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The department store redefined
We see a movement towards specialisation, relocation out of town and downsizing, for deeper consumer reach.
What is a department store? It may seem obvious: a department store offers
a multi-brand experience on a large scale, with a variety of services and propositions, usually in a city-centre location with a rich history. We automatically think: Harrods, Galeries Lafayette, Lane Crawford, Macy’s… The list is large, global and impressive; these are department store icons – destinations, global names that resonate internationally.
Retail is changing: perhaps the internet is supplanting the department store as the ultimate destination for a collection of brands; maybe Amazon is the new department store, the multi-brand offer of the future. Will the traditional department store format become the retail white elephant, a huge slow moving institution with an illustrious past and an uncertain prospect?
Perhaps we’ll see the department store become the antithesis of what it’s known for, see its overall breadth and scale reduced. Is the true strength of the department store its ability to deliver that variety of brand? It’s about choice, but breadth within a category, authority built on a single product category, delivered with confidence and better than any mono-brand can
offer. The department store could be seen as a specialist delivering advice and expertise, rather than the ‘jack of all trades, master of none’ format of
We are seeing department stores begin to specialise, which will also break down our understanding of what ‘department store’ means. Selfridges’ new men’s Shoe Gallery brings together a persuasive and authoritative collection of top brands in one space – a true destination – but could it be a standalone store in its own right? It’s pretty clear it could, but this would only be possible due to the strength of the Selfridges brand, a brand built on a mix of innovation, scale, history and its iconic Oxford Street position.
Similarly, recently opened menswear standalone, Saks Fifth Avenue Man in Beverly Hills, is a fantastic example of a brand modernising its heritage. It exports its NY roots, bringing to LA a lifestyle menswear offer with the brand’s authority and a New York twist.
The rise of the mono-brand
Department stores need to reassess their competition and re-establish themselves as the destination of choice.
Alongside the threat of the internet is the continuous growth of global mono-brands, such as Zara and H&M, and large-footprint local players, such as M&S and Target. These retailers are responding to consumer confidence in their offer, adding footage and services, moving outwards from their fashion roots and high street locations, to become the new anchors in shopping centres up and down the country.
Next is ever broadening its offer, from traditional fashion business, into sport, perfumery, home and now gardening and DIY. M&S’s new Cheshire Oaks store is a destination – pretty much a day out for some customers – with its extensive offer that now extends into beauty, personal finance and insurance. Where will it stop? These retail giants can no longer be described as just ‘shops’. Supermarkets, too, have become department stores for the value customer, with their huge range, burgeoning footprints and e-commerce offers.
To survive and flourish, a department store must continually evolve. Consumer expectations are so high these days that innovation has become the real differentiator. Service, display and product innovation are a must in order to continually surprise.
Build on your position within the community, reach out to your customers and offer more than they expect.
As the high street battles for survival (so we are constantly reminded), could the department store, due to its position and scale, be the last man standing? By capitalising on its local roots – its place, quite literally, at the heart of the community – the department store can beat the negativity and become the local hero. A local narrative can be built in many ways, engaging with the community by offering space for local organisations, events and initiatives. The department store’s role within the community it serves can be a fundamental factor for its success, for it remaining relevant, trusted and admired.
Another way to connect with your community is to offer specialised products and services that are unique to their local store. As part of its recent relaunch, the Siam Centre in Bangkok signed up a range of brands that presented food and other products that were only available in that mall. Executed with commitment and prioritising quality, this initiative attracts customers and builds a local pride and a loyalty that is at the heart of any community project.
Digital technology facilitates a closer connection with the community. There are apps that deliver personalised and locationbased offers and services, but integrating digital into your store can also allow you to play with the size of your format to service more customers. John Lewis’ new small format ‘boutique’ department store, in Exeter, UK, has done just this. They have reduced the classic 150k sqft concept into just 70k sqft – and technology has enabled this – but what is interesting is that the brand has been able to open in a location that would never have previously supported it. There have been huge benefits to John Lewis’s e-commerce sales in that locale. As the physical store becomes a constant reminder of the brand in the local psyche, this ‘halo’ increases online trading beyond the store itself, on a regional scale.
