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EDITORIAL What role now for department stores as retail changes?

Shoppers looking to buy now find online easier than a department store

Time was when department stores must have been a game-changer in terms of the convenience that they offered to shoppers, who no longer had to call at a variety of shops in order to buy the items they wanted to have – but could just visit one store. 

As that level of convenience and ease of purchase now becomes more commonly associated with the internet, rather than with a visit to a store, we’re considering in today’s InternetRetailing newsletter what role department stores can now play as retail changes. The question comes in the week that Debenhams said it would close up to 50 stores over coming years, slimming its estate down by a third as it looks to make 30% of its sales online instead. Meanwhile, ScS’ decision to quit its House of Fraser concessions paints a far from rosy picture of how business is going within that department store.

So does this suggest the end of the road is in sight for department stores? We’d say not. Some department stores are doing very well indeed. Selfridges, for example, this year reported record results with strong growth from digital after a year in which it invested in stores as well as online. That fact that Selfridges has many fewer stores will make a big difference to the rent and rates bill. But the stores it has are upmarket, full of luxury brands and an example of experience and service-led retailing. That’s the direction that John Lewis is now looking to go in, while Debenhams said this week that it was investing in services, opening stores that focus on beauty and restaurants – and the social way shoppers now want to buy.

This week we also report on Amazon’s third-quarter figures, and on Alibaba Group’s plans for Singles Day. These, you might think, are examples of how retail is going firmly online – and that, surely is where the future lies. In fact, both retailers are focusing firmly offline as they look to expand their presence beyond the internet. Amazon is ramping up the services offered from its Whole Food Market stores in the US, while Singles Day will take place in stores across China as well as online. Alibaba’s UK and Nordics managing director David Lloyd told this year’s InternetRetailing Conference that stores would be very important for future for his business. “The biggest investments we’ve made in the last few years have all been offline,” he said, “building and growing an offline presence. We believe the the only way we can truly scale our business and impact a billion people in China is off-line, working in partnership with small retailers.” Indeed, many of the shops that Alibaba Group has opened, such as its Hema supermarkets, are very like department stores in that they offer convenient shopping from many categories under one roof.

But the difference is that digital is woven into these stores, making it ever more convenient for customers to shop, whether they buy online or offline, or move between the two. That, after all, is how shoppers do show that they like to buy – and department stores that can achieve such ends, while negotiating the practicalities of rents and rates, seem likely to survive and prosper in the long-term. Whether department stores of the future will bear the names they do now will depend on how management can grapple with legacy footprints laid down in the 19th and 20th centuries to make them relevant for the 21st century – and beyond.

In today’s newsletter we’re also reporting on the challenges of the current retail environment. Analysis suggests that prices are already falling ahead of Black Friday – the question now is whether consumers are waiting to buy, or not planning to buy at all. A Whistl study suggests that shoppers now regularly buy from abroad, rather than from UK retailers – and are looking beyond the UK as they do so. Meanwhile, a Nosto study of email marketing after GDPR has some very interesting findings for retailers. 

Today’s guest comment, from Duncan Hendy of Kentico, is a timely one, then, as he considers what retailers need to do to earn a customer’s true loyalty. 

Image: Fotolia

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