Debenhams Plans American Expansion Inside Sears

Discussion
Jun 01, 2011
George Anderson

First, this is not
a Sears story even
though the company is involved.
No, this is a story
about a British department
store chain looking for a way to
enter the U.S. and succeed where
so many others have struggled and
failed.

Debenhams, which operates over 150 stores in the U.K. and Ireland, is
looking to the American market and The Telegraph reports the chain is in early
negotiations to open stores inside Sears across the country.

Sears is not new
to other retailers occupying space in its stores. Forever 21 signed a deal
last year to take about 15 percent of the floor space at a Sears in Costa Mesa,
CA. Other chains that have grabbed up Sears’ space include Edwin Watts Golf
Shops, Whole Foods and Work ‘N Gear. Sears has also created space within stores
for sister company Lands’ End.

According to The Telegraph, Debenhams currently
has "60 franchised stores around the world" and is looking to add 40 more beyond
the U.K. and Ireland.

Sears currently operates more than 2,700 Sears-branded
and affiliated stores in the U.S. and Canada, according to the Sears Holdings
website.

Discussion Questions: What do you think of retailers going the store-within-a-store route to expand to new markets overseas? Does the retailer leasing the space matter or is the space location the primary concern?

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14 Comments on "Debenhams Plans American Expansion Inside Sears"


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Paul R. Schottmiller
Guest
Paul R. Schottmiller
9 years 11 months ago

This may provide a fast and easier path to getting real estate presence along with opportunities for rapid scale of shared services (right place, right time). However, success will still require offering something of value that competes effectively for the local consumer (right product, right price).

Put another way, it is great to jump into a river with a current that is already flowing fast, just make sure it is flowing somewhere that you want to go.

Dick Seesel
Guest
9 years 11 months ago

The “store-within-a-store” concept makes sense for the franchising retailer, provided that there is compatibility between the parent brand and the leased space. (Debenhams has a long track record of successful franchising in order to build its reach.) I’m not convinced in this case about the marriage between Debenhams and Sears, however, unless Debenhams plans to carve out completely separate space. To operate a shop within Sears is asking for trouble, given Sears’ proven troubles attracting softlines customers. And Debenhams focuses on popular-to-moderate price points, with design and trend incompatible with a lot of Sears’ content. Just one more illustration that Sears is grasping for straws–trying to leverage its real estate portfolio without developing its own relevant merchandising strategy.

Steve Montgomery
Guest
9 years 11 months ago

I admit I had to look Debenhams up on the web to determine what it is that they sell. I have to admit I find it unusual that a full line department store would want to lease space inside Sears. True, you get some advantage of existing traffic but they are locating inside a business known more for its tools and appliances than the rest of its departments.

The article did not indicate what items they want to sell in the leased space or how much space the want to lease. Perhaps they should lease all but those two departments and make it a Debenhams with a Sears inside rather than the reverse.

Carol Spieckerman
Guest
9 years 11 months ago

I’ll try to get ahead of the inevitable Sears bashing by saying that this is yet another example of how Sears is looking at retail with a fresh perspective. Instead of getting precious about owned brands and space, Sears continues to see them as assets to be monetized. As I’ve called out a few times, that doesn’t mean that every play will win but they are setting a new standard that will change the game for all who follow.

Gene Detroyer
Guest
9 years 11 months ago
This is a Sears story! This is all about how Sears is going to succeed. Ever since Eddie Lampert took over, this has been a real estate play. Sears as a retailer is done. Without the real estate, this retailer has a negative net worth. There is nothing that can be done to revive Sears as we have known it (40 years ago). The retail moves Sears has made have been minimal. The meaningful moves have all been about giving the space within the store to an operator who knows what they are doing and comes without the baggage of Sears (your grandmother’s favorite retailer.) This move was not only predictable but it is not unlikely that the idea was generated by the folks at Sears. Going back to yesterday’s “half-empty” discussion, the “half-empty” position for Sears is “our business is in toilette and it will take gazillions to turn it around.” The “half-full” position is we have all this real estate, how do we get the best ROI from it?
Charles Billups
Guest
Charles Billups
9 years 11 months ago

This is a wonderful way to make money for Sears when you have an underperforming business, long-term assets in owned space and leaseholds, and a shortage of large square footage possibilities in top malls. This is essentially a leased space arrangement is my guess. Go walk a two or three story Sears location in a top mall with an eye for how much retail space is walled off. Huge amounts.

