Has the department store finally reached retirement age?

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The news that House of Fraser's flagship department store in Manchester 'Kendals' is set to close in the New Year after 182 years of trading is a landmark event in the demise of the British department store.

Not so many years ago, a visit to a department store like Kendals or Selfridges would have been regarded as a smart day out for aspirational families. From a 2018 vantage point, it’s hard to imagine that the extravagant displays of food, clothing and cosmetics concessions gathered for the convenience of shoppers under one glamorous roof were once the last word in shopping. Today, the experience of walking into many department stores feels as anachronistic as watching re-runs of ‘Are You Being Served’.

Shoppers are saving time and money by buying online

The classic department store formula of presenting a curated collection to discerning shoppers has been superseded not only by the advent of the out-of-town American-inspired mall, where people can pick from a more eclectic mix of stores and price points, but also by the wholesale move towards online browsing and buying. Why schlep into a city centre with all its concomitant parking and access issues, when you can shop to your heart’s content in your own bedroom?

And, with less spare time sloshing around than most of us would like, the notion of treating yourself to a new purchase or two with a couple of clicks has proved surprisingly seductive. Time was, consumers wouldn’t have dreamed of investing in an expensive appliance or big-ticket furnishing item like a bed or sofa from anyone other than a trusted high-street store. But those reservations have been swept away as the search for value has moved shoppers ever-further away from the elegant town-centre shops with he sky-high overheads. 

The trend is deconstructing the department store model

Nevertheless, the speed at which the market has shifted is impressive. Earlier this year, department store veteran John Lewis reported a steep decline in profits – 77 percent – year-on-year, while shares in Debenhams slipped 20 percent on the back of a January profits warning. Even reliable old Marks and Sparks reported disappointing figures a couple of months ago.

It’s House of Fraser, though, that’s been skating on the thinnest of ice since last December when its credit rating was downgraded, and Rothschild investment bank was called in to refinance its debt. Discount retailer Sports Direct acquired all 59 House of Fraser stores in August, but the company hasn’t yet disclosed how many will close as part of the planned rationalisation process. The shuttering of the Deansgate store will lead to several hundred job losses, including those associated with fashion brand concessions in store. Although it will stay open through the Christmas period, its Art Deco doors will close for good at the end of January.

Is the high street in terminal decline?

Not entirely – it is in a period of flux, though. Savvy department stores – as well as smaller retailers – are seeing the Internet as an opportunity to diversify, rather than an invitation to shut up shop: Debenhams’ online sales now account for around 15 percent of total revenues, for instance.

Others are finding new uses for expensive real estate by focusing on providing a unique consumer experience. Selfridges is experimenting with pop-up shops and in-store events that are designed to promote the store as a destination – something that’s resonating with a younger insta-audience. By playing to its traditional strengths – the opportunity to touch products and get great service – Selfridges is winning new fans from a fresh generation.

Catering to customers’ needs with specialist products is also enabling some previously ecommerce-focused businesses to put a stake in bricks-and-mortar shops. Take Darren Bailey, CEO of Angling Direct. He began with a small fishing tackle shop but quickly grew his business into a multi-million-pound company supplying products to more than 40 countries. As part of his recent expansion, Bailey just opened his 24th store and has identified locations for 20 more. He puts his success down to good old-fashioned customer service – proving that maybe there’s still room for an authentic shopping experience in an increasingly virtual world.




Posted on October 23, 2018 | Kendals, Manchester, Store Closure

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