Boohoo acquires Debenhams brand and plans to take business entirely online

Boohoo has acquired the Debenhams brand from administrators for £55m
and will take the business and brand entirely online, leading to the closure of 118 stores.

Boohoo said the transaction represents a fantastic opportunity to grow the Group’s target addressable market and increase the share of wallet opportunity through a new capital light and low risk operating model that is complementary to the Group’s highly successful direct-to-consumer multi-brand platform.

Debenhams has an established online platform with approximately 300 million UK website visits per annum, making it a top 10 retail website in the UK by traffic, boohoo said.

The Group intends to rebuild and relaunch the Debenhams platform, helping further the Group’s stated ambition to lead the fashion e-commerce market, and grow into new categories including beauty, sport and homeware through:

● Marketplace: creating the UK’s largest marketplace across fashion, beauty, sport and homeware. The Group plans to expand the range of products sold via the Debenhams marketplace by maintaining existing marketplace brand relationships and adding new brands over time. The relaunched marketplace will also provide an exciting new route to market for the Group’s existing brand portfolio

● Beauty: the Group will continue to operate the current wholesale model, but will also look to add new beauty brands via the marketplace model

● Own brand fashion: Debenhams’ own fashion brands including Maine, Mantaray, Principles and Faith will be absorbed into boohoo’s current brand portfolio and sold via the core Debenhams site and their own pureplay websites

John Lyttle, CEO, commented: “The acquisition of the Debenhams brand is an important development for the Group, as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail. We have developed a successful multi-brand direct-to-consumer platform that continues to disrupt the markets that we operate in. The acquisition represents an exciting strategic opportunity to transform
our target addressable market through the creation of an online marketplace that leverages Debenhams’ high brand awareness and traffic through the development of beauty and fashion partnerships connecting brands with consumers.”

Mahmud Kamani, executive chairman, commented: “This is a transformational deal for the Group, which allows us to capture the fantastic opportunity as e-commerce continues to grow. Our ambition is to create the UK’s largest 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 e-commerce, but in new categories including beauty, sport and homeware.”

Emily Salter, retail analyst at GlobalData, a leading data and analytics company, offers her view on this news: “In a surprising turn of events that proves the speed of the significant changes that the retail sector is undergoing, the boohoo group has acquired the intellectual property assets of Debenhams, raising the question of the relevance of traditional department stores in a post-pandemic environment. The group will relaunch Debenhams’ website as an online marketplace, with its expertise at operating digital pureplays providing some hope that the retailer’s fortunes could be turned around, benefiting from the shift to online shopping.

“However, there is strong competition from other online marketplaces, not least from leading force Amazon, but also from the likes of Next and ASOS, so the boohoo group will have to develop a more compelling branded offer for Debenhams for it to succeed. The acquisition of Debenhams also provides the group with a chance to expand its empire into new categories such as beauty, sports and homewares, likely translating into the launch of branded products in these sectors on its existing websites such as boohoo.com and PrettyLittleThing, helping them stand out in the crowded fast fashion market.”

Elliott Jacobs, EMEA commerce consulting director at LiveArea, said: “The Debenhams deal constitutes a wider trend in the evolution of retail, namely the unstoppable rise of e-commerce.

“High street brands have been struggling for years, but the pandemic has accelerated the demise of many as consumers flocked online. In the aftermath, digitally-native online giants are jumping at the opportunity to absorb the brand names without the burden of their physical real estate. Boohoo, in its quest to become the country’s largest marketplace, has already picked up Oasis, Coast and Karen Miller, and Debenhams represents its ambition to branch out beyond fashion and into beauty, sports and homeware.

“Anyone watching will realise that digital is now the key priority for the new retail landscape. Only by investing in online capabilities will companies be able to adapt to, and predict, market changes. It is now a stark fact – companies that don’t make the right investments will not stand the test of time.

“With Asos now in “exclusive” talks to buy Arcadia’s Topshop brand, what we’re seeing is the beneficiaries of the pandemic’s behavioural changes carving up the spoils. Put plainly, brick-and-mortar survival remains uncertain but we know digital is here to stay – Debenhams and Arcadia, two giants in the casualties of the pandemic, will certainly not be the last.”

Daniel Whytock, CEO of DownYourHighStreet.com, said: “Consumer choice and jobs will be most severely impacted by these changes. However independent shops will have the opportunity to prosper as consumers look for alternatives to the household names that have been acquired and taken online.

“I predict that within five years we will see High Streets offering a more unique experience. Independent retailers will thrive as they are small enough to adapt quickly to changes, and with these large brands leaving the High Street, smaller retailer will be the ones offering consumers a place to shop in person – where they can talk to someone, feel and see the goods they want to purchase, and know that returns can be processed quickly and easily if needed.   

“Also, shopping is, for many, a social activity. So once the restrictions are lifted many people will be looking for that in-person experience to complement their online shopping.

“The Debenhams department store was founded in the 1700s, one of the first ever to exist, so this is a very sad loss for the High Street. A department store, by definition, offers a variety of consumer goods in different areas of the store; each department focused on a different category. This is very much like an e-commerce store, although e-commerce offers you everything you need within a few seconds without the need to walk around.  Debenhams becoming part of an online marketplace is somewhat inevitable.

“Even with the rise of e-commerce, consumers wanting their shopping the very next day and at the best price, let’s not forget that human beings naturally desire physical experiences and the retailers that offer the best experience will prosper on the high street in years to come.”

Source: https://www.retailtimes.co.uk/boohoo-acquires-debenhams-brand-and-plans-to-take-business-entirely-online/