The company first figured in the London Stock Exchange in 1928 and from then the company started to expand. In 1985 the Burton Groups took the company but they demerged and Debenhams was a separate company again(Debenhams, 2010). The company started expanding in the 1990’s and set up stores outside UK. Few store offer personalized service to the customer while shopping. The customer has to make a prior appointment to shopping and they will be guided by personal shopper while shopping(Anon, 2009)
The company sells clothing and accessories nder a number of segments: health and beauty, Christmas, wedding services, womeswear, menswear, young fashion, food services, home, children’s and fashion accessories. The stores of the company vary widely from each other and some of the stores do not have all the segments (Debenhams, 2010) Debenhams has a strong presence in Strong presence in UK. They also offer online shopping to the customers. This shows the company’s dedication and commitment towards the customers in bring more value and great services. The company’s has a mix of their own brands and world class international brands.
The stocks are ensured that it lasts only till the current trend is there in the market. The Designers at Debenhams collection stocks a range of designer labels that give value for money. The designer ranges are available in almost every department ranging from home ware to lingerie and accessories( Debenhams, 2010). 1. 1) SITUATION ANALYSIS: Debenhams have good market progress in children wear and home wear and had good sales performance from their own brand products. The exclusive Designers at Debenhams portfolio extended new brands principles by Ben de Lisi.
They opened 4 new stores and created jobs for over 400 people. They also brought the Denmark’s leading department store chain Magasin du Nord. The company also continued to growth strong in multi channel business; sales up 85. 9%. and the Gross transaction value was up to 8. 4%. the like for like sales up was 0. 3%. The Gross margin was also up 70bps and the headline profit before tax and exceptional ahead of market expectation were at ? 123. 6 million, up by 18. 6%. So Debenhams had a steady growth in market(Debenhams, 2010) 2) MACRO ENVIRONMENT- EXTERNAL ANALYSIS 2. )
PESTEL: a) Political: Factors| Impact on the industry| Implications| Employment| In this recession time it is hard for the business to survive| Job seekers may find it hard to get a job| Taxes| Changes in the Taxes| Due to increase tax, the company had to increase the product price| E commerce| The Company provides online shopping, customer services and gives order online| Better chance for increase global business and customer satisfaction| Terrorism| Increase in number of terrorism and gang war in the country| Affects the market growth and the economy of the company |
Conclusion: The political factor plays an important role in the success of the company. Political factor are external issues which affect the growth of the company. Factors like the new government taxing and terrorism will surely affect the development of the company. Economical: Factors| Impact on the industry| Implications| Oil Price | Increase in import and export rate| It causes increase in the product price| Currency | Change in the exchange rate| Due to constant change in the exchange rate, tax rates and the duty rates keeps changing| Economy | Due to recession there is an economy slow down. It affects the demand and purchasing power. | Conclusion: The recession may affect the buying power of the people. The increasing oil price will have a impact on the export and the import of the product and the varying exchange rates also causes problem in taxing and duty rates Social: Factors| Impact on the industry| Implications| Population | Because of Immigrants, the population has increased. | This will leave to increase in customers| Brand value| Company has strong brand name| It can attract people easily| London Olympics | Increase in tourism. | Good opportunity for the business to boom |
Conclusion: The increasing pollution and the upcoming Olympics provide an excellent opportunity for the business to develop and having a Brand value is an added advantage. Technological: Factors| Impact on the industry| Implications| Internet| Using Internet the company offers online shopping, online services, jobs and ordering. | It makes the work easier for the customers and employees| Safe online payment system | Payment can be done online using credit cards| Customers don’t have to come in person to pay the bill| Modernism| It is very important in current market. It will help in saving their time and money. | Conclusion: The technological factors such as Internet and safe online payment are so useful for the customers and it helps in the development of the company. Environmental: Factors| Impact on the industry| Implications| Pollution| The production line produces clothes that cause less pollution| Cause less damage to the Environment| Government waste strategies| Recycles all waste products| One of the highlight of the brand| Conclusion: Recycling the waste and causing less damage to the environment is one of the highlight of the company Legal:
Factors| Impact on the industry| Implications| International Trade | The company imports products from different countries and also does business in many countries| Different trade law in each country may affect the business| Government laws | The company has to follow different rules in different countries to run business| Some laws in certain countries may affect the business| Conclusion: The Company has to follow different trade laws and government laws doing business in different countries 3) MICRO ENVIRONMENT- EXTERNAL ENVIRONMENT 3. 1) PORTER’S 5 FORCES: The following is the Michael Porter’s 5 force model.
