12th Nov, 2019

Debenhams store closures threat prompts warning from Coventry business expert

Felix Nobes 1st Nov, 2018 Updated: 1st Nov, 2018

THE threat of Debenhams store closures has prompted a University of Warwick business expert to call for a review of taxes which advantage online retailers.

Last week, the company announced it will shut down up to 50 stores in the UK, placing over 4,000 jobs at risk.

The major high street retailer has branches in Coventry, Rugby, Leamington Spa and 166 across the country.

A major store in the West Orchards Shopping Centre, Coventry, has for decades been a central part of the city centre.

Professor of strategic management at Warwick Business School, Christian Stadler, is now warning of a high street crisis unless the government supports retailers.

He said: “Debenhams is the latest in a long line of department stores to run into trouble as the decline of the high street continues, with more and more shoppers choosing to buy online.

“The tax advantages that online businesses enjoy have to be addressed, otherwise iconic names like Debenhams will continue to face higher costs than its internet rivals and will struggle to compete.

“The government has to decide whether it is prepared to stand by and watch the death of the high street and the loss of jobs that involves.

“Politicians need to think about what city centres will look like, and what the environment will be like, if all the shops are gone and decide whether they want to give stores a leg up.

“Debenhams closing up to 50 stores is worrying news, but fortunately it is not as dramatic as US department store Sears going bankrupt.

“There are still things management can do.

“Online sales have grown by 10 per cent, so management need to invest heavily in that.

“It has also tried to make shopping more of an experience by opening champagne bars in some stores.

“Similar tactics have helped other department stores, but it slows the decline, rather than stopping it.

“Debenhams needs to optimise the opportunity to renegotiate its expensive long term leases when they expire to save money and inevitably it will close some stores.

“We don’t want Debenhams to go the same way as Sears, where hedge-fund managers took over, selected the more profitable areas of the business, such as property, and allowed the others to fail.”

US department store Sears is facing bankruptcy and has announced around 200 store closures after falling sales and massive debt.

Debenhams has not yet revealed which stores will be closed in its programme of cutbacks over the next three to five years.

The move follows a sales slump in the year to September and record annual losses.

Reports suggest the company’s flagship stores are more likely to stay open.

The worst performing and least profitable stores will be closed.

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