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Debenhams closes doors after 240 years of trading


Debenhams, a famous UK department store, was opened in 1778 by William Clark. The first Debenhams department store opened in London's West End selling fabrics, bonnets and parasols.


The growth of department stores accelerated rapidly during the 19th and 20th century as vehicle ownership became more commonplace in the British economy. This made department stores increasingly popular to consumers as travelling to one location where a larger amount of goods and services could be bought became increasingly attractive to consumers.


By the 1950s Debenhams had become the largest department store retailer in the UK economy with 110 sites across the country. Furthermore, at the peak of Debenhams reign, there were over 150 stores across the UK.


However, over the past decade, Debenhams has faced dramatic falls in sales. This is primarily attributed to falling footfall levels in town centres pulling consumers away from local town centre stores including previously popular retailers such as Debenhams. This led to the store entering administration in 2019 as financial struggles stalked the firm.


Online retailers have increasingly become a more popular substitute to the traditional high street department store. UK consumers have opted to shop online as retailers can provide a wider range of product choices and selections leading to Boohoo’s takeover of the high street retailer. Furthermore, the UK lockdown in order to suppress COVID-19 cases has provided further loss and struggle to the online retailer. The forced closure of stores reduced revenue levels for the firm dramatically forcing further losses combined with lower consumer spending.


The recent purchase of Debenhams came at a cost of £55 million in January to the online retailer Boohoo. The online Retailer has opted to progressively close all high street stores and has moved the Debenhams brand onto their online retail site. However, this comes at significant costs to local communities who previously had Debenhams stores as 12,000 jobs are planned to be lost.


The large loss of jobs is untimely due to the UK recession where incomes have fallen dramatically along with the UK economy shrinking by 8.7% since the beginning of the pandemic.


The further loss of 1200 jobs puts significant pressure on UK workers who have faced a significant fall in income. This means that those workers can no longer maintain their standard of living prior to the pandemic and may be forced to buy lower quality products as their purchasing power falls. Specifically, those already on lower incomes will be impacted disproportionately and forced to either buy less or buy lower quality products.


However despite the negative effects of an increase in unemployment the closure of Debenhams may provide long term benefits to the UK economy. Losses in an economy provide a crucial role in where scarce resources should be allocated. The takeover of Debenhams shows increasing demand for online retailing and may foster further job creation in the logistic sector of online retailing. This may help to offset job losses by providing new jobs to those who were impacted by the recent closure of Debenham stores.


Furthermore, this allows resources to be reallocated to the online retailing industry helping meet consumer demands and provides an increase in overall consumer satisfaction as online retailers become increasingly popular compared to outdated department stores which fail to provide sufficient sales.

 

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