign to drive sales and improve brand perception
Performance 2013
  • Market share growth in key product categories
  • Sales density trials in womenswear showed useful results
  • New Designers at Debenhams include Stephen Jones, Patrick Grant and Todd Lynn
  • First Christmas brand advertising campaign for six years
  • Brand awareness at all time high
  • Single customer view launched to enable more personalised communication
Challenges in delivering
  • Safeguarding sustainability of supply chain including need for more flexibility and shorter time to market
  • Ongoing cost price inflation due to higher labour rates in Asia
  • Ensuring effectiveness of brand and marketing programmes
Sustainability in action
  • New third party supplier monitoring partners appointed
  • Signatory to Bangladesh accord
  • Ethical compliance team strengthened in UK, Hong Kong and Bangladesh
  • Bangladesh sourcing office opened
  • Increase in number of unannounced factory visits
Increasing availability and choice through multi-channel
Strategic priorities
  • More choice, made easy to choose and easy to get
  • More ways to browse, discover and buy
  • Shopping experiences that recognise, reward and put customers in control
Performance 2013
  • Strong growth in online sales, up 46.2%, representing 13.2% of total sales
  • Online market share up 70bps to 3.6%
  • Visitors up 36% to 241 million
  • Sales from mobile devices up over 200%
  • All own bought fulfilment brought in-house
  • 270bps reduction in UK online costs as percentage of sales due to scale and efficiency improvements
  • Awarded “Retail Technology Initiative of the Year” for Endless Aisle
Challenges in delivering
  • Recovering higher proportion of fulfilment costs
  • Optimising natural search to reduce cost of customer acquisition
  • Offering enhanced range of delivery options
  • Providing additional payment methods
Sustainability in action
  • Number of parcels per order reduced as all own bought fulfilment in-house, reducing parcel miles and delivery costs
  • Increasing number of Click & Collect parcels are being transported to stores on our own fleet, reducing parcel miles for each delivery
  • Working to reduce amount of packaging used in online fulfilment
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strategy in action – read more

...Magasin du Nord

Magasin du Nord is a long established, well known brand in Denmark with strong customer awareness. Although it has a different customer base and product offer compared to our UK business, Magasin has benefited from leveraging the Group’s expertise and experience in a number of important areas in the four years since acquisition, including sourcing, multichannel and logistics. The business is now very profitable, having been loss-making when acquired, and delivered another year of strong sales growth in 2013.

Looking forward, we can grow sales and margins by introducing more Debenhams brands and developing the Magasin own label. Whilst Magasin will always have a lower penetration of own brands than the UK due to its more premium market positioning, we anticipate we can double the own brand mix over the medium-term.

We are investing in the Magasin stores including a substantial makeover of the flagship store in Kongens Nytorv in central Copenhagen and upgrades to the Aarhus and Odense stores.

Magasin also has the opportunity to become the leading online retailer in Denmark and even elsewhere in Scandinavia. Its trading website, www.magasin.dk, was launched during the course of 2013 and is already showing encouraging signs. A mobile site and app will be available in time for Christmas 2013. Multi-channel services such as click and collect are also under development.

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Debenhams plc,
registered in England No. 5448421,
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