Debenhams tweaks strategy, is accused of unreasonable discount demands

By

Barbara Santamaria

Published
Oct 23, 2017

Debenhams CEO Sergio Bucher is planning to bring more ‘excitement’ into its stores by reducing clutter on the shop floor and reviewing the store portfolio, as the company faces backlash for reportedly asking for unreasonable supplier discounts.

In an interview with Mail Online, Bucher said the department store chain needs to be adapted to the era of the digital shopper, with ‘right-sizing’ stores and faster replenishment times at the centre of his vision.

The new branch in Stevenage, Hertfordshire is being used as the test bed for his ideas. The store, which opened in August, features a new interior design with lots of colours, wide walkways and three food outlets.

Stock on the shop floor has been cut by more than 20%, as customer feedback revealed shoppers struggle to find products in Debenhams’ traditional layout, while replenishment times have been reworked to cope with faster demands.

The concept is proving to be a great success, with the store becoming one of the company’s best branches in terms of womenswear sales.

But his plan to revitalise Debenhams and revert its old-fashioned image hit a wall this week when reports emerged about its treatment of suppliers.

Emails seen by the Sunday Telegraph revealed that Debenhams asked one of its small business suppliers a series of discounts, including a 16.7% deduction, for payments settled within 90 days, as well as a deduction for every item that had to be scanned, and a further charge for deliveries.

The requests have been branded as ‘immoral’ by the chairman of the Federation of Small Businesses, Mike Cherry, as the industry average for supplier payments is 42 days.

A spokesperson for Debenhams responded to the accusation by saying: "It would be very misleading to make general inferences from any one agreement with a single supplier but it is categorically not Debenhams’ policy to ask for discounts in exchange for payment terms of 90 days. Our average payment days are 60 days. We are proud of our supplier relationships and aim to follow best practice in dealings with them."

This week, the company is expected to report a double-digit fall in annual profits and flat sales, reflecting the impact of the weaker pound, higher rental bills and wage rises.