Michele Moehrman
Guest
Michele Moehrman
9 years 11 months ago

Being a former ex-pat, I love the idea! An example of this store-within-a-store practice already in place is Boots products in Target.

Mike Blackburn
Guest
9 years 11 months ago

This type of strategy is likely the only way Sears can get out of the huge whole it’s dug for itself: sublease its valuable real estate space. Sears obviously has no interest in remodeling or improving the millions of square feet it devotes to apparel, so why not rent it out to another firm? Sears keeps its space for tools, appliances, lawn and garden, while renting out its poorly performing space currently allocated for its own apparel offerings. Sears gets a better return from subleasing compared to selling its own goods, while store traffic increases, which helps sales of appliances/tools. Of course, the format will still need dollars for investment/remodels, but now Sears has a partner who, hopefully, knows how to manage the space properly.

Ted Hurlbut
Guest
Ted Hurlbut
9 years 11 months ago

I think this bears watching. Sears has been pretty aggressive in trying different approaches to increase the return on their retail square footage, with pretty disappointing results to date. Some of these lease deals may work out, though. Still, Sears has been the black hole of retailing for so long, it seems more likely that Sears will drag these lease departments down, rather than the lease departments picking Sears up.

Kai Clarke
Guest
9 years 11 months ago

The store-within-a-store concept is a selective idea for targeting a market where real estate and store establishment are not a valid concept for the ROI that they offer. Instead, by purchasing space, inside a non-competing branded retailer, you offer the advantage of a symbiotic relationship while extending the reach of the new occupant. Unfortunately, the reason that many stores would offer this, is that their real estate is not a prime offering, and their customer traffic is not productive. This often leads to a continuation of this same poor retailing atmosphere to the new store-within-a-store occupant.

Craig Sundstrom
Guest
9 years 11 months ago

Carol made a valiant effort, but let the Sears bashing begin…or more exactly, let the Debenhams bashing begin: what are they thinking??? I’m not sure of D’s exact price points, but I think it’s safe to assume the average bloke–and blokette–in the U.S. will believe them upscale, and Sears would be the last place I would expect to find them (or nearly the last…I guess K-Mart would be less likely…oops!).

Victor Willis
Guest
Victor Willis
9 years 11 months ago

Debenhams and the Dinosaur. It’s exciting to read of the #2 department store chain in the U.K entering the U.S market. But that’s where the sentimentality ends.

Store within a store is a cost effective entry into new markets provided both retailer’s strategies are compatible and the new kid on the block has done their real estate research. I worked with Harrods in the 1990s as they forged a successful franchising strategy in Japan with Mitsukoshi. Both were in high density, prime real estate neighborhoods and offered luxury brands.

With retail, its always about location. Both the store itself and within the store. Debenhams and its strengths–co-branding; forging collaborative partnerships with new/established brands; product quality; and digital marketing–are likely to just get lost in a Sears struggling with overpriced real estate and a disjointed merchandising strategy. But I commend Sears for at least exploring these opportunities.

Roger Saunders
Guest
9 years 11 months ago

The store within the store is highly dependent upon the mother ship. The new addition isn’t going to be the driver of bringing new consumers into the store. They will want to feed off the “whale” in some way, shape or form–demographic fit, traffic patterns, product lines that fit the same customer base, etc.

The “mother ship” should be looking for the opportunity to increase ticket and frequency of visits to the store. If they are only going to make the leasehold agreement to collect a rent check (could be Sears’ approach), this model sinks to the bottom of the deep blue.

vic gallese
Guest
9 years 11 months ago

The retailer that is leasing the space absolutely matters! Unless the real estate is super high traffic or both brands are top of mind, that is. In addition, both product lines must be complimentary.

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