Fight to survive
The fallen The stayers The family shop
Department stores around the world are struggling, retail expert Juanita Neville-Te Rito says. In the glory days of department stores, in the first half of the 20th century, it was all about the experience, she says.
‘‘I grew up in Australia and my nana would take me into David Jones once every school holidays and I still have an incredible memory of the dude who was playing the grand piano.’’
Staff would know her grandmother by name, even though she lived an hour away.
‘‘It was the bastion of service and curation and it was something special.’’
She says department stores had been slow to adapt to online retail and discount stores.
And the giants of retail are facing strong headwinds from online shopping, there’s no doubt about that.
About 8 per cent of shopping is now done over the internet and, coupled with the entry of standalone luxury stores and aggressive discounting from both homegrown and international foes, the traditional department store is battling to hold ground with consumers.
In the US, some have already succumbed. Barneys, the famous New York retailer, filed for bankruptcy protection in August before closing stores. Sears filed for bankruptcy in 2018.
But the numbers also show the big retailers still appeal to Kiwis across the spectrum, from discount retailer The Warehouse to David Jones, department stores have performed better than most other retail categories this year.
Department stores had their second-largest increase in sales in the September quarter, up 3.5 per cent, according to Stats NZ.
In the quarter, New Zealanders spent $56 million in department stores, significantly behind spending on electronics, at $83m but ahead of spending at supermarkets ($51m) and restaurants ($35m).
However, if you look a bit further back to year-on-year spending, the data paints less of a rosy picture; department store spending was down $30m on the September quarter last year.
The key for survival, NevilleTe Rito says, is high-end department stores offering an experience and service that surpasses what customers can find elsewhere.
That customer service and little bit of something special was what set the now-closed Kirkcaldie & Stains apart in a crowded retail pack.
Where The Warehouse had settled on an ‘‘everyday low prices’’ discount strategy, and Farmers is firmly entrenched in more of an upmarket model, with its new-format store in Auckland boasting a men’s grooming island and a mini lego store typified by
Farmers’ chief executive David Collins as ‘‘an honest, true department store’’.
But there is no doorman to smooth your retail journey. A doorman in top hat, gloves and tails famously welcomed customers to New Zealand’s oldest department store.
Wellingtonian Jo Glantschnig says walking into the former ‘‘grand dame of retail’’, Kirkaldie & Stains, was an experience in itself.
‘‘There was just something special about the store,’’ Glantschnig says.
The staff had an old-world style of service, personalised but a little formal and always close by if you needed help, she says.
But after 153 years, the store, also known as Kirks, was sold to Australian retailer David Jones.
Kirkcaldie & Stains’ closed in January 2016, before the first David Jones stored opened in its place later that year after an estimated $20 million overhaul.
But for Glantschnig, David Jones is just not the same.
It feels sparse and impersonal, she says.
Still retaining its original name and presence in Auckland is Smith & Caughey.
But high-end department stores in New Zealand have experienced mixed fortunes over the last decade.
Kirkcaldie & Stains is gone and Arthur Barnett in Dunedin was taken over by H & J Smith.
Smith & Caugheys, Ballantynes in Christchurch and Thomas’s in Blenheim are all holding on.
Neville-Te Rito says she wonders whether the older names in department stores, like Smith & Caughey, will be agile enough to survive the pressure from the larger competitors.
Delivering on exclusivity and experience was where department stores could build their success, she says.
‘‘There is a special talent pool that sits in department stores and that is visual merchandising. You walk into a department store and it gives you that sense of wow,’’ she says.
Ballantynes, in Christchurch, is an outlier and has done well to keep up with local demands, Neville-Te Rito says.
The company surveyed customers about what they wanted to find instore and were quick to change to market demands, she says.
In Marlborough, Thomas’ celebrated 107 years in business.
The department store is still in family hands.
Tim Thomas, who runs the business with his brother Hamish, says the beauty of a department store is the ‘‘shops within shops’’, offering a variety of products in the one store.
‘‘I think, for a lot of our customers, particularly in Marlborough, we have been here a long time. We have built up a lot of loyalty over that time,’’ he says.
While the Thomas’s markets itself as a luxury destination, the size of region and potential customer pool meant the product range included high and mid range products, Thomas says.
The store stocked Karen Walker through to Icebreaker, Super Dry and Huffer.
Thomas believes changes to online shopping rules and GST could even out the playing field for department stores, particularly in the regions.
But he says even being small in size has been good for this business, he says.
‘‘There has been World Wars, there has been depression, the global financial crisis, the rise of internet shopping . . . we have been able to adapt and change and that is why we are still here.’’