Boohoo eyes new customer base with Debenhams deal

Boohoo’s recent purchase of the troubled high street department store is the online retailer’s latest move to expand its core audience of shoppers.

DebenhamsWhen online fashion retailer Boohoo bought Debenhams from administrator FRP for £55m it was buying a brand, a name with history and traditions, rather than cashing in on a cheap property deal.

The department store chain, which has been on our high streets in one guise or another since 1778, will now only exist in an online capacity with all its 118 physical sites scheduled to close once surplus stock has been sold off, presumably sometime in the spring once restrictions are lifted.

What Debenhams actually means as a brand these days, especially to anyone under 40, is something of a moot point, but the general consensus is that Boohoo has got itself a tidy little bargain, particularly given its long-held desire to move into the beauty products market.

The fast fashion retailer, which is also buying the Maine, Manataray, Principles and Faith brands, describes the acquisition as a “transformational deal for the group” that fuels its ambition to create the UK’s biggest marketplace.

“Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion ecommerce, but in new categories including beauty, sport and homeware,” says Boohoo executive chairman, Mahmud Kamani.

Reportedly the plan now is to expand the Debenhams online offering and position the website more globally, opening it up to territories in North America and Australia.

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Looking at YouGov’s BrandIndex metrics to examine the brand health of Debenhams some telling stats emerge. Compared with John Lewis, for example, Debenhams dipped below its fellow high street retailer soon after the first lockdown hit in March 2020 and struggled to catch up.

By the end of last year, Debenhams’s BrandIndex score for value stood at 10, while John Lewis was at 18.2. House of Fraser, another struggling former favourite, was behind Debenhams with a score of -2.4.

In terms of customer satisfaction, John Lewis came out on top with a BrandIndex score of 42.3, eclipsing Debenhams (28.7) and House of Fraser (13.1). When it comes to customer ratings for quality a similar pattern emerges, with John Lewis taking the lead (58.6), followed by Debenhams (29.6) and House of Fraser (29.1).

Focusing solely on an older age group aged 50 plus does show an improvement for Debenhams. The department store’s BrandIndex value score rose to 12.8, but it’s notable that the John Lewis figure also goes up accordingly to 25.3.

Staying with this age group, there’s an intriguing comparison to be made between Debenhams and Boohoo. When it comes to value, Boohoo scores -2.0 with this older demographic, while Debenhams scores 12.8.

Likewise, for quality the 50 plus age group rate Boohoo with a BrandIndex score of -4.2, compared to Debenhams at 28.2. Small wonder then that the online retailer is so keen to buy into that particular segment of the market.

YouGov head of account management, Amelia Brophy, tells Marketing Week the acquisition could open the way for Boohoo to reach an older and more varied consumer base, and that the Debenhams brand value remains in relative good health despite entering administration.

“Debenhams has strong brand equity particularly among the over 55s age group, scoring highly in customer satisfaction and quality perception,” she explains. “While Boohoo has a strong draw with younger age groups, the brand is yet to find a footing among older consumers.

“With plans to revamp the Debenhams website and relaunch with the same brand partnerships this year, it’s likely that Boohoo will become an even larger force to be reckoned with in the British retail space.”

That space is being constantly reshaped, or rather resized, with Boohoo busily buying up the online businesses of troubled high street brands including Warehouse, Oasis, Coast and Karen Millen.

And, with online retailer rival Asos confirming it’s closing in on a deal to buy Arcadia’s Topshop, Topman and Miss Selfridge – but again not the actual stores – mainstream physical retail is fast becoming an engendered species.

The dream scenario for Debenhams now is that it lives on as a brand, reinvented online rather than gradually asset-stripped into oblivion. As principle fashion analyst at Kantar Anusha Couttigane points out, Boohoo will be keen to put a protective arm around those premium beauty names that come with the Debenhams deal.

“Despite its troubles, this is a category that Debenhams has generally performed better in,” she says. “Additionally, premium beauty continues to grow and is a resilient category in a recession.”

However, there’s a serious risk that many of those beauty brand big-hitters that Boohoo have scooped up as part of the deal may not want to be sold on the new online platform, opting to instead focus on direct-to-consumer channels or the few remaining opportunities for counter sales.

“Boohoo will need to work some magic with the Debenhams proposition online to ensure the premium beauty experience offers a competitive advantage to beauty labels in the digital space,” Couttigane warns.