Why Boohoo acquisition of Debenhams.com means outlook for high streets is grim

Boohoo’s bid came out of nowhere.The online upstart is barely a teenager - it was born in Manchester in 2006 - but it is about to swallow-up a retailer that has been trading for more than 200 years. Boohoo is paying £55m for Debenhams’ website, its brands, customer database and £400m of annual online sales.

Thousands of jobs have been lost at Debenhams since it first went into administration in April Credit: Stefan Rousseau/PA

It plans to turn the Debenhams.com into an online international marketplace - like Amazon - for clothing, beauty, sport and homeware.Boohoo, however, is not interested in taking on any of Debenhams’ department stores, or its warehouse facility in Peterborough.The chief executive of Boohoo, John Lyttle, was asked how many of Debenhams’ 12,000 staff will be joining as a result of this transaction.

He avoided answering. It won’t be very many, if any at all.

Debenhams will sit alongside other Boohoo products from next year Credit: Boohoo/PA

As it stands, Debenhams’ 124 department stores will eventually reopen, Covid restrictions permitting, only to run down what stock is left before closing for the final time.  The process will take a matter of weeks and staff will gradually be made redundant.Boohoo is basically lifting Debenhams’ online operation out of the business and leaving everything else behind.

It did the same when it bought Warehouse, Oasis, Coast and Karen Millen.Asos looks set do something similar with what’s left of Sir Philip Green’s Arcadia empire. 

Topshop is one of the brands under consideration by Asos Credit: Jane Barlow/PA

On Monday morning, the online retailer confirmed it is in “exclusive discussions” with the administrator, Deloitte, to acquire the “Topshop, Topman, Miss Selfridge and HIIT brands”. Arcadia employs 13,000 people.In the past 12 months, Laura Ashley and Cath Kidston have both been “rescued” from administration.

In both cases the buyers wanted the websites and the brands, the shops closed and the majority of staff lost their jobs.This deal leaves Boohoo with a stable of fashion brands, 3% of the UK clothing market and not a single physical presence on any UK high street. The trend toward online spending was well-established and has accelerated during lockdown.

Boohoo set out their plan. Credit: Boohoo

Lyttle says that 55% of clothing is now bought online, versus 33% a year ago. He believes that’s a permanent shift.Neither Boohoo nor Asos has a single shop and neither has any intention of opening any, not yet anyway.The short-term future for shopping centres in communities across the UK looks bleak.  The internet and the smart phone has transformed our shopping habits and created winners and losers. It is tempting to see the Boohoo and Asos acquisition as a changing of the guard.

It is interesting to note that Mike Ashley, the owner of Frasers Group and Sports Direct, hustled and bustled, loudly declaring his interest in both Debenhams and Arcadia.

He has ended-up empty handed.