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Debenhams multichannel strategy still paying

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Debenhams has reported online sales up by more than a third in the past four months, as its multichannel business continues to grow.

The department store chain said ecommerce sales were up by 34.9% during the 16 weeks to 23 June and had increased by 40.2% for the year to date.

Debenhams is now the eleventh biggest UK online retailer by traffic volume, up from thirteenth last year, and mobile continues to be the fastest-growing channel, accounting for 30% of website traffic.

The numbers quoted by the company include sales which have been fulfilled through its Endless Aisle initiative, which is intended to increase fulfilment rates by meeting customer demand from stores as well as fulfilment centres.

If Endless Aisle had been factored in when Debenhams reported its figures in April, the numbers would have been different, the retailer has admitted. The first half online sales growth reported on 19 April 2012 of 34.7% goes up to 43.4% with Endless Aisle in the mix, which makes the latest reported growth look less impressive.

Debenhams said that in future its online sales will always be reported on this basis.

In April, when Debenhams reported its interims, it said that it won an estimated £10m of sales that would otherwise probably have been lost. The innovation also means that Debenhams minimises markdown by selling stock more efficiently.

The system works by identifying when a product is out of stock in the online stockroom to keep it on the retailer’s website for shoppers to buy. Using the shops as an additional stockroom gives Debenhams lots more selling power online, with  stock available at 36 of its biggest shops.

Chief executive Michael Sharp said: “We have continued to make good progress and I am particularly pleased with the like-for-like sales trends in the second half of the year.  Debenhams has again demonstrated the efficacy of our strategy to build a leading international, multi-channel brand and our ability to trade well in difficult market conditions, as well as the inherent strength of the department store model.”

Sharp said the retailer’s focus for the remainder of this financial year and into next year will be “the remorseless execution of the four pillars of our strategy which we believe will bring success irrespective of the wider economy."

Debenhams said in April that its target is to grow online sales to £500m over the medium-term. Of that total, it said 20% would come through international online delivery, partly by increasing the number of countries it delivers to from seven to 40 during the first half of 2012. By the end of the summer  the number should have expanded to 67.

Other innovations during the first half included the introduction of kiosks across its stores, which delivered “encouraging” levels of sales over Christmas.
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