Department stores have suffered a dismal few years. Once-loved names such as Debenhams and House of Fraser are in the emergency room after their administrations and profits have evaporated at bellwether John Lewis.
But it’s not all doom and gloom in the department store sector, as the powerful performances delivered by landmark stores Fortnum & Mason and Selfridges show.
Some say their small number of unique destination stores makes life easier for them. But isn’t that a convenient excuse? Shouldn’t mass-market players like John Lewis, Debenhams and HoF recognise these successes and ask what they need to do to compete?
Day-out status
Fortnum & Mason and Selfridges draw shoppers from far and wide because they make the journey worthwhile through their exciting environments, product and in-store theatre.
They are true destinations, constantly evolving, constantly refreshed, places where ‘experience’ means more than a new desk of that name or a dressed-up sales promotion.
Whether it’s stylish in-store cinemas, teaming up with cutting-edge artists, mouth-watering food halls or glamorous dining options, or the most innovative and up-to-date product fantastically showcased, the pair reward a visit.
Rivals may argue that is easy to do in the small number of stores that each operates, but some of the most overtly mass-market retailers manage to do the same. Primark is one of the most obvious examples.
As it opens new stores and refurbishes older ones, Primark brings excitement. The Birmingham branch, which opened last year, became a destination for coach parties.
If Primark can do it, so surely could others.
Department stores used to be a draw in their locality, be this big city or small town.They stood for something new and different in retail, but contemporary players frequently fail to live up to the billing their predecessors possessed. When was the last time someone organised a coach trip to a Debenhams?
Limited store portfolio
Fortnum’s and Selfridges have been able to differentiate themselves from mid-market competitors because they have very small estates.
Selfridges has four stores: the flagship in London, two in Manchester and another in Birmingham. Alongside Fortnum’s Piccadilly flagship, there are only four branches including the recently opened store in Hong Kong.
Some say that means high standards and theatre can easily be created consistently, as they don’t have to do so across hundreds of shops.
Perhaps that’s the wrong way of looking at it. It’s not that high standards can be delivered in a few stores, but maybe they can’t – and are ever harder to achieve – in large numbers.
John Lewis called a halt to physical expansion in 2015, and Debenhams and House of Fraser have both shut branches as they restructure, but when shops remain open, surely they need to fire on all cylinders to appeal – and if they can’t, surely there should be fewer still?
All stores need to deliver on the promise. Head of retail consultancy at Harper Dennis Hobbs Jonathan De Mello says closing stores alone won’t save struggling department store chains. He argues instead that mid-market brands need to address their offerings and focus more on exclusivity to drive footfall and spend.
He says: “If they had a smaller footprint that would help, but if you can buy products from them that you can buy anywhere else – that’s less enticing. If they just reduce their footprint, but don’t do anything about their brands, that’s not going to be helpful.”
On-trend
The Christmas trading updates threw into stark relief the differences in the way that forward-thinking department stores have their fingers on the pulse of consumer trends in a way that others don’t.
As retailers increasingly cater to growing market trends such as flexitarianism and ethical consumerism, John Lewis & Partners mentioned neither – surprising, given its revolutionary origins.
By contrast, Selfridges trumpeted the rocketing success of its vegan food ranges, especially its vegan confectionary range, which delivered a 96% sales surge over the festive period – presumably from a low base. Selfridges also flagged that its newly created vegan hamper completely sold out, and signalled that a big new sustainability initiative will be unveiled soon.
Fortnum & Mason, meanwhile, highlighted the burgeoning success of its alcohol-free and exclusive sparkling tea product – launched to reflect the less-boozy habits of younger consumers – which accounted for one in every nine bottles of sparkling drink sold during Christmas.
Fortnum’s chief executive Ewan Venters says that by the run-up to last Christmas the retailer had long been tailoring its offer to growing trends such as “less alcohol, slightly healthier, lighter foods, which were there last year and are only set to continue”.
Open to all
Retailers such as Fortnum’s and Selfridges may be famous for offering some the most contemporary and exclusive goods and services available, but they are also determinedly democratic institutions.
All are welcome and there is something for any budget. Customers can enjoy all the excitement and pleasure associated with the famous brands even if they can only afford lower-cost treats, still taken away in a bag stamped with the legendary names.
It was always that way at Selfridges. Adverts for the store, opened by retail legend Harry Gordon Selfridge in 1909, included the line: ‘No cards of admission are required’. It was in stark contrast to the practice of some others at the time and reflected too in Marks & Spencer’s ‘Admission Free’ signage on its Penny Bazaar.
John Lewis’ ‘middle class, middle England’ appeal has been a cornerstone of its success but does it still appeal to the aspirations of younger shoppers who will be tomorrow’s big spenders? Selfridges manages to be ‘down with the kids’ as well as with their parents, grandparents and cousins visiting from abroad.
Truly different
Harrods, Fortnum & Mason and Selfridges all offer a genuinely unique product and experiences.
While some retailers bemoaned poor toy sales at Christmas, Selfridges’ new tie-up with FAO Schwarz – complete with giant walk-on piano – gave children and adults alike the chance to recreate the scene from classic Tom Hanks film Big.
Venters says the luxury department store’s commitment to supporting distinctive “British suppliers and new, local businesses, combined with the inherent trust and affection” that the Fortnum brand inspires is what pulls customers through its doors.
Selfridges hasfor instance made the most of its association with Paddington Bear - author Michael Bond was inspired to write his stories during a visit to the shop. Others may not be able to draw on such mighty heritage but can’t they also make the most of their own distinctive characteristics and set themselves apart?
Selfridges and Fortnum’s have made the most of their appeal. Regional department stores do the same. Why can’t mass-market department store groups do the same?
Critics say the department store is dead. That’s not true - but boring shops are dead. And department stores need not be boring.
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