Many customers are wondering what it means for orders, gift vouchers and returns. Retailers and shopfront specialists, on the other hand, are interested in what this means for the long term future of department stores, all-in-one high street retail and indeed the retail world as a whole.

 

The fall of Debenhams has been caused by a myriad of factors that call into question how much its struggles reflect the retail world as a whole.

 

What We Know

Debenhams has been in trouble for at least a year, long before the current circumstances. It was over £600m in debt before the current circumstances significantly hurt the retail industry according to an article in the Guardian.

It had already been in administration in 2019, with that process leading to the closure of 22 stores, and so a year later, it released a Notice of Intent, the first step of the administration process.

The intention was to find a buyer, with Next, Mike Ashley’s Frasers Group and JD Sports appearing interested, as well as other groups such as The Hut Group looking into the website however these offers gradually disappeared.

The complication of any deal comes as a result of the previous administration in 2019 which put the company in the hands of its creditors.

On 1st December 2020, the hammer fell, as Debenhams announced they would be winding down the business whilst looking for buyers of either the whole company or pieces of it.

The reason for this announcement was the reporting that JD Sports, the last major potential buyer, pulled out after rumours of this decision led to a 6 per cent rise for the company on the stock market.

Debenhams is a particularly special case when it comes to its collapse. Not only is the scale of its fall bigger than most, but a large part of it is based on its struggles to adapt.

However, its issues are as much about a failure to adapt rather than the stability of the retail landscape as a whole, with similar companies such as Selfridges still open despite the market conditions.

 

Lack Of Flexibility

Successful shopfronts, both before and during these current circumstances are about providing an effective and desirable customer experience, that captures what the brand means to its customers.

Some of Debenhams’ struggles mirror other department stores, however many of these have managed to effectively restructure, usually by reworking their shopping experience.

Debenhams struggled as a house of brands to do this, as a lot of its branding work was the result of the partners it worked with, and its functional but unremarkable online offering did not help in a digital age.

There is one other major connecting factor to take into account.

 

The Arcadia Group Administration

The Arcadia Group, the owners of Burton, Dorothy Perkins and Topshop, collapsed and also went into administration on 30th November, when talks to secure an emergency £30m loan failed.

Whilst both Debenhams and The Arcadia Group’s parallel collapses are seen as reflections of the retail market, however, both were victims of underinvestment and an unwillingness to change.

Both The Arcadia Group and BHS, both owned or formerly owned by Sir Phillip Green are also at the centre of pensions shortfall scandals, in which funds totalling £931m have been found missing from company pension funds.