More stores of despair

Germany’s two major department store chains, Galeria Kaufhof and Karstadt, have merged; the UK’S House of Fraser has collapsed into administration. One can’t help but take a slightly despairing view of the future of department stores.

In the interests of full disclosure, I am a big fan of the format — the food halls (and shoe departments) in particular.

Department store shopping is by its nature geared towards meandering. The problem is that no-one really has the luxury of meandering these days and when they do (meander, that is) they aren’t inclined to traversing up and down the escalators of a department store.

So like most modern consumers when it comes down to the buying of, say, wardrobe basics, a new winter coat or work wear, it’s online shopping or a single-branded retail store where money actually gets spent.

Sure, department stores are finding ways to evolve in the changing retail market — big, bland stores just aren’t cutting it.

Space is being reduced for a more curated shopping experience and some are branching out online. Then there’s their last line of defence — what they like to call “unique experience offerings” — because e-commerce is not the only thing upending the department store industry, bad retailing is.

Liberty hosts a sewing school where you can learn to knit mittens, Selfridges stages multisensory art exhibitions and Harvey Nichols offers 15-minute blow-dries from 8am.

There is something else to consider when thinking about the waning interest in department stores: the growing affinity for individual brands. The prevalence of vacancies in shopping malls has created the opportunity for traditional bricks-and-mortar retailers to create large-format concept stores. Brands always want a transaction to take place but in these stores they’re going the extra mile to build good rapport so consumers “identify” with them and come back.

An example is Nestlé’s Kitkat concept store in Japan, which taps into the region’s gift-giving tradition. It sells speciality bars made by chef

Yasumasa Takagi, one of the most renowned patissiers in Japan.

Another example is Nike’s 4,000ft² “Nike by Melrose” store in LA, which uses data from online purchases to inform the product the store stocks. Much of the store’s stock, including 25% of its footwear, refreshes every two weeks – that’s three times faster than a typical store refresh. Customers can use the Nike retail app to scan products’ barcodes and find out more information, including the sizes and colours the store has in stock.

I’m not sure how a humble department store concession can compete.

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The death knell

Retail veteran Andrew Jennings told me in an interview that he doesn’t see a great future for department store chains. The future is in what he calls “trophy stores”, like Selfridges and Harrods in London, Lane Crawford in Hong Kong and Le Bon

Marché in Paris.

Jennings was at one point the CEO of the above-mentioned Karstadt and the MD of retail at Woolies.

“Department stores cannot be all things to all people, they have to have a point of view. Sometimes what you don’t have is as important as what you do have in your assortments. Department stores of the future have to be unique and differentiated.”

I’m inclined to agree.