Debenhams and Tesco

It is necessary to start this blog post by reflecting that underneath the news stories and headlines are real personal stories in which individuals are losing their jobs.  Too often it is easy to focus on the store closure and ignore the human cost.  We need to remember this, as it underpins both the retail stories discussed below.

It is hard to know what to say about the saga of Debenhams and the antipathy there seems to be between the various parties.  At one level, given previous stories, it is hard to like Mike Ashley, but at least he is trying to put some money where his mouth is.  Whether this is because he sees a retail or a property play is another matter.  But in the case of Debenhams this is now moot, as he has been finally rebuffed. Though as I write seems determined to try to sue someone involved.

So, for now, Debenhams is in the hands of the lenders.  Looking at the business it is hard to be positive.  Buffeted by the changing consumer interests and behaviours, in large spaces hit by the excessive town centre rates charges, the business is in real difficulty.  But considering the stores (and experiencing them) it is difficult to see their point of differentiation and the reasons for consumers to visit.  Stories of in-store confusion and poor service abound.  They have been losing their way for a while.

The current proposition seems to be to try to close some stores and rationalise the portfolio.  There may be some benefit to be had on rents as well.  But none of this really addresses the fundamental problem of the attractiveness to consumers.  A smaller chain still faces the same problem. What are the plans to sort out the offer to customers? And can they be made affordable?

This week Tesco produced their latest figures and seem to be on track to come back fully from their problems.  Dave Lewis has altered what the business does and refocused operations.  Some of this has involved closing stores (and cutting plans for openings), reducing staff, planning to cut some counter services and simplifying operations.  There is more to it than this of course, but the point to make is that slash and burn and simply cutting stores is not the answer on its own.  Tesco still have a long way to go, and some of their initiatives will not work in all probability, but there is far more of a sense of trying to satisfy customers than is yet in evidence from Debenhams. It is a simple reminder that the business must run for the benefit of customers or they will go elsewhere.

About Leigh Sparks

I am Professor of Retail Studies at the Institute for Retail Studies, University of Stirling, where I research and teach aspects of retailing and retail supply chains, alongside various colleagues. I am Chair of Scotland's Towns Partnership. I am also a Deputy Principal of the University, with responsibility for Education and Students.
This entry was posted in administration, Consumer Choice, Consumers, CVA, Debenhams, Department Stores, Employees, Rates, Rents, Retail Change, Retail Failure, Sports Direct, Store Closures, Uncategorized and tagged , , , , , , , , . Bookmark the permalink.

6 Responses to Debenhams and Tesco

  1. I love Debenhams in Cambridge and Inverness. The department store format where you can browse multiple mid-range brands of clothing in close proximity to one another and pay at one till is very convenient, especially in a sea of multiples competing with one another on price. Tied together with traditional department store customer service, and ambience, and this is a format that should still have some life in it. Shame these stores are being hamstrung by business rate charges which tend to form a higher proportion than other shops, of an anchor-store’s total occupancy costs.

    • Leigh Sparks says:

      We were in the one in Stirling at the weekend. A sea of discount and reductions with seemingly little rhyme nor reason. Business rates are not fit for purpose as I noted here over many years, but the basic offer needs to stack up and I am not sure it does at the moment. That for me is the challenge they face – weaning themselves off some bad practices of the last decade (?)

  2. Have to say that my periodic experiences with the large flagship Debenhams in Glasgow can be a tad tedious. Finding serving staff can be a bit of a trial. Some layouts are very problematic, not at all clear what (any?) staff is serving what concession (or if they service each others’ customers?). Prices are often be very competitive and attractive, but as mentioned a bit ‘all over the place’. Has become really rather irritating the way that the tellers are made to ‘push’ the store card at you when you just want to pay and go.
    (BTW I have to admit to having had strong reservations as to whether TESCO could pull it off, but it does now seem well on the right tracks. Respects due from me (but I still loathe the jingoistic Union Jacks plastered all over the foodstuffs – I know I’m far from being alone in that).

    • Leigh Sparks says:

      Agree ion the Debenhams point. Am intending to see a Tesco Jacks in the summer so curious about the feel and look of them – gone a little quiet in recent months. I don’t quite see the volume of Union Jacks in our Tesco but would be interested in comparing Scotland and Wales on this. Seems to be more dragons in Wales when I am down – but then the dual language adds to that.

  3. Hi Leigh (and Natalie – fancy seeing you here!),

    Agreed re Stirling store – the incredibly mundane offer is like browser kryptonite.

    On the topic of business rates, I wondered if you’d caught this recent piece in the FT?

    https://www.ft.com/content/fe021c96-5ad4-11e9-9dde-7aedca0a081a

    We thought the True Capital idea an overhaul was interesting, if not without flaws. Any thoughts?

    • Leigh Sparks says:

      This is very much along lines I have argued in this blog for a number of years – the Houston we have a problem piece in T&CP is one example but I have written a few times on it. What we have is not sustainable. We have to move away form a property tax. Transaction tax is the obvious step. Not sure I see it as binary though – I suspect we have to have a mixed version for a while. But I am not enough of a property expert to know full consequences. The thought of sim,ply putting a tax on online sales a la Hammond is not the answer, but is a classic government response.

      One issue with transaction is the definition of location. Is this where the transaction occurs, or where it is delivered to as an example? Can see ways round some of this, so if too local than a problem?

      I was not also sure about the statement that we have a structure as LAs in place. At one level this is true obviously, but LAs have not to date very often covered themselves in glory in terms of how they have managed places and towns. They do not think in those terms in many cases.

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