Reimagining the Role of the Department Store
A new sense of purpose
Like so many of their counterparts on the high street, department stores have hit troubled times, with both sales and footfall in decline and predictions that this is only set to worsen in the years to come. In the last year alone we have seen several long-established names close their doors for good, and those that remain are investing heavily in their survival.
But what does the future hold for department stores? Is it simply an outdated model that’s no longer relevant to the way consumers shop today, or could there be a new sense of purpose and role that will secure their future?
Fading appeal
In a recent statement from Morgan Stanley they predicted that department stores will only account for 8% of the apparel market by 2022, down from 24% in 2016. It seems that the lure of the ‘one-stop-shop’ that was historically always the department stores greatest strength, has been overtaken by online shopping, as consumers naturally view this as the most convenient ‘one-stop-shop’ of all.
It was Harry Selfridge who coined the phrase ‘retail theatre’ and when Selfridges first opened its doors to the public in London it brought with it an extravagance and showmanship that the UK had never witnessed before. Describing the experience as ‘a pleasure, a pastime, a recreation’, the roof had a skating rink and within the building were cafés, libraries and reading rooms.
Fast-forward to today and the store bears so much resemblance to this description that it’s hard to imagine over 100 years have passed. In fact, throughout the world, the department store model hasn’t altered dramatically at all. Not only are the events and in-store experiences similar, the floor plans and layouts have barely altered too. And yet, what worked so well in the past no longer seems to resonate with consumers today.
Next-generation customers
If our department stores are to secure their long-term future, they must adapt to serve the needs of the next generation of consumers — in particular, Generation Z. According to the trend forecasting consultancy, Stylus, Generation Z will make up 33% of the Global population by 2020 and are set to transform the retail landscape in the next five years, rewriting what it means to be a brand and retailer in the digital age.
With their exacting standards and entrepreneurial outlook, this highly empowered and deeply ethical generation have very different expectations of the physical brand experience and very different buying behaviours.
Unlike older generations who can recall the glory days of the department store, Generation Z often struggle to see the appeal. With their heightened expectations of both experience and convenience, the majority of department stores are falling short on both accounts. Failing to deliver the immediacy that this ‘on demand’ generation has grown up with online, and also struggling to offer the kind of experience that consumers have become accustomed to from retailers in other sectors.
Forward-thinking department stores are recognising that they must take a consumer-centric approach and place the wants and expectations of Generation Z at the heart of their strategic thinking. Many are exploring ways to balance their emotional desire for experience, sociability and personal service with their rational need for convenience, immediacy and speed.
Investing in the future
Across the globe, the most notable and iconic department stores are investing in their future and embarking on ambitious renovation projects in a bid to stay relevant to their consumers.
In the UK, Selfridges is currently undergoing a colossal and elegant £300m rebuilding by Architect David Chipperfield, and Harrods is also investing £200m in an ambitious refurbishment by 2020. In Paris, Galeries Lafayette have innovative renovation plans, as do Macy’s, Nordstrom and J.C. Penney in the U.S. Several architecturally stunning restoration projects have recently been completed, including the revival of the Fondaco dei Tedeschi department store in Venice and the rebuilding of La Samaritaine with an iconic wavy glass façade.
Clues to the future of the department store can be found throughout the world as the most visionary department stores begin to re-evaluate the purpose of their brand and the role of their stores.
A new sense of purpose
When department stores first opened their doors to the public their role was crystal clear. Often described as ‘Temples of the Modern Age’, these stores revolutionised the process of buying, transforming it into the cultural activity that we see today.
They were a symbol of liberation, offering employment for women and a safe haven for shoppers seeking respite from the dirty and bustling city streets. They also became gateways to the future, showing people products they had never seen before and entertaining them in a way they had never known. Department stores set the benchmark for all of the retail formats that followed and signalled the dawn of a new era in retail.
So, what is the purpose and role of the department store today? If the traditional approaches to department store retailing no longer resonate with consumers, how must the department store model evolve?
Taking a deep-dive into this subject, I have explored the latest department store concepts from around the world and created a report entitled ‘The Future of the Department Store’, identifying the following four key roles:
01 The Curator
Forward-thinking department stores are becoming the editor and curator of their product range — reimagining their offer to appeal to shoppers who seek the thrill of discovery, yet also have a growing need to simplify an overwhelming amount of choice.
Across the globe, iconic department stores including Galeries Lafayette, Macy’s and Bloomingdales are experimenting with new edits and collaborations and hosting temporary expo stores and pop-up shops, all designed to create a sense of constant newness and a sense of urgency to buy.
Borrowing from the streetwear market, the American department store Barneys are releasing product in anticipated drops and playing on the consumers fear-of-missing out (FOMO). Their recent two-day retail experience in New York named ‘The Drop’, launched in collaboration with US streetwear e-magazine Highsnobiety, was designed to cater to the ‘drop- shopping’ culture of streetwear brands.
At the same time, department stores like Showfields in New York are reminding shoppers that one of the fundamental reasons that we continue to enjoy shopping in-store is the natural sense of serendipity and discovery it imbues and becoming far more imaginative in their product offer and range; embracing direct-to-consumer e-brands, rising stars and new players.
At the very heart of this trend is the shift towards department stores becoming far more agile and experimental in their approach. Taking this idea to the extreme, the Neighbourhood Goods department store in Texas is made up entirely of pop-up shops, offering menswear, womenswear and housewares from both local start-ups and established brands. The goal of the store is to create a dynamic sales floor, where about 15 brands at a time create their own experiences, each shining a light on their products and overall worldview.
