Comment: Debenhams' problems amount to more than just snow

With its surprise update this morning, on January like-for-likes falling around 10%, Debenhams won the unwanted distinction of being the first retailer of the year to complain about the snow.

Predictably this then kickstarted the familiar rounds of discussion among retail watchers about just how much of the tumble can really be blamed on the problematic weather.

Any kind of disruption that gives consumers a reason to think twice about heading to the shops is generally bemoaned by retailers, for obvious reasons. However, for Debenhams to point the finger solely in this direction seems like an over-simplification.

The term ‘January sales’ already requires greater scrutiny this year, given that much retailer promotional activity began as early as Christmas eve. In fact, by the time the New Year arrived many consumers were ‘shopped out’ and their thoughts were already turning back to budgeting, to protect themselves against an uncertain economy. Indeed, Conlumino’s monthly tracker showed a sharp fall in confidence at the beginning of the year, with spending on fashion identified as a particular area for cutting back.

The arrival of the snow from January 14 onwards further accelerated this trend. Shoppers that were already cautious now had another excuse not to spend, providing a neat cut-off point to a trading period that was already losing momentum.

Of course, some retailers were more exposed to this slowing than others.

Debenhams has made excellent strides forward in recent years, but it is fair to say that it remains more reliant on the buzz surrounding sales periods than many of its competitors. John Lewis has a stronger multichannel offer, more diverse ‘pull’ factors (such as superior service and store environments) and a wider range of products with which to excite people. Consequently it was better placed to cope with the external difficulties which squeezed Debenhams, boasting superior growth rates as a result.

But perhaps it was Debenhams own reaction to the adversity which was most telling. In an attempt to compensate for the weak month, Debenhams ramped up promotions in February. Rather than use the tough time as a catalyst to re-evaluate their offer and ask why they may be losing out, instead they reached back to the short-term boost of the discount. Although this did have some limited success it came at a price, inevitably undermining margins and profits.

Although not directly comparable, contrast this with John Lewis’ reaction to their own tough time back in 2008, when they began introducing many of the long-term improvements which are still bringing success to this day.

Snow is a problem for retailers. But it is a short-term problem, more keenly felt by retailers with a short-term outlook. Perhaps the real message for Debenhams is that it needs to better engage the consumer, whatever the weather.

Matt Piner is research director at consultancy Conlumino