Regular readers will know that I have written about UK department stores many times – and particularly how they remain relevant. Not so long ago, the biggest threat looming appeared to come from online, but we have since seen many of the hottest multibrand ecommerce players go into decline. In today’s world – where those digital rivals are less of a threat and in a post-covid period which has shifted people’s working and travel patterns permanently – what role do department stores play?
For as long as you and I have been consumers, several landmark department stores around the world have been a critical part of the fabric of the retail and luxury landscape. We instinctively feel that their heritage and legacies extend far beyond our own memories, but we perhaps forget just what a different era they were born into. As tumultuous and challenging a time they have faced in recent years, it’s quite remarkable to stop and think just how different the political, cultural and technological context was when they first flourished.
“For as long as you and I have been consumers, several landmark department stores around the world have been a critical part of the fabric of the retail and luxury landscape.”
Founded in 1707, Fortnum & Mason, for example, is literally as old as the United Kingdom of Great Britain, opening its doors in the same year the Acts of the Union were passed by the English and Scottish Parliaments.
Paris’s Au Bon Marché – the precursor to Le Bon Marché, often cited as the world’s first department store – opened in its doors in 1838, the year slavery was abolished in the British Empire. Its iconic site on Rive Gauche opened in 1852, three years after Harrods had started to emerge in London’s Knightsbridge. The same year, James Knox Polk – the eleventh US President – was the first ever to be photographed.
Continuing the theme of US Presidents and technological advancements, an address by Calvin Coolidge (POTUS 30) was the first to be broadcast on the radio from the White House in 1924 – the same year Saks landed on Fifth Avenue.
On the cultural front, Harry Gordon Selfridge welcomed the first customers into his eponymous Oxford Street store in 1909, the same year that Manchester United won the FA Cup for the first time. Meanwhile, Galeries Lafayette became a department store in 1896, the year in which Oscar Wilde’s play Salome first went into production in Paris at the Théâtre de la Comédie-Parisienne.
Of Liberty of London, which first opened on Regent Street in 1875 before taking up its current location on Great Marlborough Street in 1924, Oscar Wilde once remarked: “Liberty is the chosen resort of the artistic shopper”.
However, as much as we might mourn their loss, heritage and legacy alone are not enough to ensure department stores live on. Of course, earlier this year we saw Fenwick’s permanently close the doors of its New Bond Street store after more than 130 years of trading.
“However, as much as we might mourn their loss, heritage and legacy alone are not enough to ensure department stores live on.”
Over recent weeks, I’ve been speaking to a number of department store leaders past and present about where this unique corner of luxury retail stands today – and about what the future looks like. These are some of the key themes that emerged from our conversations.
Creating destinations through innovation
In many ways, Oscar Wilde’s comment about Liberty’s captures the essence of what department stores have always had to do: to be a destination. While they must adapt to the political, cultural and technological context of the times, department stores have always needed to play an experiential role. They are places where people come together to celebrate, discover new things, or receive personalised and knowledgeable service.
“They are places where people come together to celebrate, discover new things, or receive personalised and knowledgeable service.”
CEO Andrew Keith explained to me that Selfridges is a “creative playground and a social centre.” It is a “place where people can come together to have fun discovering and we have to use our space in interesting ways to create delight”. It is no wonder then that Selfridges is celebrating the summer with Sportopia, an immersive festival of sports throughout the store, including a 40-foot climbing wall to its Champion Sports Bar.
Former Saks Group President, Andrew Jennings echoed the theme: “the days of taking a large space and filling it with stuff is over forever. The department store of the future has to be a place of discovery and delight”.
As Sarah Andrews, Chief Retail Officer at Harrods says, “the nature of the challenge changes, but the approach has always been the same: to dig deeper to be more exciting, more compelling and more extraordinary to ensure our loyal customers from all over the world keep coming to visit us.”
Shop windows: still relevant, but changing
The opening of Selfridges was literally marked by the lifting of the curtains on its windows in 1909. Mary Portas reminded us of the significance windows play in the sector when it was a critical component of her role in overhauling Harvey Nichols in the nineties – so successful was she, that the windows became part of guided tours around London. But do department store windows mean the same thing today?
“But do department store windows mean the same thing today?”
Andrew Keith told me that “the eyes of the world are on those windows… they are incredibly important in being able to tell great stories.” Their Joke Shop window display at Selfridge’s earlier this year certainly caught lots of attention. “The approach that we’ve always taken is to use our windows to tell stories that are bigger than just product. It’s about stimulating thought and imagination”, he said.
Today, though, the virtual shop window is just as important. Generating interest and appeal online – whether that’s how customers use a department store’s website to plan their next trip, or creating a buzz on social media – allows the shop window to travel further.
Moving threat: from online to brands
As Michael Mire, NED, Advisor and ex-McKinsey Partner, who has been a commentator on retail for more than 30 years, put it to me, “I had originally thought that the likes of Net-A-Porter, Matches, MyTheresa would mean the end of luxury department stores. But I was totally wrong.” The bigger threat, he tells me, comes from the luxury brands and their own march on retail.
Firstly, luxury groups have immense spending power; earlier this year Kering deployed $963m purchasing Manhattan’s 715-717 Fifth Avenue, part of a “selective real estate strategy, aimed at securing highly desirable locations for its Houses”. For a further €1.3bn, Kering picked up a 127,000 sq ft 18th century store spanning five floors at 8 Via Montenapoleone in Milan.
Where they are opening their own stores focused on clothing, the risk is that Bond Street and others like it around the world capture designer apparel at the expense of department stores.
That spending power is also on full display across their shop windows. If you’ve not walked past a Hermès store recently, a quick look at this Pinterest page cataloguing their windows shows you what you’ve been missing.
Secondly, as the luxury brands continue to create world-class retail environments, the strength of their range threatens the appeal of department stores. Beauty is perhaps the strongest category in department stores Michael Mire explains: “beauty benefits from having all the brands together – customers want to compare them as they go from counter to counter”. Leather goods, footwear and accessories also work well where department stores can carry a brand’s full range.
Clothing, however, is different because it needs more space. Though it can be convenient to have multiple brands on the same floor, many luxury shoppers are tempted to go to specific brand’s shops where there will be greater range.
Like all aspects of retail, very little of what we have been used to for decades is set in stone. The future of luxury department stores does feel precarious – but perhaps that feeling is as perennial as the stores themselves. For the benefit of the whole retail landscape, I hope they can continue to innovate and evolve – as they are in Korea, Japan, Shanghai and Dubai (to be discussed in Department Stores Part II soon).