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Take-up of premium delivery drives online profitability at Debenhams

Department store group Debenhams, which reported its full year results on Thursday, says that its customers are increasingly taking up premium delivery options increasing the profitability of online performance as result. “As the service improvement is more widely recognised by our customers and the uptake of premium delivery options increases, the profitability of the online channel has increased, reflected in the 14.0% improvement in online EBITDA,” said the retailer.

The company said click and collect had also increased in popularity as a delivery channel, accounting for almost a third (32%) of online order fulfilment last year and peaking at 46% in the pre-Christmas peak. Click and collect is up 35% year on year. Debenhams said it expected such figures to continue to rise as more of its concession partners are able to meet its next day delivery promise.

Returns and refunds will also be a key focus for Debenhams in the coming year the retailer said. They have been identified as one of the key customer pain points the retailer hopes to tackle this year.

Last week also saw Debenhams’ new CEO Sergio Bucher visiting the company’s warehouse in Peterborough on only his second day in the job. In order to improve efficiency in its warehouse Debenhams reported that it is “well on the way towards implementing a single warehouse management system integrating store and online fulfilment” and that the new facility should be operational for spring 2017.

The retailer is working hard on its supply chain and stock management and says that by making the move from multiple systems to a single platform it is expected to deliver benefits in space efficiency, picking costs and reduced stockholding costs over time.

The  department store group also opened a Shanghai sourcing office in August which is says marks the next phase of its drive to a faster, more responsive supply chain in order to manage international multichannel growth, and is increasing own brand sourcing through its own offices.

By FY2020, following further investment in automation Debenhams said it will have “transformed our supply chain from a UK department store model into a global multi-channel operation to support future sustainable growth and to drive our transition from a push to a pull supply chain.


Image credits: Debenhams