Thursday 27th Oct 2016 - Logistics Manager

Debenhams plans to cut multi-channel costs

Debenhams is planning to increase the use of automation in its distribution centres to reduce the cost per unit of fulfilment.

In its half year results, the department store group said the importance of continuing to build a more competitive and more economic multi-channel business was brought into sharp focus during the recent Christmas trading period when convenience became the key factor in customers’ shopping choices.

It said: “The programme we have been working on for the past year to reduce the cost per unit of fulfilment will continue, particularly around Click & Collect. As a result we are accelerating our investment in automation in our distribution centres, starting with the packing process in time for peak trading.”

The retailer also plans to launch a next day click and collect service as well as extended the cut-off for next day delivery.

“We will begin to offer a more competitive range of premium delivery options over the course of the next six months in time for peak trading in 2014. This will include next day Click & Collect and extending the cut-off for next day delivery to home from 2pm to up to 10pm, thereby capturing peak shopping hours, as well as nominated day delivery including Saturday.

Debenhams trialled an increase in the threshold for free standard delivery during the half, “however the negative impact on sales was unsustainable and so the increased charge was reversed, leading to lower than expected online delivery income during the period,” it said.

While gross transaction value was up by one per cent to £1.27bn in the UK, EBITDA was down 17.4 per cent to £117m as a result of a number of factors including below expectations clothing sales and a more intense promotional environment.

“As a result of these factors, sales before Christmas in the UK were lower than expected, leading to higher levels of markdown required to clear stock in the post-Christmas sale period.”