Debenhams analysis: What future for the Scottish high street?
It’s doubtful that the high street has ever seen anything like the grim events of the past couple of days.
The collapse of Topshop and Burton owner Arcadia and now Debenhams, the venerable department store chain, is likely to trigger hundreds of store closures and a pre-festive nightmare for some 25,000 workers.
Dozens of Scottish high streets and shopping centres, already sagging under the weight of boarded-up properties and “to let” signs, will rapidly resemble ghost towns.
The demise of Debenhams will be particularly painfully felt – most of these vast department stores are key anchor sites drawing in shoppers to malls such as Edinburgh’s Ocean Terminal and Dunfermline’s Kingsgate.
Richard Lim, chief executive at Retail Economics, the independent research consultancy, talks of a “truly devastating” week for the UK high street.
“We cannot overstate the significance of this collapse given the vast property portfolio, number of jobs impacted and the reverberations felt across the industry,” he observes.
Susannah Streeter, senior investment analyst at financial services outfit Hargreaves Lansdown, warns that the “retail house of cards on the high street is in danger of collapse”.
She adds: “Arcadia Group’s collapse has set off a domino effect, with JD Sports pulling out of talks to buy Debenhams. Arcadia is the biggest concession operator in Debenhams and so its collapse into administration clearly put the frighteners on management.”
Both Arcadia and Debenhmans had been looking like slow car crashes for some time, with a failure to adapt to changing buying habits and the relentless onslaught of nimble online retailers such as Asos and Boohoo. They have also faced the might of Primark when it comes to stacking them high, selling them cheap.
The demise of both businesses has clearly been exacerbated by the off/on nature of lockdown, and the worry is that other names teetering on the brink may go the same way.
But amid the bloodbath there are likely to be opportunities. Big names such as Mike Ashley’s Frasers Group and JD Sports Fashion – both of which were linked to possible swoops for Debs – may well be interested in snapping up some of the distressed brands and assets.
At the same time, shares in M&S and Next have been attracting buyers amid expectations they could capitalise on the demise of their crestfallen peers.
The retail sector is constantly adapting and evolving and there is every chance new entrants will take up space vacated by others.
However, there must be a huge question mark over the larger Debenhams sites if, indeed, the business fails to survive into the new year. As past experience has shown with the likes of BHS, it can be very challenging finding new occupiers.
Obvious large floor-plate alternatives to retail such as cinemas and gyms spring to mind but many locations where Debenhams stores are sited already offer these – Ocean Terminal being a prime example.
There is every likelihood that the stores will need to be reconfigured into smaller units, or perhaps offered as space for indoor market stalls.
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