Debenhams to double number of overseas stores within five years
Detailed pre-planning and the careful early management of the initial store¬ís in new markets are leading to exponential growth in international territories for department store business Debenhams. By Glynn Davis
With 67 outlets in 25 countries the company has just celebrated the 15th anniversary of the opening of its first overseas outlet, but its most exciting prospects are ahead of it because there are plans to double its international store numbers over the next five years.
John Scott, head of international at Debenhams, is taking part in a panel discussion at the forthcoming Retail Bulletin International Expansion Conference in London on March 27th, and ahead of that event he highlights the thinking behind the company’s overseas strategy.
Debenhams works entirely with franchise partners in each of the countries in which it trades and it has the most outlets in a long-standing partnership with M.H. Alshaya, which operates 24 Debenhams stores in six countries in the Middle East. In contrast, in many countries it has partners that operate only a single or two units.
For department stores the partnership model is a natural route into new markets because they are complicated outlets to run and also capital intensive. “The partners have given us scale and speed that we couldn’t have got on our own. The growth achieved required a capital outlay that we couldn’t do,” he says.
Although the model can undoubtedly have its challenges, Debenhams’ experience means it now has a tried-and-trusted model for entering new markets. “The challenge is with the set up. Meeting potential partners and making sure they have retail expertise, are well funded, and have equity to invest. We then put various economic criteria into our planning model to see whether it [the proposition] is robust enough,” explains Scott.
There is then a period of learning and correcting any mistakes with the first store. For instance in India a single store has been trading for two years. But now that the arrangement has been proven in the country Scott says two more will open this year and “there is a pipeline for 15 stores in the next five years”.
It was a similar story in the Middle East: “Again it was one, two, three stores by year five but we are now opening six stores per year. There can be exponential growth afterwards.”
He suggests the countries Debenhams is now entering represent “empty plains, virgin territory” so it is no surprise that the company believes that international markets (combined with e-commerce) will be “a much more important part of the business” in the future.
“We are keen to expand in the UK and are always looking for new sites, and we’ve got quite an aggressive store modernisation programme, but international is the growth opportunity,” says Scott.
Debenhams benefits in its overseas ventures from having a strong portfolio of private label brands. This means that in some of its overseas stores up to 98 per cent of the products are its own private brands.
This removes the need for concessions and having to deal with lots of third-party brands. “It helps with the look of the stores and their size. And we can also translate a lot of the [UK] marketing and visuals for use in the overseas stores,” he adds.
There is also no requirement for having special ranging for each country, although Scott acknowledges that a team in the UK reviews the domestic ranges for suitability so there will be “no Puffa jackets sent to Asia” and also care has to be taken to not send some third-party brands into certain countries if there are local distribution rights in place.
Click here for the full programme and registration.The event is sponsored by GfK
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