Introduction
When organizations aim better to satiate the needs and desires of their clients, innovation frequently results. Organizations must decide on the type of innovation they should use when establishing their strategy. A company must concentrate on introducing new components to the current item or service to enhance its competitiveness. This report addresses the issues facing Debenhams and how they can be solved.
Specific Issues the Company Faced That Required an Innovative Approach
Debenhams is presently increasing online sales beyond the UK, although it is having difficulties because of intense rivalry and online sellers like Amazon. The fact that the share price has fallen from 201 GBX in 2006 to 22.12 in 2018 indicates that Debenhams is facing severe internal and external difficulties (Taylor, 2018). Debenhams was founded in 1813, and based on the fundamentals of share prices, it has now reached the phase of “Decline,” and it is at the absolute end of its lifetime (Taylor, 2018). In order to prolong the economic cycle and keep earning profits, Debenhams must innovate.
The fundamental issue for Debenhams was the lack of distinctive products that exposed it to competition from young, innovative firms, many of which operated only online. Designers at Debenhams existed in the 1990s, and artists like Ted Baker and Jasper Conran created in-house collections for the retailer (Upadhyay et al., 2021). That was a helpful differentiator, but they remained stagnant and stocked their shops with widely available street diversions. Additionally, Debenhams had to adjust, as many purchases were made online. Having a great website is only helpful if the item is balanced. Therefore, the brand losing relevance was the more significant issue.
Poor financial decisions that resulted in rising debt and deterred suitors were other contributing causes. The retailer leased back 23 shop freeholds that it had previously sold to the property investment firm British Land worth £495 million in 2005 (Grant et al., 2021).
Thus, the firm was obliged to negotiate costly leases with up to 35-year contracts and annual rent hikes of 2.5%. (Roach, 2018). The costs quickly surpassed the immediate cash benefit, and by March of this year, the business was carrying £720m of debt (Grant et al., 2021). Debenhams was placed into management in 2019 to restructure its finances, wiping out its stockholders desperately. Once it had a “company voluntary arrangement” with its landlords, it could lower its rent payments and close 50 of its 166 outlets (Grant et al., 2021). However, the damage had already been done by the time it was put back under administration in April 2020.
As a profit oriented company, Debenhams experienced remarkable growth over time. It made aspirations to expand to 240 locations in 2006, and as recently as 2017, it added additional stores (Pandit et al., 2019). Consumer spending was constrained while shopping patterns changed due to the pandemic and Brexit anxiety. Debenhams had to deal with many underperforming stores at a hefty expense, including escalating rents, business rates, employees, and upkeep. As revenue started to decline, those liabilities were more challenging to cover, and the company experienced a record £491.5 million loss in 2018 (Pandit et al., 2019). When the coronavirus hit, this made it nearly hard to turn the company around.
The Decisions and Internal Factors That Led to the Issue
Since neither Templeman nor Sharp, the company’s former CEOs, altered their established business model, Debenhams experienced difficulties in 2008 (Strategic Decision, 2019). Notably, directing an institution’s innovation process calls for special skills and expertise. However, Mr. Bucher, who took over for Sharp, began fostering an entrepreneurial spirit from the top down (Strategic Decision, 2019). In contrast, the physical business staff is centered around a single power source. Employees do not connect directly with senior management and mainly rely on level or departmental executives; however, managers may need to be corrected.
Because of its limited marketing initiatives, the company’s products were less widely available. In order to provide trustworthy sale points for in-store sales, the company needed to overcome constantly changing obstacles (Stevenson & Cole, 2018). On the contrary, the rising costs of the items gave rise to additional opportunities for its primary components to offer more competitive or cheaper prices. Due to the lengthy process, a client’s business was more inclined to suffer significant client losses.
The Process of Innovation They Should Go Through
Idea Generation and Mobilization should be the first action Debenhams should take, and throughout this phase, fresh ideas should be generated. When an idea is mobilized, it is transferred to a new location, either geographically or logically, such as an outside company or another department (Sjödin et al., 2020). As per Innovation: Management, Policy & Practice, managers must emphasize innovation properly (Afuah, 2018). If the need is overstated, some individuals may leave for positions with greater job security, but if the need is underemphasized, everyone will experience less urgency and less idea generation.
The next step for Debenhams should be advocacy and screening, enabling it to assess a business idea’s viability and any potential drawbacks or advantages. Refinement is one of the main benefits of the lobbying and screening processes working together (Shahzad et al., 2020). Arguments and conversations can improve an idea if it has potential. According to the study published in Innovation: Management, Policy & Practice, this stage prepares an idea for top management, which may require a different strategy (Afuah, 2018). A few appropriate procedures can be established for this step for Debenhams, which is trying to develop a strong culture.