It can help to understand about Debenhams competitive environment and the clothing and fashion industry. a) Threat of new entrants: Factor| Level of threat| Implication| Brand | Low| Debenhams has been in the industry for a long time and has a strong brand name. | Financial investment | Low| There is less chance of any new entrant to invest as much as Debenhams and win the current market| Competence | Low| Company shares a respectable market in UK and Europe, not possible for new entrant to catch up| Sales| Low| New entrants may sale products at low prices but still Debenhams strong brand name attracts customers|
Conclusion: The threat from the new entrants will be low because Debenhams is already an established and well known brand. The new entrants entering the market may not cause huge problem since Debenhams has already gained a good market position b) Threat of Substitutes: Factors| Level of threat| Implication| Substitutes| Medium| There are many substitutes retail store but Debenhams is efficient| Importance of substitutes| Medium| There are not many stores that are very efficient so their importance goes down| Cost rate| High| There are many substitutes that are not efficient, still they offer products at a lower price than Debenhams|
Conclusion: Though there are many Substitutes, Debenhams have gained a niche market position for itself but the cost rate of the products in Debenhams is a concern c) Bargaining power of the customers: Factor| Level of threat| Implication| Quality of the product| low| When people look for high Quality product, price is not considered important | Competition| High| There are many retail stores competing with Debenhams so high competition| Differentiation products| Medium| Customers always look for new and latest trend products|
Conclusion: Since the Quality of the product is good, customer usually don’t consider the price of the product so the level of threat is normally low when compared with it competitors d) Bargaining power of the suppliers: Factors| Level of threat| Implication| Price of suppliers| Medium| If the demand increases then the price of the product also increases| Power of suppliers| Low| Suppliers have to meet the customer’s needs to get future orders| Political issues| Low| Political issue are to be met by the suppliers| Conclusion: The suppliers will usually try to keep their customers happy so the threat from the suppliers will be low
Competitive rivalry: Factors| Level of threat| Implication | Brand identity| High| All Competitive companies such as ZARA, NEXT, MANGO have good brand reputation in the market| Company growth| High| Tough competition from other companies affect the growth| Cost structure| Medium| Most of the companies maintain their cost of profit accordingly the other competitors. | Conclusion: There are many retail stores which may be considered as a competitor to Debenhams so the competitive rivalry among stores is high 4) MARKET SEGMENTATION: a) Consumer Market: Segmentation| | Profile|
Psychographic| Social| Single , Married and teenager | Behaviour | OutlookFaithfulnessUsage rate| Common usersHigh faithfulness in the brandEnvironmentally concerned | b) Products: Debenhams has a wide range of products for all ages and gender. These are the few products they offer c) Competitors: Debenhams has few major competitors in the markets. They also have a major portion in the market share High Quality ZARA Low Quality d) Brand: Debenhams has a successful own brand portfolio of approximately 55 own brands (such as Debut, Maine New England, Red Herring and Thomas Nash) including 25 Designers at Debenhams brands.
The Designers at Debenhams range offers customers exclusive product lines at mainstream prices by designers such as Jasper Conran, Julien Macdonald, John Rocha and Matthew Williamson. Third party brands are either bought by Debenhams (such as Estee Lauder and Levi Strauss) or available through in-store concessions (such as Oasis). e) Core Competence: Core Competence of Debenhams is their brand value and their promotion. Debenhams being one of the leading retail store in clothing industry, it has a strong brand value. 5) INTERNAL AUDIT 5. 1) RESOURCES AUDIT: a) Physical resources: – Total number of stores Debenhams has 157 stores across UK and Scotland. It also has 51 international franchises stores in 18 countries b) Financial resources: | Feb 2009 (? m)| Aug 2009 (? m)S| Revenue (? m) | 1,064| 1,915| Gross Profit (? m)| 178. 8| 264. 9| Revenue in Feb 2009- 1,064 , In Aug 2009- 1,915 Gross profit 178. 8 264. 9 Operating profit 134. 7 182. 2 Profit before taxation 102. 2 120. 8 Profit for the financial period attributable – 81. 5 95. 1 To equity shareholders Profit for financial Period 81. 2 95. 1 Other comprehensive income/(expense) 41. 3 93. 6 Total comprehensive income 39. 2 4. Assets 1,583. 6 1,598. 7 Current assets 487. 8 537. 1 Liabilities 144. 4 74. 4 Net current liabilities 1,276. 6 1,099 Net Assets 162. 6 425. 3 Total Equity 162. 6 425. 3 Net cash generated from operating activities 120. 8 158. 4 Net cash used in investing activities 51. 2 84. 5 Net cash(used in)/generated from financing activities 2. 5 117. 2 Net(decrease)/increase in cash and equivalents 67. 1 191. 1 Cash and cash equivalents at end of financial period 64. 2 188. 2 5. 2) DIFFERENTIATION AND CAPABILITIES: The 5M’s can be used to analyse the Differentiation and capabilities of
Debenhams Market: Debenhams is one of the leading retailer in UK and has 51 franchise worldwide it is also expanding its market by reaching out the customer through its internet website Material: Debenhams have a strong presence in products like womenswear, menswear and childrenswear. The materials for manufacturing these items are brought outside and designed when making clothes of her own brands. For the other brands, they get the clothes form the other company’s manufacturing outlet Men: Debenhams has a workforce of 24,000 people and they also have designers for their own product.
