With department store obituaries seeming to become daily occurrences, it could be assumed that the culling has started. With around 50 Debenhams and 31 House of Fraser stores planned for closure, it is evident that the traditional tried and tested format no longer appeals to the modern consumer.
Department stores used to be a prime hotspot to spend a Saturday. With racks to browse and café stops, they were the ultimate weekend destination. However, present day paints a very different picture. With the spending power of Millennials and the growth of Generation Z, weekends are now reserved for experiences that can be posted on Instagram. Our shopping behaviour has also changed as we move online and we often have parcels waiting for us almost daily.
Despite these trends, 85% of UK adults surveyed stated that they still prefer to physically purchase products in-store. This strongly suggests that they still have a future.
With this is mind, we explore the question that is on the mind of many retailers today: what does the future department store look like?
There’s no denying the considerable impact that going digital has had within retail over the past 10 years. Yet, department stores have been slow to adapt to this and embrace the digital revolution. They have fallen behind the sector.
Many retailers have already begun with great success to explore how applying the use of in-store digital technologies can drive customer experience. As different technologies have been trialled and tested, department stores should learn from them and feed it into the future strategy.
The department store was once famous for their beauty floor but has faced fierce competition and struggled to evolve appropriately. However, Sephora is one retailer who has outpaced it competitors and adapted successfully. It has brought people into stores with its ‘welcome to experiment’ format and in-store digital experiences. Colour match, for example, is an AI tool which asks the consumer to upload a photo of themselves. It then suggests the correct colour shades and products for them. This immersive and efficient experience means that customers are able to try a greater range of products and make broader purchasing decisions.
Another experience in which department stores could further develop with enhanced digital technology is homeware. Department stores are the perfect place for the time-poor consumer wanting to kit out their home in an efficient manner. Technology adopted by car manufacturer, Audi, could be taken as a surprising inspiration for department stores. The automotive retailer developed a VR experience that allows consumers to configure their dream car, as well as explore the car’s exterior and interior in realistic detail. Imagine this recreated within a department store and being able to virtually experience your future living room with all the items, from television to sofa, personally picked out to suit your needs. Although the likes of Ikea and Made.com have trialled this technology, department stores will be able to take this further due to their broad offering.
Department Store’s differentiating factor of everything ‘under one roof’ means that they can serve a variety of consumer needs whilst also providing a personalised experience (one which ensures they do not simply choose Amazon instead). A key advancement in this area will be the roll-out of 5G which department stores must be quick to adopt and power new technologies with. Already being successfully rolled out in China, 5G has kick-started the Internet of Things and has been designed to connect to multiple machines at low cost, for example, linking products through RFID tags and smart mirrors. An example of this in practice would be trying on an item of tagged clothing which can send messages to a smart mirror suggesting what accessories and shoes may work best with it. Once they gain data on their style, preferences and size, the department store can send hyper-personalised offers to their customers, promoting sales.
The ability to create a personalised experience and build a loyal community is a shared success factor for all retailers. Department stores need to prioritise obtaining enough data to analyse whom their customers are and what they want. This will enable them to create stores which put the customer first.
As consumers tend to research the product they want before purchasing it, retailers need to gain a better understanding of their end-to-end journey and shopping behaviours. Tracking the social media activity, visits to websites and even how consumers use the internet provided in store will provide a wealth of data which can be analysed. Being able to track this means that retailers can target the consumer and invite them into their stores to tell them more about the product and finalise the sale.
Utilising customer data and building stores for the community that retailers are based in should be prioritised for the future. Department stores could learn from the likes of Nike by Melrose - a concept store built for and inspired by LA-based Nike Plus members. Within this store, a proportion of the product offering is based on buying patterns within the local neighbourhood. This makes the store unique and relevant to the local area - a lesson which John Lewis could adopt when thinking about what products it should sell in its Solihull store versus the London flagship.
However, it isn’t just customer data that can be used to make the experience feel more personal. Matchesfashion.com for example, has married lessons learnt on logistics from its pureplay origins, enabling customers to order anything within 90 minutes to their personal dressing room based within their 5 Carlos Place townhouse. Store associates deliver coffees and lunches from an onsite kitchen whilst consumers wait (complimentary of course), and the store also hosts several events open to its community – this further enhances the experience and emotional attachment that customers have to the brand.
The future role of store associates has been questioned constantly, especially with the introduction of mobile checkout, restocking robots and chatbots. However, even Amazon, a leader within digital innovation, couldn’t open a store without people supporting its operations. That being said, the roles and responsibilities of store associates has also evolved so that they are a service themselves and provide the customer with that additional piece of personal insight which is currently unmatched online.
The evolution of technology means that store associates are released from doing menial tasks, such as stacking shelves. Instead they can focus on providing excellent customer service. Going forward, stores may rely on robots to stack shelves and monitor inventory. American supermarket, Walmart has already invested heavily into robots to automate tasks. 5G could also be adopted here by using IoT embedded sensors which can track inventory and autonomously communicate with your supply chain when items are running low.
Through the use of data, store associates are able to interact with consumers on a personal level and help to finalise purchases using their insight. This could be further enhanced by technology such as tablets, which can provide real-time data dashboards on the customer’s previous purchase history, items they may like and how they prefer to buy. Insight like this could help provide prompts on how to approach the customer and finalise sales. An even better option could be an in-ear virtual assistant which utilises a voice application to help store associates access information systems on their customers and collaborate with others in-store.
The future of department stores will be interactive, informative and an experience in itself. Their core principle of housing everything under one roof should remain, ensuring that their store is a one-stop shop for the time-poor consumer. We will see more pop-ups, concessions and experiences within department stores as they begin to battle against one another and the likes of Primark and Next, who are evolving their format into one that mirrors a department store, providing additional service as well as products.
To succeed, they must continue to invest in understanding their customer, providing them with a unique and seamlessly integrated omnichannel experience and curate their stores to complement their clientele. Although technology will play a significant role and should be used wisely, it should not be the end goal. The department store should use it as a cog in their machine to build the ultimate shopping experience.