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What department stores need to fix in 2019 by Carlos Virgile

Whilst rumours of the sad and untimely death of retail are everyday reading, they’re also often fuelled by those retailers that have not been able to maintain their relevance or customer appeal or have failed to reinvent their shopping and in-store experience.

An uncertain economy plays a key part in the challenges the sector faces, as well the usual culprits: high rates, over-ambitious growth, lack of continuous investment and online shopping. However, when one goes through this rather depressing blacklist of well-known names one cannot stop thinking they’re also being driven by a shift in customer behaviour – a new shopping ‘culture’ that is inevitably impacting those retailers that are still sticking to old retail models and are either reluctant or unable to change.

Recent news that mid-range, ‘high street’ department stores such as House of Fraser and Debenhams are in decline is clear proof of this disconnection between an old culture failing to bridge the gap, as well as the result of over expansion on the basis of a traditional retail model.

Other established department store brands such as Harrods, Selfridges or Harvey Nichols - either with “just only one’ or very few stores - appeal to a different sector and with a luxury and creative approach to retail. Whilst feeling the economic kick, they are still successful, constantly updating their positioning and still attracting customers.

Undoubtedly these brands rely on the attraction of their key London location and what tourists bring to their performance and results. Luxury retail has become incredibly dependant on the annual peregrination of Middle Eastern clients to their retail Mecca as well as the undiminished attraction of brands for Asian visitors.

Mid-range high street department stores do not have the same area of appeal and their position is dramatically different. Their great benefit is a position in the local community and the way they can respond to people’s needs and help to enrich their lives. Products and brands - and even just value alone – will always be key, but they are simply not reliable enough these days, wherever a department store is based.

Far from destroying the high street, technology is playing a huge part for those that are successful and thriving, a real complementary tool rather than a total replacement. Online is not the only driver of high-street department stores’ mass exodus, but rather a lack of creativity to react quickly and reinvent retail imaginatively, adapting to new scenarios and demands. Customers’ expectations, the rise of 'accessible' luxury and instant availability have reached a peak. Although daunting, these sudden changes of pace might actually be a great opportunity to rethink what the new services to provide are, and which are the true values of shopping in the real world, further than just the product and its purchasing channel.

Understanding why department stores were created in the first place and learning from their roots might give an indication of why so many mid-range department stores are struggling. The department store of the past replaced the commercial principle of merely ‘supply’ with a more sophisticated and ambitious aim: consumer seduction.

The traditional architectural language was grandiose and imposing and had authority and a real sense of scale. With a view of attracting the middle classes the stores were exquisitely designed and fitted out, visitors were coming for a day out expecting ever-changing and ever-growing spectacles of invention in display techniques and merchandise assortments. The aims were to bring in well-heeled customers and create places that were more than just about shopping but to be seen and socialise.

I’m not sure this description can genuinely apply to those mid-range British department stores we see struggling these days. The ability to be distinctive, understand market context, their individual role in their community and the need to communicate a point of view – beyond everything for everyone - has been key to setting the department store format apart from other retailers. In its evolution, department stores have sometimes lost sight of the core values and their attraction to the consumer. Either too many stores, or too slow to respond to the fluctuations of a more discerning and sometime younger market more attracted to new styles of shopping, or even sometimes underestimating the understanding of brands and level of worldliness of provincial markets.

The successful department stores of today have emphasized the importance of generating ideas that include the most attractive brands to capture their audience but also their imagination. They have recovered their essential quality and personality going beyond a house of brands to become homes of retail ideas and excitement.

In their quest to become strong pools of attraction and social interaction, department stores have made promotional events and launches, fashion shows, demonstrations, exhibitions, educational information and collaboration with artists a real part of bringing the brand alive. Retail has taken a new dimension that adds a new angle to the experience of browsing and buying.

Department stores should aim to be a creative source, connecting with the customer emotions and bringing a sense of discovery and surprise – qualities difficult to emulate by online shopping – which will justify their existence and enrich their contribution to their community.  Focusing on reinforcing this incredibly powerful dialogue between the customers and the store is what will continue to ensure the role of the department store and its place as a timeless and everlasting retail model.

Carlos Virgile is director of Virgile + Partners, part of Imagination

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