The news of Boohoo purchasing the Debenhams brand has dominated the headlines this week. But what will this mean for the high street, and what repercussions will this have for similar businesses who are struggling? Ben Cowgill, Director of The Insolvency Experts, part of Cowgills, provides an insight.
As we know, Boohoo is not taking on any of Debenhams’ stores, therefore increasing the number of empty stores both on the high street and in shopping centres. Supply of retail property will, therefore, further outweigh demand.
This means that new prospective tenants will be in a stronger bargaining position with regards to rent prices. Existing tenants are likely to see a further reduction in footfall on the high street as people who specifically went into town centres/shopping centres to visit Debenhams will no longer be doing so. This may impact negatively on their turnover and prompt them to renegotiate with landlords. As a result of this pressure, landlords will likely need to realign rents in line with the current times.
There will also be an increased amount of pressure on the Government to revisit business rates, or even to consider scrapping altogether in order to assist traditional retailers to compete with those who are making a huge amount of profit online.
A huge lesson that other retailers can learn from this is that it is extremely important to stay with the times. Also, what sort of experience can businesses offer in-store that cannot be experienced online? For example, excellent customer service, the ability to try clothing on, trying free samples etc.?
Boohoo unquestionably has a younger audience. Does this mean Debenhams now have a chance of appealing to a younger audience? It’s hard to say, but they certainly now have an increased database to target in both in terms of size and profile. This will enable them to diversify their product offering further. It remains to be seen whether the Debenhams brand will stay for the long term or whether Boohoo decides to revamp it. Either way, the target audience will certainly be broadened.