Debenhams’ demand for discounts from suppliers may not be the best timing but everyone should be invested in the retailer’s growth plans

Debenhams’ demand this week that suppliers help fund its marketing and store revamps by cutting their bills by 2.5 per cent is terrible timing.

sarah145

Just days before Christmas, it makes the department store comes across as miserly. No wonder suppliers are up in arms.

It also leads to questions over Christmas trading at Debenhams, with analysts seeing it as an attempt by the firm to boost profit margins following a tough festive season. With consumer demand low many retailers, Debenhams included, have been forced into huge price cuts, offering discounts as high as 60 per cent in the hope of spurring demand.

But ignore the timing (hard I know) and there is logic in Debenhams’ request. It’s hard not to be in support of companies and their suppliers working together to make business more efficient, especially with times tough on the high street.

Debenhams is hardly the first to try it, with Laura Ashley earlier this year demanding a 10 per cent rebate and John Lewis asking for a discount of up to 5.25 per cent.

In this case, Debenhams is arguing that by helping support investment, suppliers will reap the benefits as sales grow. It can back up that argument by pointing out that sales are already increasing, up 2.5 per cent year on year in the year to August.

It’s also not like Debenhams isn’t investing itself. It has already pumped £25m into a refit of its Oxford Street store to make it a “true global flagship” and doubled marketing spend year on year for its autumn collection as it looks to improve brand perceptions.

It also has ambitious expansion plans, with more store revamps in the pipeline and plans to open a further 14 stores over the next four years.

Unlike some of its rivals (I won’t name them) Debenhams’ plans also seem to be working. Its “House of brands” strategy is achieving cut-through, helping to boost perceptions of the brand in areas such as impression and value, according to figures from YouGov’s Brand Index.

Plus, as already mentioned, sales are rising and growth is accelerating. Further investment is now key to improve dated stores and ensure Debenhams can keep up with big spending rivals such as John Lewis. 2014 is set to be a big year for Debenhams as it celebrates its 200th anniversary. It wants to make sure it has the full support of every one involved in the company and that includes the suppliers.

Still, it is awful timing!

And on that note, I’ll say Merry Christmas and see you all in the new year.

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