Debenhams [IRDX RDEB] today unveiled a review of its strategy along with its half-year results. The department store group pointed to the importance of social and mobile to its multichannel business, as it reported group sales (group transaction value) of £1.7bn in the half year to March 4, 2.9% up on the same time last year, with UK sales like-for-like sales up by 0.5%. Pre-tax profits of £87.8m were 6.4% down on last time. Here are the key points for its multichannel strategy.
Mobile driving online growth
Debenhams online sales grew ahead of overall sales: its 14.6% half-year ecommerce increase included 12% growth in the UK, thanks to a 64% growth in mobile orders. The retailer now aims to put mobile at the centre of its business, so that customers can always engage with it via their smartphones, wherever they are, and whether they are shopping or communicating. Its internal surveys have found that shoppers use their phones most frequently to engage by writing reviews, checking opinions, commenting on social media, or to check logistics, such as a store location or product availability. That will be supported through an upgraded mobile platform.
Debenhams sees growth opportunities in social shopping, as both leisure and mobile become a greater part of the shopping experience. It defines this as “shopping as a a fun leisure activity enjoyed with friends and family and shared via social media”, and says in its half-year results: “We will give our customers more reasons to come to Debenhams, whether they are at home, on the train or in the high street, and build a stronger relationship with them, centred around mobile interaction. We score well on many metrics compared with competitors but can do better to encourage frequency of visit.
“We will create an environment both online and offline that is engaging and inspiring, with great service, and a shopping journey that is convenient and reliable so they will want to come back to us more often. We want them to share the experience, whether by visiting stores with friends and family to shop, use our services, eat and drink or attend events – or via social media.”
More frequent shopping, online and offline
The retailer wants to increase the frequency of shopper visits, both online and offline. It aims to do this by improving the quality of its stores and the locations that they are in and through new in-store events. More than 30% of its online sales are already picked up in store – now it plans to make the click and collect experience a more engaging and sociable one, linked to services such as personal shopping, as part of its social shopping ambitions. It will trial a click, collect and play service from the autumn. Over the next five years it will also review the future of 10 stores.
Two thousand more staff will move to customer-facing roles as the department store group looks to make more effective use of people, inventory and infrastructure. Debenhams will also target customers through new channels; for example, it is launching on Amazon.de next month.
Sergio Bucher, Debenhams chief executive, said: “Our customers are changing the way they shop and we are changing too. Shopping with Debenhams should be effortless, reliable and fun whichever channel our customers use. We will be a destination for “Social Shopping” with mobile the unifying platform for interacting with our customers. If we deliver differentiated and distinctive brands, services and experiences both online and in stores, our customers will visit us more frequently and, having simplified our operations to make us more efficient, we will be able to serve them better and make better use of our resources.
Debenhams expects to complete a warehouse automation programme in 2020. In the meantime, it is consulting on the closure of one of three central distribution centres and 10 smaller warehouses.
Shoppers opted more frequently for premium delivery options, up by 64% in the half-year.