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Can Debenhams stores in Suffolk and Essex survive the retail slump?

PUBLISHED: 18:08 29 January 2019 | UPDATED: 12:48 31 January 2019

Debenhams department store in Ipswich town centre

Debenhams department store in Ipswich town centre

Archant

As speculation mounts over the future of Debenhams, we ask - should we really be worried that our regional branches of this much-loved British institution will close down soon?

The embattled department store announced back in October that it was planning to close up to 50 of its 166 stores over the next three to five years. But it has not ruled out a company voluntary arrangement, an insolvency deal that could involve further store closures. Some newspapers have reported that Debenhams has earmarked another 40 stores for potential closure - which would bring the tally to more than half of the chain’s UK branches.

Debenhams has stores in Ipswich, Bury Saint Edmunds, Colchester and Chelmsford, and the loss of any of these stores would be a devastating blow to the town in which it is based. The loss of Debenhams could all have a knock on effect on the prospects for other town traders.

We analyse the prospects of survival for each store.

Debenhams department store in Ipswich town centreDebenhams department store in Ipswich town centre

Ipswich

There are hopes that the Ipswich store on the Cornhill should be able to survive the current storm.

It is understood that the Debenhams Ipswich store is one of the more profitable Debenhams across the country.

The store, which is the only traditional department store left in Ipswich, employs 500 people in its store (300 directly and 200 with concessions in the building), and the numbers can go up to 600-650 at busy times of the year.

Debenhams, ColchesterDebenhams, Colchester

Two years ago, when a new restaurant opened in Debenhams Ipswich, store manager Neil Robert claimed that Debenhams is “very committed” to Ipswich. “We trade very successfully in the town,” he added.

Debenhams signed a 125-year lease on its premises in 2013, which was hailed as a guarantee that it would stay in Ipswich. The only way that Debenhams could get out of its long lease is through a CVA.

A source at Ipswich Borough Council explained: “There are break points ten years after the lease was signed, so that would be in 2023 - but they would have to pay rent until then.

“The council have discussed it, and even if there is a CVA, there is a strong chance that Debenhams Ipswich will survive - unless the entire company goes completely bust.

Debenhams, Chelmsford  Picture: GOOGLE MAPSDebenhams, Chelmsford Picture: GOOGLE MAPS

“It would be hard to attract other tenants into the building without spending a significant amount of money. Look at the old BHS building, which is still empty now. Other prospective tenants would have to be offered a rent free holiday to entice them to move in.”

Bury Saint Edmunds

The Bury St Edmunds store opened more than 10 years ago along with the rest of the Arc centre, and still appears to be a major draw for shoppers.

Mark Cordell, Chief Executive of the Business Improvement District in Bury St Edmunds, Our Bury Saint Edmunds, said that he believes that the Debenhams store in Bury Saint Edmunds trades quite well, which would put it on firm footing. “Normally when a major brand goes into administration, its Bury Saint Edmunds store ends up surviving the storm - it happened twice with HMV,” he said.

Mr Cordell explained that Our Bury Saint Edmunds is in discussions with the local Council on ways to get people to stay in town for longer, which could boost footfall for stores like Debenhams. “We have pay and display, which is based on short stay parking, but we have so much for people to do here - we are the foodie capital of Suffolk. So we are working with the council to try to get people to stay in town for longer.”

Colchester

But in Colchester, Debenhams faces stiff competition from Fenwicks department store a short walk away on the High Street, and also from M&S. However, the Culver Square area of Colchester where Debenhams is located still has very few empty shop fronts and generates plenty of footfall.

Colchester’s former MP Sir Bob Russell, who now holds the historic title of High Steward of Colchester, says that it is vital that Debenhams remains in the town.

“Debenhams was the key anchor tenant when the Culver Square development opened 32 years ago when I was Leader of Colchester Borough Council. I recall how pleased we were that this nationally renowned department store wanted to be part of our exciting new shopping development in the heart of our attractive and growing town.

“I would argue that the reasons why Debenhams wanted to come to Colchester remain as strong today as then, for while it is acknowledged that in recent years there have been significant changes in the retail sector, it is also the case that Colchester’s population continues to grow – and the need for shops is still there, which I hope will ensure that Debenhams keep faith with us.”

Chelmsford

The future for the Debenhams store on Chelmsford High Street looks less secure than its other regional branches, despite the fact that Chelmsford itself it still a thriving shopping destination. That’s because the beleaguered cafe chain Patisserie Valerie has just closed its outlet in the Chelmsford store. It was one of the 71 under-performing cafes closed down across the UK after Patisserie Valerie collapsed into administration. This appears to indicate that footfall in the store is weaker than in other stores.

And British Land, which owns the Chelmsford Debenhams store, is currently trying to sell the building off - along with other Debenhams stores in Bournemouth, Cardiff and Chester - as it shifts its estate away from the stricken high street.

How much does Debenhams pay in business rates?

While Debenhams faces a number of challenges - not least the current freezing spell, which could dent its profits even further. But it doesn’t appear that Debenhams is over-burdened by its business rates. In Ipswich, the rateable value the store pays per square metre is only £55 - compared to £700 for adjacent shops. “This is because Debenhams is rated under the GIA system, which is the same system as Amazon and many other giants including supermarkets,” explained rates expert Ian Berry from Sudbury. This means that in Colchester, Debenhams pays a rateable value per square metre of £80, compared to £1,150 for adjacent shops, which are rated using different criteria known as NIA. And in Bury Saint Edmunds, it pays £57.50, compared to £925 for adjacent stores.

“I get furious when the bosses of Debenhams, M&S, Tesco, John Lewis, Homebase and all other GIA rated shops complain about their high business rates,” added Mr Berry.

“If Debenhams in Ipswich paid rates using the NIA criteria, the same as WH Smiths, they would have a rateable value of over £4,350,000, instead of the subsidised amount of £955,000 r/v that they enjoy today.”

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