Department store futures

The Department Store is regularly highlighted as ‘under threat’ whenever anyone thinks about the next retail casualty. Our Creative Director, David Dalziel's, shares his thoughts on this challenging sector.

By David Dalziel
Posted 17. 05. 2018
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We’re in a new era of retail where major shifts in consumer behaviours are changing the way brands need to engage. The pace of this change is having a profound effect on ‘traditional’ retail models and the department store is regularly highlighted as under threat whenever anyone thinks about the next casualty.

Why should that be, is there a long-term future for these businesses and what might that look like? Over the coming weeks, we will explore some of the potential routes and strategies available.

Department Store

What are the threats?

Numerous, but let’s start with the consumer – as they evolve they’ve become even more fickle. They’re likely to reject a brand or a format because it feels dated by definition. Brands need to constantly innovate – looking at new ways to engage with new customers, but not forgetting that existing ‘loyal’ customers also need to be re-engaged on a regular basis.

The massive growth of online contribution to turnover has been remarkable in the past few years. While this shift has built turnover overall, it does look negative for the traditional store space. With footfall drifting away, brands and retailers need to excite and engage with relevant and responsive retail thinking, to re-establish the reason for operating in the physical space.

Pure-play brands are also a great threat. Agiler in their offer and cost base, and better at talking directly to the customer, why do they need a department store to showcase anything? Creating a sense of identity will be crucial in the long term, department stores need to answer the question ‘Why?’ when asking themselves, ‘Who are we, what do we do, and why do we do it?’ Like any brand anywhere at any level, department stores need to innovate, to keep moving forward. Otherwise, they’re managing a slow and painful death.

What are the opportunities?

The large format, multi-brand retailer could and should have one of the most vibrant and relevant offers. It can entertain, feed, replenish and revive a customer in a way that no other single entity can. It can be a compact shopping centre and an exhibition hall, even a flexible workspace, all at once! What if 30% of the retail floor-space of a traditional department store was allocated to events? What could you sell, what would you sell… should you even sell?

We’re exploring these topics under three key headings:

  1. The customer – The customer no longer shops in the way department stores sell. What needs to change?
  2. The offer – We’ve seen it (and shopped it) all before, so how do we keep it fresh?
  3. The experience – Where’s the added value? Can department stores be more than just a shop?

If you’d like to talk further about anything discussed in this article, please don’t hesitate to email c.bacconi@dalziel-pow.com.

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