Be true to your roots, understand your strengths and build
your brand around them.
A department store needs to learn to think like a brand and, more than that, act like a brand – not simply a collection of disparate offers, not just a name
or a building. It needs to examine its DNA, understand what it does best, and what its customers expect from it, and translate that into action. A department store should own the conversation with its customers, above the brands it houses.
Selfridges has always been seen as a retail innovator. Today it’s building on this strong brand attribute and still challenging the norm, with innovations such as ‘No Noise’, a space dedicated to tranquillity and relaxation away from the bustle and overload of modern life. It may appear frivolous and indulgent, but events like this bring global publicity and creative credibility, giving the department store a ‘glow effect’ that infuses through the brand.
Having defined what you stand for and who your customers are, build a clear strategy that pulls on your brand’s values, heritage and expertise, to connect with your customers and offer the most compelling retail environment.
You need to excite and entice your customers. Use the breadth of your offer to enable best-in-class retail entertainment.
Scale can certainly be seen as an advantage for a department store; with scale there is the opportunity to showcase in an immersive and truly engaging way. Space can be used to create experiences beyond purely selling – brand-building experiences that are linked to a wider strategy and give something unexpected, social, educational and entertaining.
A department store can use its unique proposition to its advantage, crossmerchandising from all departments and bringing together complete stories across ranges and categories. We often talk about the importance of curation. With the help of visual merchandising you can begin to express an opinion with confidence that no other can replicate.
There is some very expressive work coming out of South America: Liverpool in Mexico City and Paris in Santiago are both fully embracing this theatrical trend and taking it to a new level. We were appointed by Paris to redesign their children’s department for a new store – the brief was to take what was an uninspiring space and turn it into a modern, world-class department. We created an urban, playful and interactive space that engages not only children but parents too. The concept is about adventure, the look and feel of the department is achieved through theatrical sets resembling miniature houses, unfinished room sets, and deconstructed play areas.
Department stores can offer multi-sensory experiences that the web can’t match. More than sight and sound, all the senses can be involved: smell, touch, taste… true retail theatre that only the physical store can provide. The scale of the department store allows customers to lose themselves in a truly persuasive, all-encompassing brand experience.
Inspiration vs. aspiration
Try not to be swayed by the allure of luxury – it’s more about inspiration than aspiration.
We have seen a trend, over the past decade, for department stores to become luxury and appeal to an increasingly wealthy clientele. But is this sustainable and the route for all department stores? It’s true that we will always aspire, but we don’t want to lose that aspiration in a veil of exclusivity. We need to be more democratic in offering luxury to the many, not the few.
People have come to expect higher levels of service; store environments should be offering the best quality experiences the brand can afford. Personal shopping, once the preserve of high-end retail, is now the norm, with stores such as Topshop and Forever 21 offering it to the young and fashion hungry.
The size of the “global middle class” will increase from 1.8 billion in 2009 to 3.2 billion by 2020 and 4.9 billion by 2030. (OECD Yearbook 2012). Our focus should be on developing that rich seam of the burgeoning middle class, while remembering that luxury has an important place at the top of that mix – without it, where is the middle?
New technology can help you better understand and connect with your customer. The stronger your connections the more rewarding
the outcome; embrace the digital revolution in everything you do.
Increasingly, the consumer is using and exploiting new digital channels to connect, share and compare, 24 hours a day, with their friends, followers and favourite brands. The potential for you to connect with your customer at a level never before achievable is huge: you can be their friend, their advisor, their inspiration. The insights you can gather from these relationships are invaluable. However, you need to use this information wisely and, as in any relationship, use the right tone. Sound too familiar and it’s easy to offend, too corporate and the customer will just feel like one of the crowd and switch off. Think about incorporating this knowledge at every level of the customer journey, from the offer that gets them into the store, to the service that asks them how they like their new purchase and makes suggestions about what may go well with it.
We’ve already referenced John Lewis Exeter and the new ‘flexible’ department store format we developed for the brand. The familiar 150k sqft city-centre destination is adjusted here – the full offer is presented, but in half the space. Increased display density is step one, but the concept of showcasing stock to be purchased in new ways through a more integrated and considered use of in-store technology – a truly multichannel experience – is the key. This approach, through the use of stronger and denser VM, excellent customer service and digital tools, plays to one of JLP’s strengths: being an informed editor for their customer.
