Monday, March 1, 2021

boohoo snaps up Debenhams IP for £55m

boohoo, the online fashion retailer, has acquired all of the intellectual property assets (including customer data and related business information and selected contracts) of Debenhams from its joint administrators, for £55 million in cash.

The group will only be acquiring the brands and associated intellectual property rights. Thus the transaction does not include Debenhams’ retail stores, stock or any financial services.

Debenhams is in the process of closing down, with administrators unable to secure a rescue deal.

boohoo has said it intends to rebuild and relaunch the Debenhams platform, helping further an ambition to lead the fashion eCommerce market, and grow into new categories including beauty, sport and homeware.

It is planning to do this by creating the UK’s largest marketplace across fashion, beauty, sport and homeware, and expanding the range of products sold via the Debenhams marketplace.

John Lyttle, CEO, said: “The acquisition of the Debenhams brand is an important development for the Group, as we seek to capture incremental growth opportunities arising from the accelerating shift to online retail. We have developed a successful multi-brand direct-to-consumer platform that continues to disrupt the markets that we operate in.

“The acquisition represents an exciting strategic opportunity to transform our target addressable market through the creation of an online marketplace that leverages Debenhams’ high brand awareness and traffic through the development of beauty and fashion partnerships connecting brands with consumers.”

Mahmud Kamani, Executive Chairman, said: “This is a transformational deal for the Group, which allows us to capture the fantastic opportunity as eCommerce continues to grow. Our ambition is to create the UK’s largest marketplace.

“Our acquisition of the Debenhams brand is strategically significant as it represents a huge step which accelerates our ambition to be a leader, not just in fashion eCommerce, but in new categories including beauty, sport and homeware.”

Debenhams is expected to relaunch on the boohoo platform in Q1 FY22.

In order to allow for the winding down of Debenhams’ operations, Debenhams will continue to operate its website for an agreed period before the relaunch on the boohoo platform and a licence has been granted to allow for the winding down of Debenhams’ retail stores (when they are in a position to re-open) for an additional period.

Following the announcement that Boohoo is to acquire the Debenhams brand but will close all stores, e-commerce expert Matt Wheatcroft, Managing Director of Purpose Media, is warning that online retailers need to also commit to saving the high street otherwise they too could suffer in the long term.

Matt said: “Whilst trends for buying online are increasing, brands that fail to recognise that consumers will still crave the physical and emotional experience of shopping in store may also struggle to achieve success over the long term – particularly once COVID restrictions are lifted.

“Consumers still want to see, touch and try on garments and products. They will not always want the hassle and cost of returning goods. Once restrictions are lifted, this pent up desire will mean that consumers will want to be outdoors enjoying the social interactions a good high street shopping experience has to offer.”

Whilst at the minute online shopping is booming because shops are closed, Mr Wheatcroft believes the high street will bounce back – but the retailers that will survive will be the ones that adopt intelligent and integrated marketing strategies which enable them to meet demand with a combined on and offline offer.

The Debenhams collapse was very much due a lack of intelligence and understanding of customers caused by a poor investment decisions pre-covid related to online and other digital marketing and their dated in-store experience. This led to declining sales, and coupled with the burden of maintaining an expensive property portfolio, a perfect storm was created that has ultimately destroyed a legacy that has been in existence since 1778. Covid has only sped up the process of failure.

Describing the ideal on and offline solution Matt advises brand owners and City Centre Managers to work together to design the right high street shopping combinations that create attractive and vibrant shopping experiences.

He added: “For the high street to be a success, fashion brands would be wise to engage with planners to help generate the level of footfall needed so that other retail outlets such as coffee shops, cafes, pubs, restaurants and leisure facilities can also thrive.

“The long term solution will be to embrace digital marketing techniques that include robust on-line and off-line offers. Savvier retailers with long term vision, are using the data gathered from their customers buying behaviour digitally or at the till, to provide tailored offers which drive both in-store footfall and online sales. Additionally, trends like having click and collect pods will continue to grow as complimentary brands commit to sharing floorspace in order to boost on and offline sales and create footfall for each other.

“Online retailers like Boohoo and Asos were only interested in Debenhams and the Arcadia Group because they have been able to buy trusted brand names, and whilst they have invested heavily over several centuries to build their brand awareness, in just one acquisition and within only a very short time frame, Boohoo have elevated their brand and also tapped into the wider demographic of consumers these brands will attract. It is not so long ago Mike Ashley offered a reported £125m for Debenhams only for it to be rejected, allowing Boohoo to march in and make an offer for £55m once it became a distressed sale.

“Their challenge now is to now build sustainable businesses. It will be very interesting to observe the steps they take to align these on-line brands with the pent up demand from consumers for a vibrant and appealing physical shopping experience.”

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