Debenhams, the department store chain with 166 stores, which can trace its origins back to the reign of King George III, has today gone into administration after its lenders rejected the deal put forward by its largest shareholder, Mike Ashley, who is looking to be crowned as the new king of the High Street. There are many factors which led to its demise and many would say that the writing has been on the wall for some time as Debenhams has failed to keep up with the changes affecting the whole of the retail industry and adapt to changing consumer habits.
It's store portfolio has an average length lease of 18 years on FRI terms with upwards only reviews and a massive rates liability (post the 2017 revaluation), which means that it required a huge amount of footfall through its stores to sustain its significant bricks and mortar presence and make it competitive against other more flexible retailers.
In order to successfully trade in today's challenging climate retailers need to offer a superb consumer experience and connect the physical with the digital environment, something which Debenhams failed to do.
It did not offer a clear or relevant product to a defined target market and in an overcrowded market place became better known by its shoppers for its Blue Cross days which is not in itself a successful sales strategy as customers simply wait until items are discounted in the knowledge that a sale will soon follow.
Obviously Debenhams fate has not been helped by current economic factors and consumer confidence hit by Brexit uncertainty but it does seem to have been the master of its own destiny with its failure to move with the fast changing times that retail in the 21st century demands.
Put simply, the business has been outmanoeuvred by more nimble competitors, failed to embrace change and was left with a tiring proposition. The industry is evolving fast and it paid the ultimate price."