Asos v Debenhams: The battle lines are drawn

One is the archetypal department store, the other an online-only success story, but Simon Neville says the lines are getting blurred and both groups are changing

Michael Sharp, the veteran chief executive of the department store chain Debenhams, has admitted his company was a little slow off the mark when it came to creating an internet offering worthy of the 200-year-old retailer.

Male customers would receive email offers for dresses and lingerie, while click-and-collect was unheard of and the website was slow and clunky.

By comparison, online fashion retailer Asos has swathes of data on every single customer, knows each and every item they have bought and has screens dotted throughout its head office showing real-time sales data, including the customer's location, gender and items bought.

It has left Asos with a market value of £4.4bn while Debenhams is worth just £1.4bn, in arguably one of the clearest examples of traditional bricks-and-mortar retailers losing out to their younger online upstarts.

But all is not lost. Retail expert John Pal at Manchester Business School explained: "The department store format has often been compared to a dinosaur yet as Debenhams reaches its 200th year of trading there still seems cause for optimism as it spreads its risk by having a well-regarded international and online presence."

Online sales this year are up 46 per cent at £366.3m and now account for about 15 per cent of sales, which were up 2.5 per cent at £2.28bn and way ahead of Asos's £769m. But perhaps the most interesting aspect of Debenhams' online growth has been as a direct result of the new stores it has opened.

In Chesterfield, where the company recently opened its first store, bosses were amazed to see online business in the postcode area double in 12 months – a trend that has played out across other stores that have opened or been modernised. Mr Sharp said: "I think the future of retailing is multichannel. It is quite clear customers still shop over a number of different channels, and the more channels you have, the more they will spend with you. I think it's all joined up and will remain so."

He explained that 25 per cent of all online orders were collected from stores, up from 15 per cent last year, and he expects this to rise.

"It gives us an opportunity to get people into the stores, where they may browse, see the new layouts and make additional purchases," he said.

However, Debenhams may never get to a full gallop while it suffers from the high street's biggest bugbear – business rates. The British Retail Consortium has been campaigning for a 2 per cent cap on rates rises, and several high profile retailers have spoken out about the current system.

Mr Sharp added his voice to the debate and said the company had to carefully consider where to open new stores because rates were so high.

He said: "It's quite clear that the current method of calculating business rates is archaic and not fit for the future, let alone the multichannel world we are living in today. It's not about taxing online-only retailers but about challenging the nature of the business rates itself in the way it is applied."

And as business rates continue to rise in line with inflation, online-only retailers will only continue to see their major distribution costs fall as they become more efficient. Asos, for example, has announced an expansion of its US warehouse, meaning current US customers – including the First Lady, Michelle Obama – will no longer have their goods shipped from the UK. Previously returns also had to be sent back to the UK, at great expense.

Debenhams is making strong progress and has the potential to continue growing through its combined online and high street offer – although convincing the market might prove more difficult: its shares closed down 9 per cent last night.

Retail trio pick up millions in shares sales

Asos's founder and chief executive, Nick Robertson and his finance director Nicholas Beighton, have cashed in shares worth £103m – or 2.3 per cent of the company.

Their decision to take home the windfall came as Asos reported a 40 per cent jump in sales to £754m with pre-tax profits up 37 per cent to £54.7m.

They were joined by another retailing giant, Mike Ashley, who cashed in £106m of shares in Sports Direct – sending shares down 4 per cent.

The billionaire vowed not to sell any more shares for at least six months to calm investors who may be worried that he plans to remove even more money from the business – having sold £100m of shares in February. All three businessmen cashed in at a discount to the current trading price.

Start your day with The Independent, sign up for daily news emails
Arts and Entertainment
Books should be for everyone, says Els, 8. Publisher Scholastic now agrees
booksAn eight-year-old saw a pirate book was ‘for boys’ and took on the publishers
Life and Style
Mary Beard received abuse after speaking positively on 'Question Time' about immigrant workers: 'When people say ridiculous, untrue and hurtful things, then I think you should call them out'
Life and Style
Most mail-order brides are thought to come from Thailand, the Philippines and Romania
Life and Style
Margaret Thatcher, with her director of publicity Sir Gordon Reece, who helped her and the Tory Party to victory in 1979
voicesThe subject is being celebrated by the V&A museum, triggering some happy memories for former PR man DJ Taylor
ebooksA special investigation by Andy McSmith
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Ashdown Group: Treasury Assistant - Accounts Assistant - London, Old Street

£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...

Ashdown Group: Business Analyst - Financial Services - City, London

£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...

SThree: Trainee Recruitment Consultant

£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...

Day In a Page

General Election 2015: Chuka Umunna on the benefits of immigration, humility – and his leader Ed Miliband

Chuka Umunna: A virus of racism runs through Ukip

The shadow business secretary on the benefits of immigration, humility – and his leader Ed Miliband
Yemen crisis: This exotic war will soon become Europe's problem

Yemen's exotic war will soon affect Europe

Terrorism and boatloads of desperate migrants will be the outcome of the Saudi air campaign, says Patrick Cockburn
Marginal Streets project aims to document voters in the run-up to the General Election

Marginal Streets project documents voters

Independent photographers Joseph Fox and Orlando Gili are uploading two portraits of constituents to their website for each day of the campaign
Game of Thrones: Visit the real-life kingdom of Westeros to see where violent history ends and telly tourism begins

The real-life kingdom of Westeros

Is there something a little uncomfortable about Game of Thrones shooting in Northern Ireland?
How to survive a social-media mauling, by the tough women of Twitter

How to survive a Twitter mauling

Mary Beard, Caroline Criado-Perez, Louise Mensch, Bunny La Roche and Courtney Barrasford reveal how to trounce the trolls
Gallipoli centenary: At dawn, the young remember the young who perished in one of the First World War's bloodiest battles

At dawn, the young remember the young

A century ago, soldiers of the Empire – many no more than boys – spilt on to Gallipoli’s beaches. On this 100th Anzac Day, there are personal, poetic tributes to their sacrifice
Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves

Follow the money as never before

Dissent is slowly building against the billions spent on presidential campaigns – even among politicians themselves, reports Rupert Cornwell
Samuel West interview: The actor and director on austerity, unionisation, and not mentioning his famous parents

Samuel West interview

The actor and director on austerity, unionisation, and not mentioning his famous parents
General Election 2015: Imagine if the leading political parties were fashion labels

Imagine if the leading political parties were fashion labels

Fashion editor, Alexander Fury, on what the leaders' appearances tell us about them
Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

Phumzile Mlambo-Ngcuka: Home can be the unsafest place for women

The architect of the HeForShe movement and head of UN Women on the world's failure to combat domestic violence
Public relations as 'art'? Surely not

Confessions of a former PR man

The 'art' of public relations is being celebrated by the V&A museum, triggering some happy memories for DJ Taylor
Bill Granger recipes: Our chef succumbs to his sugar cravings with super-luxurious sweet treats

Bill Granger's luxurious sweet treats

Our chef loves to stop for 30 minutes to catch up on the day's gossip, while nibbling on something sweet
London Marathon 2015: Paula Radcliffe and the mother of all goodbyes

The mother of all goodbyes

Paula Radcliffe's farewell to the London Marathon will be a family affair
Everton vs Manchester United: Steven Naismith demands 'better' if Toffees are to upset the odds against United

Steven Naismith: 'We know we must do better'

The Everton forward explains the reasons behind club's decline this season
Arsenal vs Chelsea: Praise to Arsene Wenger for having the courage of his convictions

Michael Calvin's Last Word

Praise to Wenger for having the courage of his convictions