Debenhams reveals plans to build £1bn beauty business

By Lucy Tandon Copp 24-Apr-2017

Under a new strategy, Debenhams Redesigned, the UK retailer aims to become ‘a destination, digital and different’ with a focus on dominating in the beauty sector

UK department store retailer Debenhams has announced a new strategy aimed at delivering growth, with a focus on on becoming a destination retail location and a leader in beauty.

The 'Debenhams Redesigned' strategy is predicted to cost the high street chain £50m from full year 2017-2020 to implement, and will see the retailer hone in on digital opportunities and innovation.

Beauty focus

As part of the strategy, Debenhams revealed plans to become the “preferred destination” across all retail channels in beauty.

A market leader in the premium make-up segment and No2 in the premium beauty retail market overall, the retailer saw online sales in 2016/17 grow by 14.6% for the half year 2017, fuelled by its beauty division and gift business. Beauty sales specifically were up 31%.

Kat Von D Studded Kiss Lovecraft lipstick

Going forwards, Debenhams revealed it plans to build a £1bn business in the beauty category and grow its share in the £4bn beauty services market, which it acknowledged is “highly fragmented”.

However, Debenhams believes it has the opportunity to build a differentiated proposition in the services market.

It already offers Clarins Beauty Bar treatments in select stores and its Oxford Street store is home to the Benito Brow Bar as well as Arden Red Door services.

In October 2016, Debenhams became the exclusive retailer of Kat Von D make-up, which fast became its No1 online beauty brand; the brand generated £1m in online sales and £120k in-store in just under a week of its launch.

From September 2016 to March 2017, the retailer’s top fragrance launches were Chanel, Gucci Bloom and Thierry Mugler Aura.

Changing demands

But the retailer’s beauty goals are just part of a broader cross-division strategy.

Sergio Bucher, Chief Executive of Debenhams, 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.”

He added: “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.”

Digital first

We will be a destination for 'social shopping' with mobile the unifying platform for interacting with our customers.

Online channels are becoming an increasing focus for the retailer with ambitions for it to become a destination for social shopping.

To do this, Debenhams will move to a new mobile platform in order to unify channels and interaction with consumers.

Bucher added: "We will be a destination for 'social shopping' with mobile the unifying platform for interacting with our customers."

It also plans to build brand ranges for its online customers first going forwards, editing its in-store ranges based on insight garnered from customer uptake and online catchment profiles.

Debenhams currently receives over 5 million visits online per week, and ships to 60 countries.

Store closures

Also high on the retailer’s list of priorities is ‘fixing the basics’, which will involve the review of up to ten UK stores for closure over the next five years, axing certain brands and distancing itself from non-core international markets.

Debenhams also plans to switch approximately 2,000 staff to customer-facing roles and declutter its store environment with roughly a 10% reduction in stock options and faster replenishment from an average of eight to two days.

It explained that some of its smaller UK stores may be converted into Outlets, a strategy it plans to test out.

The retailer aims to drive frequency of visit both on and offline. In bricks-and-mortar, it plans to do this by having “good stores in strong locations” as well as leading market positions in key product categories.

Debenhams stores see 19 million UK customers come through its doors yearly and employs 30,000 people.

It currently operates 176 UK and ROI stores, with 171 international owned stores and 168 franchise stores.

The beauty floor in Debenhams' Liverpool store

Standing out

Reinventing Designers@Debenhams, the store hopes to make the proposition “more relevant” by managing the portfolio more robustly.

It said: “We will invest in full price marketing to support our ambition to build brands with their own brand equity and also with international appeal.”

Warehouse cuts

Debenhams also plans to transition to a single warehouse management system, and consultation has already begun on closing a central distribution centre and around ten smaller regional warehousing facilities.

The retailer plans to report back at its preliminary results in October with progress on the trials and new initiatives.

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It plans to deliver the majority of the strategy over the next three years.