02 The Advisor
As service continues to be the greatest differentiator of all within the physical retail environment, many department stores are transforming their service strategies and adjusting the role of their staff.
They are adopting much softer selling techniques whereby their staff take on the role of advisors and experimenting with the latest digital technologies to create physical brand experiences which blend the very best in human, personal interaction with all that personalised technology can enable.
In many of the latest beauty hall concepts, notable players including Debenhams are experimenting with ways to deliver impartial advice to shoppers, with advisors who work across all brands, rather than one particular concession.
We’re also seeing a concierge culture emerge, inspired by hospitality and hotel design. Very often they are placed in one central space in-store and offer advice to customers about a vast array of different subjects, far above and beyond the products sold in-store. Within what they describe as their ‘super-service’ flagship format, John Lewis offers a total of 22 services, all managed from a centralised ‘Experience Desk’.
Technology has a vital role to play in this area, offering hyper-personalised service and virtual assistance. A key feature of the latest Neiman Marcus department store in Hudson Yards is their digital styling lounge, where shoppers can interact face-to-face with a digital stylist who has prepared a ‘look book’ based on their online activity.
Smart technology is providing shoppers with valuable virtual assistance in department stores such as Galeries Lafayette in Paris, whereby hangers with touchscreens provide information and let customers order their size. In a move that emulates the approach of several other department stores, they have also developed an app which enables them to offer unassisted service in the form of styling advice, ideas and inspiration.
03 The Provider
Recognising that complimentary services have the potential to significantly elevate the overall appeal of the department store offer, progressive department stores are beginning to take on the role of service-provider.
Drawing inspiration from other sectors, including fashion, sportswear and homeware, they are diversifying into new areas that complement their core offer and are of genuine value to their target customer. They are also thinking holistically, considering every single step of the customer journey, both on and offline, to imagine the potential services that are required.
At its most simple and practical, the most innovative retailers are streamlining the overall experience and identifying the details that will deliver the ultimate speed and convenience for the customer; such as designated drop-off and collection points, vending machines or locker rooms. Equally, after-care and product repair services are also on the rise.
There is an enormous amount of potential for department stores to consider providing valuable ‘third-spaces’ offering things shoppers genuinely need in-store; increasing dwell-time, but also heightening their sense of loyalty and positive associations with the brand.
These thoughtful initiatives not only demonstrate a generosity of spirit, they also show that the brand has an empathy and understanding of the true needs and desires of their customer. Ultimately, it’s about offering experiences and facilities that other retailers simply wouldn’t be able to.
04 The Host
As the traditional forms of community and culture gradually erode away and our world becomes more impersonal, the size and scale of the department store naturally lends itself to becoming a host.
Many of the most iconic and influential department stores in the world have begun to reinvent the store as a cultural and community hub. Appealing to the younger consumers love real-world encounters, they are transforming shopping into a far bigger social experience and nurturing a sense local connections by bringing like-minded people together with shared passions and beliefs.
The British department store Selfridges continues to lead the way, transforming into live venues and hosting a calendar of events that cleverly reflect the mood of the zeitgeist. It’s interesting to note that they are often
adopting a local rather than global stance — for example, their purpose-built skateboarding bowl in London is open to the public and intends to support grass-roots fans and niche scenes in need of a home, such as girls’ skating.
Enlightened department stores including Le Bon Marche in Paris are also forging cultural connections with artists, photographers, actors and writers to create installations and events that you simply have to be there to enjoy. These highly Instagrammable concepts are becoming talking points in themselves and are increasing the brand stretch to new audiences.
Radical Reinvention
The department store still has a critical role to play in the retail landscape as a whole. Very often they’re the anchor to shopping developments and they also tend to occupy the most beautiful of old and historic stores. They remain the destination where consumers are able to find the most breadth and depth of choice all under one roof, and still serve as a valuable space for those brands of smaller scale to enjoy a physical presence in-store.
They have the potential to genuinely transform the retail experience and signal a new era in retail, but a fundamental shift is required to become fully consumer-focused and service-driven in their approach. Not only does this call for a total re-appropriation of physical space and format, but also a reappraisal of the purpose and role of the store.
The winners will be those department stores who commit to radical reinvention and change; not small steps, but brave moves.
A Symbol of Transformation
Just as the earliest department stores were once a symbol of liberation, the most visionary concepts today are a symbol of transformation.
The outstanding players will push the boundaries of what’s possible, and do so in a meaningful way; offering consumers what they genuinely need and desire. They will stop looking backwards to what has been done before and start looking forwards to the future; adopting an experimental mind set and thinking of their store as a retail laboratory to test new practices and a space in beta-mode — agile and evolving.
Inclusivity will be at the core of their approach. While they will target younger consumers, they will also consider how to cater for other communities that are often overlooked and under-served, including new mums and older generations.
They will be true to themselves and project a unique brand personality with a crystal-clear proposition.
Lastly, and perhaps most importantly, the very best department stores will behave like a true destination; playing to their inherent strengths of physical scale and breadth of range to offer a store experience that no other retailer would be able to.
If you would like to receive a copy of ‘The Future Role of the Department Store’ report, please contact: Kate Shepherd (kate@future-collective.co.uk / 07539 208468)