Debenhams should proceed to experimentation as the next phase to see whether ideas are viable for an enterprise at a particular moment. With the knowledge gained about the outcomes and viability of the original idea, experimentation will aid in the generation of new ideas (Åström et al., 2022). Commercialization, which tries to establish a valuation for a concept by concentrating on its possible impact, should be the next phase for Debenhams. This process will make the concept attractive to the audience by explaining how and when the concept can be used, bundling the concept with other concepts, and using data or experimental prototypes to show benefits (Kakatkar et al., 2020).
The next phase for Debenhams should be dissemination and implementation, where diffusion is the widespread adoption of an innovative idea within the organization. Implementation is the setting up all necessary infrastructure for developing the invention (Jiménez-Delgado et al., 2020). The organization will identify the following consumer needs through diffusion and execution. Feedback, success measurements, and other benchmarks are all ways that the organization can encourage innovation.
The Type of Innovation Required
Debenhams needs to use Keeley’s ten types of innovation and incremental innovation to enhance growth in their firm. Ten Types of Innovation is an analytic guideline that promotes a broad view through configuration, including internal business aspects, offering product performance and operational systems, and experience, which includes service and customer engagement (Hansen & Madsen, 2018). Ten Types of Innovation can ensure higher innovation since it works well with innovation models like incremental design (Rubin & Abramson, 2018). Incremental innovation has lower risks than other models; hence, it will work perfectly with Keeley’s types of innovation.
Ways of Protecting the Named Innovations
Keeley’s model involves configuration, offering an experience that must be integrated for success. Debenhams should enhance its profit model, network, structure, and process for configuration. The profit model involves finding new value sources and possible income streams and testing presumptions regarding what to charge and how to make revenue (Shanmuganathan, 2018). To encourage people to visit the store, Debenhams could extend its business hours to 12 pm–9 pm. Because customers could go to Debenhams after work, Debenhams might make significantly more money this way.
Network involves identifying new applications for other businesses’ procedures, tools, products, distribution channels, and brands. Debenhams should think about establishing a potent Sales department that would preserve the current sales channels and develop new ones as much as they are going toward growing their online sales. Structure involves rearranging the company’s physical and human resources and using improved talent management techniques to cut fixed expenses (von Stamm, 2018). Debenhams should implement a cross-functional recommendation initiative to streamline and improve communication.
Because they frequently contact clients, employees in retail establishments should offer suggestions on how to enhance the “process” of selling things. Process involves adopting new techniques and procedures to better capitalize on an enterprise’s fundamental competencies (Philbin & Kennedy, 2020). Debenhams’ current marketing plan comprises two primary parts: emphasizing online sales by developing new online sales channels and incorporating social shopping into current physical stores. Debenhams must prioritize social shopping and turn store trips into pleasant leisure activities.
On offering, Debenhams should enhance its product performance and system. In product performance, it should focus on updating and upgrading its current items and new products. Product system involves altering how goods and services are combined to build value-based ecosystems and systems (Kuijken et al., 2017). R&D should unite all divisions and establish a direct connection to Debenhams key concepts as long as the company maintains its strong competitive advantage through its nail bars, cafés, and online and physical stores.
On experience, Debenhams should enhance its service, channel, branding, and customer engagement. Service enhances an offer’s usability and effectiveness by simplifying its use, emphasizing its characteristics, and fostering the consumer experience (Yu & Sangiorgi, 2017). Debenhams should ensure all clients are aware of the company’s working hours. Channel includes enhancing immersive physical experiences or eCommerce and lowering barriers to buying. Debenhams should recruit more employees to ensure every physical buyer is attended to appropriately. Branding involves creating a “promise” that draws customers through marketing, connection with customers, and communication.
Debenhams needs to rebrand itself and make promises that they are sure it will deliver to its clients. Customer engagement involves building authentic connections and being aware of customer desires. Debenhams should introduce platforms where clients can offer their suggestions and get feedback. Debenhams should give new restaurants and nail and blow-dry salons extra room for incremental innovation. To enhance the shopping experience and encourage frequent visits from customers, Debenhams need to introduce more fresh cafes and eateries inside its retail stores.
Conclusion
Debenhams company is among the companies looking for ways to adapt its current strategy to the new climate. Every company is affected by the innovation waves since a product undergoes a favorable shift; other businesses are forced to innovate to remain competitive and profitable. Corporate design should be developed on trust, transparency, as well as self-interest to innovate and react more quickly to external circumstances.
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