Following yesterday’s news that Debenhams has called in the administrator to restructure its debts, many industry watchers are warning the retailer that now it needs to fast track its digital strategy and fully embrace mobile if it is to survive.
Back in October, the IRUK Top500 retailer said that it planned to close up to 50 under-performing stores over the next three to five years, from a store estate of 165 stores. It also said that it expects 30% of its business to take place online in the future, primarily via mobile. In its last full year, 20% of sales took place online.
At the time, chief executive Sergio Bucher said it was “taking decisive steps to strengthen Debenhams in a market that remains volatile and challenging,” adding that there were tough decisions to take on stores where financial performance was likely to deteriorate.
Now, with the company effectively in the hands of its lenders and with the potential £200m investment lifeline from Sports Direct’s Mike Ashley down the gurgler, the retailer needs to press on with making that transformation happen.
As the shift to online and mobile has become the norm for many consumers, department stores – with the very recent example of Debenhams now being a national headline – have singularly failed to remain relevant," says Giorgia Gallarati, Retail Consultant at BJSS. "They have consistently failed to react to a new reality; one where consumers are now dependent on mobile devices, where newer, nimbler brands have entered the market and where response, rather than inactivity, is required."
According to Gallarati, to offer a truly memorable and personalised experience, department stores should look to drive greater value from their customer data and to automate repetitive, non-value add tasks to empower store associates; allowing them to focus on serving, advising and truly understanding customers. Intelligent customer service will be the way forward.
"In the case of Debenhams, we believe that in the short term it should seek to bring excitement back to its stores," she says. It needs to quickly get to grips with which brands, services and partnerships resonate with its customers, and those which quite simply don’t. It should seek to use this insight to tailor its range and assortment, drive down costs to reinvest in digital platforms and encourage full price sales. These actions will empower their sales associates to provide the service consumers are demanding."
“If store retailers want to remain competitive in today’s volatile climate, they need to be agile and adopt systems that make online to instore transactions seamless,” says Leigh Moody, UK managing director, SOTI. “Retailers must consider integrating a mobile first strategy across their entire on and offline operations to streamline the value chain, from supply to distribution to shop floor. They should be offering personalised services, whil mobilising retail staff through technology to streamline intelligent customer interactions.”
Stores too have to adapt. They still very much have a role to play, it is just that role has changed since the days of department stores. According to research by MarketingSignals.com, most UK shoppers prefer to buy in a store, while using online to research their purchase. Some 94% research online before going into store to buy, while 78% say they like to go into store to see and feel an item before going online to find the best price.
Gareth Hoyle, managing director of Marketingsignals.com says: “In an ideal world, consumers would rather visit a store to make a purchase, though due to time constraints, stock issues and ultimately convenience, many turn to shopping online. This is a lesson for retailers to ensure their digital presence is working as hard as it possible can for them, offering an omnichannel journey and an experience that is most convenient for customers.”
So where does that leave Debenhams? “There is a clear opportunity here for bricks and mortar retailers to innovate, harnessing all of the capabilities that technology now provides, such as artificial intelligence and the Internet of Things both through digital and physical channels, to enhance the customer journey,” says Moody. “This will also provide real-time, data-driven insights that retailers can use to improve their interactions with customers and ensure their stores remain competitive in the digital transformation age.”