Boohoo boss: How we will make Debenhams a force to be reckoned with

Since Debenhams fell into ‘light touch’ administration last April, several interested parties including JD Sports and Sports Direct have mulled a rescue bid for the department store chain. But, until now, no deal to save the business has been reached.

Boohoo’s eleventh-hour acquisition of the Debenhams brand, while surprising, is a bold strategic move that will see the etail giant scale up its ecommerce ambitions and expand into new categories and ways of operating.

Boohoo has acquired the brand and website, leaving Debenhams’ 116 stores and 12,000 colleagues out in the cold, but giving Boohoo ample opportunity to rebuild the business on new foundations that will set it up for online success.

Marketplace magic

Chief executive John Lyttle tells Retail Week that Boohoo is gearing up for a relaunch of Debenhams online as soon as late March, which he says opens up a “new chapter” for both Boohoo and Debenhams.

“What attracted us to Debenhams was that we talked internally previously about a marketplace,” explains Lyttle.

“At the moment, all of our brands had operated as independent websites selling directly to the consumer, but the marketplace opportunity for our nine brands to be sold together was interesting.

“It’s a different approach for the Boohoo group, but another clear step in our journey of growing in the fashion online business.”

The new marketplace will host all of Debenhams own-brands, third-party sellers and the entire ranges of each of Boohoo’s existing nine brands.

Boohoo pointed to the strength of Debenhams’ brand online as a key motivation for its acquisition of the business’ intellectual property – with 300 million website visits a year, its current ecommerce platform is in the top 10 most popular retail websites in the UK. 

The department store retailer also has a substantial hold on the beauty sector, boasting 6 million beauty shoppers a year across its stores and online and 1.4 million Beauty Club members.

Boohoo plans to leverage Debenhams’ access to premium beauty brands to make its first foray into the sector at scale, alongside launching into homewares and sporting good categories – both of which have soared during the pandemic. 

The retailer has agreed a transitional deal within which Debenhams can trade the stock from its stores once they reopen, before Boohoo launches its online marketplace in the first quarter of its next financial year. 

Restyling own-brand fashion

While Boohoo will be able to add Debenhams’ own brands such as Principles and Mantaray to its portfolio, Lyttle says the bigger opportunity lies in new categories to create a marketplace model, much like Next or Asos.

The new platform will feature a host of third-party brands alongside Boohoo and Debenhams’ own offerings creating a one-stop-shop for fashion, beauty, homewares and sports.

Boohoo believes the marketplace will be a “capital-light and low-risk” model with the brands in control of their own inventory.

Lyttle also explains that Boohoo was attracted to Debenhams’ beauty arm and own-label fashion brands, the latter of which he is confident the business can reinvigorate in a similar way to previous acquisitions Karen Millen and Coast.

“Like other brands we’ve bought, we think they can give a better fashion offering,” says Lyttle.

“You look at Principles, Mantaray and Faith and you think it’s lost its fashionability and its target customer. Equally we think, from a marketing point of view, it hasn’t been connecting with its customers as well as what it should be. Clearly those brands will now be online-only, so without the limitations of store size we can offer a much wider range.”

Lyttle also says the retailer is looking to expand Debenhams’ beauty offer with third-party brands as well as the potential to create its own labels.

In homewares – a popular category in lockdown – Boohoo is also looking to build on Debenhams base and add “fashionability”, with the potential to extend the ranges to its own brands.

PrettyLittleThing, for example, launched a successful homewares edit last year, which Lyttle is hoping to extend.

Will beauty brands bite?

While an adjacent beauty offer is likely to resonate with Boohoo’s core customer, Shore Capital analyst Greg Lawless has some concerns about the appeal of Debenhams’ premium brands to the fashion etailer’s existing audience, as well as whether such brands will agree to be online-only.

“With beauty, the big risk will be whether international beauty brands – Estée Lauder, Clinique and Chanel – will want to be online-only, which I don’t think they do. If they were to do that, would they choose Boohoo [to partner with]?” he asks.

Perhaps in a bid to keep existing beauty brands onside, Lyttle says Boohoo will keep Debenhams’ existing head office beauty team, as well as building up Boohoo’s expertise in the category in-house with new recruits.

Boohoo founder Mahmud Kamani calls the acquistition a ‘transformational deal for the group’

“A lot of the head office teams were made redundant last summer and over the last couple of months so there’s only a very small team left, and many of them will be associated with running stores or warehouses,” Lyttle explains.

“We will be looking to recruit some people [from Debenhams], the beauty team for example, and then we’ll be looking to build out those teams.”

Boohoo has a matter of months to relaunch Debenhams as a marketplace if it is to keep to its self-imposed deadline but Lyttle is confident the retailer will be able to do so.

“What we’ve done previously when we’ve acquired these other brands has been that relatively soon after acquisition, we relaunch the brand as a soft launch and then we rebuild by brand, day by day, marketing the site in different ways such as influencers,” he says.

While Boohoo’s plans may carry risks, the acquisition of Debenhams marks an important development in its future growth opportunities, as it looks to take advantage of the online shift seen in the past year to take its business to new heights.

What chair and founder Mahmud Kamani called as a “transformational deal for the group” will leave a hole in the high street that will shake up the sector and send an already soaring retailer to new heights.