Comment: How John Lewis and House of Fraser outperformed Debenhams

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There’s something about department stores and Christmas. Maybe it’s the influence of the movie Miracle on 34th Street but the two somehow seem to go together.

In reality, it probably has something to do with the fact that they allow time pressed consumers the opportunity to get a lot of things under one roof and they, traditionally, do this with relatively high level of customer service. As such, they’re a segment of retail that usually cashes in at Christmas.

It is interesting that the first three sets of results out are from three of our leading department stores: Debenhams, House of Fraser and John Lewis. In some ways what they show is a microcosm of what we will see in other parts of retailing, namely that Christmas created winners but it also created some losers too.

Debenhams was first out of the starting block, mainly thanks to the fact it needed to update the market with a profit warning. Given Debenhams’ reasonable performance over the course of 2013 the Christmas numbers were slightly surprising and certainly disappointing. There is little doubt that Debenhams suffered from the late start to Christmas which meant it, like many other retailers, lost out on the early part of the trading period. However, given the more robust activity of its rivals that can’t be used as the whole excuse for a weak set of numbers.

One of the inevitable issues for Debenhams is that it suffered from the discounting which became so prevalent on the high street in a way that John Lewis or House of Fraser did not. Debenhams customers expect discounting, it is an established part of the proposition and, as such, it likely means that in a promotional environment Debenhams had to work the harder to stimulate customers into buying. Although not the only factor, this was one of the reasons behind a dilution in profits.

If Debenhams’ results were lacklustre, then House of Fraser’s were glittering. The group posted one of its best ever festive performances, with sales up strongly.

In large part this was thanks to online, and areas where House of Fraser has worked hard to create a strong multichannel proposition. Credit must also be given to the more aspirational nature of its offer which was both appealing and compelling over the festive period and helped to isolate it from some of the discounting frenzy which engulfed other parts of the high street.

Similar to House of Fraser, John Lewis benefitted from a strong multichannel proposition. It was also helped by compelling marketing with this year’s advert throwing a halo around the brand.

In the final analysis, however, everything ultimately comes down to product and here John Lewis excelled with an assortment that was both innovative and well curated. In typical John Lewis style, ranges were well put together and were easy to shop across all of its channels. For this reason alone, John Lewis made itself a destination that was right at the top of many customers’ shopping lists.

Taking just three results as a barometer to wider trends always needs to be done with caution. However, it is telling that the two players that focused more on product and experience and less on discounting did best.

The truth is that what consumers really wanted this Christmas was good value, not just discounts and low prices.