The Department Store Struggle

It’s a tough old world out there for department stores. As e-commerce continues to rise and consumer habits change, the department store is no longer what it once used to be. From customer service, product category to innovative marketing campaigns, it’s imperative department stores find different ways to engage with the consumer, who, for the first time in decades, holds the power.

Once the definition of department stores, Barney’s provided the ultimate shopping experience since its 1923 inception. Fast forward to August 6th, 2019 and the New York department store filed for bankruptcy (it’s 1996 filing was voluntary due to a consolidation effort gone wrong) attributing to a tough retail climate. In total 15 of its 22 stores will close in order to survive its bankruptcy. Whethering the storm at present, Barney’s is looking for a new buyer with its chief digital and technology officer, Katherine Bahamonde Monasebian, telling Bloomberg that the retailer aims to emerge from bankruptcy with "a very strong, digitally focused partner".

It’s no secret Debenhams has been struggling; with profits down and debts surpassing £1bn, the firm bought in a restructuring consultant which has consolidated the marketing department and has let go of other senior staff members. Under its company voluntary arrangements, 50 of its 165 store will close and 1,200 staff will unfortunately lose their jobs, “These changes will give us the right structure to increase the focus on the key areas of our business and take a first step in achieving some of the objectives we’ve been talking about during” CEO Stefaan Vansteenkiste said.

Galleries Lafayette
When the French do fashion, they do it well and Galleries Lafayette is no different. Generating €4.5 billion in 2018, all is well with the department store who is repositioning themselves further upmarket to maintain growth. French retail has struggled with revenue sliding 15% between 2007 and 2018, however, the country’s luxury department stores reported a 10% surge in the same time period. “It’s the only distribution channel that saw dynamism, thanks to tourism — over half of the sales in department stores is generated by customers from abroad — and a shift to higher-end apparel and accessories,” explained Gildas Minvielle, economics director of the Institut Français de la Mode in Paris told the Business of Fashion.

The epitome of luxury and one of London’s greatest landmarks, Harrods are renowned for the fanciful window displays and exciting in-store activities which has seen the department store weather off any signs of retail-climate struggle. Largely thanks to the Chinese consumer, where the brand claim that one in every £5 spent by a Chinese tourist in London is cashed in at one of their tills. Furthermore, in 2017, Chinese consumers became Harrods' top customers, outspending their British counterparts for the first ever time.

House of Fraser
Last August the British department store entered administration but was rescued by Sports Direct owner Mike Ashley. After a tricky year since its acquisition, (for the year to April it had made a loss of £54 million) the retail mogul is set to move forward with his turnaround plan to make it the “Harrods of the high street”. Watch this space.

John Lewis
Famed for their Christmas adverts and having recently gone under a name change to John Lewis and Partners (to emphasise the importance of its partnership business structure), theUK department store has been fairly unstoppable in recent years. However, John Lewis recently revealed a half-year loss of £26 million which is the first in over 150 years. Luckily the department store was chosen to work with the Duchess of Sussex on her Smart Set fashion capsule whose proceeds will fund the Smart Works charity. With the most important quarter of the year approaching, it will be all hands on deck at John Lewis.

Macy’s Inc
Owning both Macy’s and Bloomingdales, shares were down by 35% last quarter so things aren’t looking too ripe for the department stores. However, in the sink or swim climate, they are looking to bounce back with Macy’s adding retail concept Story, to 36 of its stores across the country. It has also launched [email protected]’s, a pop-up shop within its stores which features local designers. Meanwhile, Bloomingdales has announced a clothing rental subscription service called “My list at Bloomingdales” which will cost $149 per month and allow subscribers to put at least 10 items in a rental queue and receive 4 of the items to wear at a time.

Over the last decade the department store has continuously engaged with the consumer. Whether it’s the likes of in demand make-up artist Pat McGrath exclusively selling her products in the department store or opening attractions that sit outside of retail like their body studio or most recently their 3-screen cinema, Selfridges is not just a department store, it’s a destination. Furthermore, the brand firmly supports sustainability with multiple initiatives put in place to achieve their goals. With consumers so aware of our planet, a firm stance on climate change as a core brand value is crucial.