The technology needs to work alongside the physical store in a holistic way that creates a seamless and relevant offer. In-store apps with built-in navigational tools; memberonly access to events and promotions; blogs and social media which allow the store to respond to customer needs, act decisively on complaints and capture micro-trends in the customer’s world… all of these tools can help the department store deploy the right strategy to reach their customers.
Build a rapport with your customer through social media channels, while at the same time articulating your physical space to accommodate this social interaction.
Shopping is social. It’s embedded in our habits, it’s cultural and important and it’s not just about capitalism and consumption. It’s vital to offer customers a place that feels personal to them and relevant to their lives. Using its biggest attribute – physical space – a department store can create truly social destinations that allow real interaction. The department store can become a leisure destination where culture and commerce cohabit. It’s the perfect vehicle to encourage dwell time, an open invitation to browse.
These spaces can be linked to local clubs or organisations and the store can be seen as a benefactor – giving something back, but most importantly embedding itself in the heart of the community. Isetan Shinjuku recently reopened its Tokyo flagship with the introduction of a fashion museum. Playing on its fashion heritage, it delivers a unique cultural experience and a world-class destination for fashionistas. Westfield in Sydney has created an exceptional food offer. The quality and variety curated there is impressive, as is its authenticity, with fantastic purveyors all vying for business in this energetic social space. Liverpool has created a similar space that spills out into a green haven atop their new Mexico City flagship. Such spaces are testimony to the intrinsic values of the stores themselves – creativity, quality, provenance – and their ambition to give the customer relevant, cultural and persuasive experiences that resonate within their lives.
A global offer
With its seductive brand mix, the department store can export well. Choose the right market and you will be able to succeed where others might fail.
The department store model has legs, it travels well. The scale and authority that come with being an established player give instant resonance and credibility. Some of the most longstanding department stores – Harrods, Harvey Nichols, Bloomingdales and Lane Crawford – are reaching out to new markets, either by opening stores in new territories or through new media channels.
Technology is giving brands a global reach. Those with iconic names and a strong sense of their brand are able to leverage their specialism and heritage. Leading US department stores Saks Fifth Avenue, Macy’s and Neiman Marcus are partnering with technology company Fifty One Global to enable international shoppers to buy from US e-tailers in their local currencies. This level of exposure helps brands assess where their offers are being best received and can help them to define where global expansion may be most appropriate. In developing regions, department stores can lead the way in gaining a foothold where other lesser-known retailers have little traction. The march of the department store has only just begun.
Are you being served?
Service is a true differentiator. Whether it’s a concierge, personal shopping, bespoke tailoring, or simply a first-class delivery promise, service is king.
People are important – often the difference between a memorable experience and a forgettable one. If your staff are motivated, knowledgeable, sincere and helpful, they can be a truly defining part of your customer’s
journey. Add the right services, that reinforce that perception of personalisation and care, and you can win over even the most jaded shopper, transforming them into a brand advocate.
The ability to react to and service customers in store is key. It’s vital that the incentives and training for store staff are not forgotten, think about the tools and information to which your staff have access. If they have
a clear view of the customer they are speaking to – their previous purchases and general profile – as well as access to up-to-date information on products, availability and promotions, they will be in a better position to provide the best sales advice. Give your staff a ‘singular view’ of the customer and your offer.
New technology lets you respond to your customers on a personal level and mobile technology can help create an even more personalised service. Neiman Marcus have an app that recognises when a customer is in store and gives tailored offers and fashion advice. Alongside the use of technology there are many easy wins. Free in-store WiFi, crèches, spacious fitting rooms, personal shopping, concierge service, luxurious bathroom facilities and wide shopping aisles are all great ways to add to the overall service proposition.
The future’s bright
One thing’s for sure: people still want to shop and enjoy great experiences. Done well, department stores have all the tools
and opportunities to deliver the best customer experiences.
The department store model continues to shine. Our top 10
global department store destinations: