This week sees the second high profile retail departure, and it’s still only Thursday morning! Debenhams and Michael Sharp is worlds away from Waitrose and Mark Price although both companies face growing competitive pressure. In fact I don’t know of a retailer in any sector that is not in the same boat to a greater or lesser extent, and that is the key point here.
Debenhams’ issues are much deeper than who is on the bridge steering. It is the vessel itself. If the business didn’t exist today would anyone invent it? The middle market of clothing is becoming an increasingly challenged, overcrowded and uncomfortable place to trade. Debenhams is far from alone in finding the going increasingly tough, and the pressures will only get worse. That middle market is being squeezed from above and below. A key problem concerns price and promotions. The company is famous for its frequent, large scale price promotions. It may be reducing their number a little but in today’s market where virtually everyone is promoting, those blue cross days have to work much harder to attract the same attention and spend. Today’s figures are better than they might have been but the middle market is contracting and only the very strongest will grow.
LIke so many of our retailers today, it is not simply a change of leadership they need but a change of strategy. And a winning strategy is not multi-channel and/or international – those are directions, not strategies. A winning strategy needs to generate profitable incremental sales, built on a compelling plan that captures those sales from the competition. There is a dearth of this kind of thinking but this is increasingly a fundamental of surviving and prospering in this market.
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