Case Study - Debenhams

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The company was established in 1778 although the name Debenhams was not used until 1813. The first department store opened in 1905 and the company continued to grow and expand over the following years. In 1985 Debenhams became part of the Burton Group of companies but it was demerged in 1998 and became an independent company again. It is now owned by its Directors and private equity. Debenhams customer base is the mass family market. The company employs 19,000 people and has 15.8 million visitors to its stores every year.

The company has a variety of stores, some of which are situated in old well-established buildings whilst others, such as the one at White Rose Centre, are based in new buildings. Stores range from 30,000 to 160,000 square feet. The White Rose store is one of the company's larger stores at 110,000 square feet. There are a total of 125 Debenhams stores nationally and, in terms of size and turnover, the White Rose Centre store is ranked 6 in the country. London's Oxford Street is the flagship store and ranked 1. Debenhams became an anchor store in the White Rose Centre because the company wanted to expand and was looking for opportunities in areas where it did not already have a presence.

There are many similarities in the layout of all the Debenhams stores. For example, in most stores the Health and Beauty department is situated close to the main entrance in order to give the store a sense of theatre and give the impression of being light and bright. Each Debenhams store is a mix of various offerings for customers, for example:

• They sell their own brand goods which include Red Herring and Maine New England;
• They also stock and sell goods designed by well known designers such as J by Jasper Conran and Rocha.John Rocha;
• Stores also offer space to concessions such as Principals and Bensons, who sell their own goods and pay a proportion of their income to Debenhams for having space in the store.

Managers at The White Rose Centre store recognise that they have a different clientele from many other Debenhams stores. The area surrounding the White Rose Centre is not very affluent and the customers who visit the store reflect this. In the city centre the Debenhams store has a higher earning clientele and is sited near to Harvey Nichols. This means that the products purchased are different too. Management also recognise that the White Rose Centre is different from other, larger centres, such as Meadowhall. Whilst many shoppers may spend a full day at Meadowhall most visitors to White Rose Centre simply call in, buy what they want and then leave.

All stores have a general footprint (or store plan) to which they work, for example, in the White Rose store the allocation for ladies clothing is 10,000 square feet and for men's clothing 7000 square feet. Managers will usually try to site women's clothes and accessories near health and beauty but this is not always practical. For example, if the store can be accessed on two levels some managers put women's clothes on the upper floor by the door.

Store managers have relatively free licence to set up the store as they wish using their knowledge of what is popular locally and the managers can decide how much space is given to the concessions. The store earns more money from its own products (42p in the £1) whereas the income from concessions is less (22p in the £1). It was decided to introduce concessions to increase the variety of goods available in stores and to supply goods that Debenhams would not sell itself, for example, beds from Bensons. Concessions pay a percentage of their turnover to the store.

Approximately 100,000 shoppers visit The White Rose Centre Debenhams store every week and the majority of its customers are women. The store's turnover is approximately £50m per year, 23% of which is taken in the 6-week period leading up to Christmas.

A mystery shopper visits the store every three months spending half a day in the store visiting most departments including the restaurant and buying and returning products. Following the visit a report is produced for the store manager.

Debenhams has contracts with health and beauty companies who require the health and beauty department to be placed close to the main entrance, but   unlike many other retail companies, suppliers do not pay Debehams to display items in certain parts of the store. Departmental managers are responsible for their own areas and are always keen to expand their floor space. Each department has a sales target and the department managers have a certain amount of autonomy when planning the display for their range of goods.

The store card is important to the Debenhams and the White Rose Centre store has a target of persuading100 new customers per week to take a Debenhams card. Privileges for having the card include sale previews, cardholder offers and special events. Account cardholders account for a large amount of the business but it is becoming increasingly difficult to sign new people up due to bad publicity surrounding the interest rates of store cards in general.

Stock is ordered on an automatic replenishment system. The computer system recognises what has been sold in store and automatically orders replacements to be delivered from the central warehouses. The store has daily deliveries (other than Sundays) from warehouses in Daventry, Northampton and Peterborough.

Shoplifting is a problem in the store and managers are very keen to put a stop to it. The store does not suffer from organised crime but more from opportunist thieves. There have been a number of arrests in the store and the policy is to prosecute those people caught.

Debenhams views other department stores in the White Rose Centre as good competition and good for trade. Managers recognise that a customer who has primarily come to shop at another store may also buy something at Debenhams and for this reason they are keen for the centre to have as many successful stores as possible. Many shoppers who visit the centre are comparison shoppers. They set out to buy an item, for example, a coat, and will visit 2 or 3 stores before choosing which one to buy. Although they may not buy the coat at Debenhams something else in the store might attract their attention and they will buy that too.

Debenhams Questions

1. How long has the company had department stores?
2. Why did Debenhams introduce concessions into their stores?
3. Other than giving the store the appearance of being bright why would health and beauty products attract customers to the store?
4. Why do Debenhams want more people to have store cards?
5. Why are departmental managers keen to increase their floor area?
6. Name three stores in the White Rose Centre that could be used with Debenhams when comparing products to buy.
7. What products may sell better at the Leeds city centre store than at White Rose Centre?
8. Why is automatic replenishment a good method of controlling stock in stores?
9. What is the turnover in the lead up to Christmas?

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