As the demand for flexible working rises and retail sales are shifting towards an online only realm, it seems to make perfect sense for retailer Debenhams to rent out surplus space to flexible office providers WeWork. Waste not want not as they say!
Debenhams’ Disappointing Sales Figures
Following a long-term decline in sales, Debenhams shares closed at a nine-year low earlier this month enhancing their desperate need to save on costs. In an effort to turn things around last year, Chief Executive Sergio Bucher announced big plans for its 240 stores. This included the closure of 10 sites and a selection of partnerships with outside firms. For example, three of Debenhams’ stores now feature gym space courtesy of the chain Sweat!
What’s more, following a disappointing Christmas in 2017, Debenhams recently axed 320 jobs in the hopes of saving £10m while also reducing their high street presence. With e-commerce now accounting for 18% of the UK’s retail sales many high street names are having to introduce partnerships to maximise on unused space.
Other Brand Collaborations
Numerous big brands such as Tesco, Sainsbury’s and Next have introduced similar collaborations and concessions in to their larger stores in the hopes to boost returns. Other retailers, cafes and restaurants are all becoming increasingly familiar sites within our favourite high street establishments.
Next have partnered with the likes of Costa Coffee and Paperchase while Sainsbury’s have welcomed brands including Timpson’s and Argos into some of their stores. So far however, Debenhams have been the first to discuss introducing workspace to their sites.
It isn’t just the online world that is causing strain for Debenhams either. The Chief Exec. is also facing increased pressure from Mike Ashley’s Sports Direct who is the company’s biggest stakeholder. Last week Ashely’s company upped its stake of the Debenhams brand to 29.7% sparking concerns over plans to buy out the company altogether. With only a slightly higher percentage, Sports Direct would be in a position to trigger a bid for the business.
WeWork aren’t the only office provider who are interested in taking space within retail units. IWG, which operates the Regus brand of serviced offices are also looking to develop within this area. With some retailers able to give up large amounts of space, Regus hope to enter into this market with force. As reported by Bloomberg, Chief Executive Officer Mark Dixon said, “We would expect to have quite a few locations in a year or two in more retail-type situations. They are quite convenient for people if they have good parking and good facilities.”
With the rate that businesses like WeWork have expanded in recent years and their presence within the serviced office industry it seems like Debenhams are on to a winning idea. Throughout the last three years WeWork have grown rapidly, securing huge investment from overseas businesses as well as collaborating with hugely successful companies such as Airbnb.
Their office spaces are immensely popular with innovative companies and creative start-ups. Community is key throughout these centres while vast open plan settings, regular social and business events and features including brainstorming rooms separate them from the rest.
For now, talks between Debenhams and WeWork are at very early stages; keep checking back to the Londonoffices blog for all the latest on this development.