Struggling Debenhams Takes Design Tips From Your Clicks
(Bloomberg) -- Going viral may soon be a requirement for products to get prime placement in a Debenhams store.
At its “store of the future” northwest of London in Watford, England, Debenhams Plc is leveraging an online community of beauty-product enthusiasts to drum up foot traffic. The merging of online and in-store shopping experiences is the latest effort to transform the struggling U.K. retailer and fend off growing threats from Amazon.com Inc. and other digital-first competitors.
“If we want to be successful against pure players, we need to create great reasons for customers to come and shop with us,” Chief Executive Officer Sergio Bucher told journalists Monday at the Watford store. “And that’s what we’re trying to do here. So clearly online is convenient, but shopping is one of the most favored sports.”
Debenhams, whose stock has dropped 79 percent in the past year, recently launched an online social platform called the Beauty Club Community, where shoppers can talk and get advice from other members. As they post on the platform, users rack up points that can be used to get discounts on beauty products online or in the store. Products that get a lot of buzz online will also be featured in the physical store.
The use of digital data to analyze customer preferences allowed Debenhams to trim down in-store offerings by 25 percent compared with similar-sized stores.
Debenhams’s future may depend on a combination of increased digital growth with a turnaround of in-store sales. In the 26 weeks ended March 3, like-for-like sales declined 2.2 percent. While digital sales grew 9.7 percent in that period, the overall performance helped force Debenhams to issue three profit warnings earlier this year.
The shiny new offerings in Watford are only one side of the store’s transformation.
“They’ve made a lot of progress, but the challenge is going to be getting this out to other stores,” said John Stevenson, retail analyst with Peel Hunt. “You’ve done the work, but how will you communicate to customers that Debenhams has changed? The jury on that is going to be very much out.”
Investors will be looking for Debenhams to take action to reduce its debt load and turn around profits. The retailer next reports earnings on Oct. 25.
©2018 Bloomberg L.P.