This has a competitive advantage over the other brands Money: Please Refer to the data given in [5. 1. b] Resource Audit (financial Resources) Machines: Please refer to the data given in [5. 1. a] Resource Audit (Physical Resources) 6) SWOT ANALYSIS: To understand the company’s strategy position in the market. SWOT analysis id used a) Strengths: StrengthsHigh Brand LoyaltyStrong financial resourcesLeading in niche marketLarger investment | Level of implicationHighHighLowHigh| b) Weakness: WeaknessHigh operation costThreat from competitors| Level of implicationMediumHigh| c) Opportunities:
OpportunitiesMarket for all agesSupport to Olympic gamesInternet salesDevelopment in house ware products| Level of implication HighMediumMediumMedium| d) Threats: ThreatsStrong competitionDecrease in sales| Level of implication HighHigh| Conclusion: The strength of Debenhams lies in their customer’s high brand loyalty and the company’s good financial resources. Though they don’t have a niche market for their product, still they invest a huge amount of their product which is one of the strengths of Debenhams. The weakness of Debenhams lies in their high operations cost and the threat from the competitors.
Debenhams has great opportunities to development in the area of online shopping and in the area of house ware items. They can also support the upcoming London Olympics to promote their brand. The Threat lies in the Strong competition and the increase in the sale of the products due to the competition. 7) MARKETING PLAN 7. 1) COMPANY’S OBJECTIVES: Short term( 1 year)| Long term (2-4 years)| Increase the sale of house ware| Space and product extension| To expand the business online. | Supply chain rationalization| To support Olympics and promote the brand| Deduce the cost of control| 7. ) STRATEGIES: Debenhams has a clear strategy to increase the profit and grow in market share. The company has to plan to achieve this by increase the sale with the existing customer, attract the new customers and moving into the new market. They have also planned to enhance the offers available through the company’s website and home online shopping 7. 3 MARKETING MIX: a) Product: Product is an important term in business, where all company will produce product with better quality, just as Debenhams has to produce products accordingly to the demand of the customers, to make it more efficient. ) Price: Debenhams have high price for premium products, where there is a range of products or services the pricing reflect the benefits of parts of the range. They also used value pricing during the times of recession and increased competition c) Place: Debenhams has 157 stores including 13 desire by Debenhams across UK and Ireland. They also have 51 international franchises in 18 countries. d) Promotion: – Endorsement with famous celebrities – Making sell easier for customer through online shopping – Targeting people of all ages e) People:
Introducing services in a way that suits all range of people, aging between 4 to 60. They attract people using good promotion and retain the customers with good customer service and support 8) BUDGET BREAKDOWN: Debenhams has decided to invest huge amount in order to achieve their objectives. They have planned to invest ? 800million to achieve their objectives a) Promotion: Of the total amount scheduled, a major portion of the is amount is allocated to promotion. They promote the products through Television, Radio, Magazines and Banners and also by promoting the upcoming London Olympic. 5% of the amount will be invested for promotion. They have planned to spend around ? 425 million for promotion alone b) Product: Debenhams has already invested a great deal of money on their products.
They have planned to increase it by another 20% which would cost ? 200 millions c) People: Debenhams is a big organisation and they have a work force of 24,000 people. The company has planned to spend an estimate of 9% from the total allocated budget which would be around ? 78 millions d) Place: Debenhams has decided to spend 7% of the total allocated budget to infrastructure, health ; Safety. ) Process: 6% of the amount which would estimate around ? 48 million is allocated for all the ongoing processes in Debenhams f) Physical Evidence: Physical evidence comes around 3% which would cost ? 24 million 9) APPENDIX 9. 1) AN OFF MATRIX MARKET PENETRATION * TARGET NEW MARKET AND * IMPROVE SERVICES * PROMOTE MORE AGGRESSIVELY HOUSEWARE ITEMS| PRODUCT DEVELOPMENT- CONCENTRATE MORE PRODUCT LINE- BRING IN MORE DESIGNERS| MARKET DEVELOPMENT * TRYING TO EXPAND BUSINESS IN FOREIGN MARKETS| DIVERSIFICATION * COMPETITION * FINANCIAL SERVICES * RETAIL BUSINESS|
According to An off Matrix, Debenhams have to concentrate more on penetrating into new market and improve services more efficiently. They should also improve on the sales of the houseware items When it comes to Product Development, the company has to produce more products and bring it new designers for their own brand Debenhams is trying to establish them as an international brand and trying to set up more stores abroad There is a Huge amount of Diversification when comparing Debenhams with its competitors in Financial Services and Retailing Business 9. 2) PRODUCT LIFE CYCLE:
The product life shows that when the company decides to come up with the product that is in the development stage, there are no sales of the product. When introduced in the market. Since it is a new product the sales volume of the product is very less. As time goes by, there comes a stage where in the product gives popularised and the sales of the product starts increasing at this stage. At a point of time it reaches maturity and then finally the sales of the product decline. In case of Debenhams, the company already as good reputation so they don’t really have to launch a new