Thanks to eCommerce and mobile commerce, retailing worldwide has been undergoing a massive transformation in the past decade. The UK is no exception. For many years, it has been viewed as one of the most dynamic retail markets and it continues to be an important part of its economy. The market value of the retail sector in the United Kingdom saw steady growth between 2015 and 2019, rising by approximately 10% to 440.5 billion euros. Projections for 2020 show that the sector could hit over 450 billion euros in GMV. While the growth is great, it is not without enduring the impact of the digital shift.
As with the United States’ Retail Apocalypse, the United Kingdom had the Death of the High Street. 1 in 10 retail outlets in the United Kingdom are now empty and only the more affluent areas have managed to keep themselves afloat. The oft-cited reason for this catastrophe is that both consumers and their shopping patterns have evolved. A report this week from Retail Economics predicted that half of all U.K. retail sales will be online within the next decade–up from one-fifth today. Also, British Retail Consortium’s monthly footfall tracker highlighted that June 2019 experienced a seven-year low on High Street footfall, dropping 4.5% YoY.
In light of this uncertain future, successful retailers will have to keep constantly reinventing themselves to keep up with the changing times. Department stores, in particular, are the lifeblood of high street retail in the UK. In 2017, department store retail sales in the UK were recorded at 34.5 billion British pounds. In this blog post, we lay out some of the department store chains in the United Kingdom that have stayed strong in spite of the ongoing digital shift.
The John Lewis Partnership operates John Lewis & Partners department stores and Waitrose & Partners supermarkets. John Lewis department stores sold a wide range of products from apparel to electronics, while Waitrose specialized solely in grocery items and other essentials. The chain was originally upmarket – designed for middle and upper-middle-class shoppers. Recently, however, John Lewis has broadened its marketing strategy towards all types of buyers. Both Waitrose and John Lewis introduced the “Essential” and “Value” ranges respectively for customers on a budget. In the wake of the digital revolution, John Lewis had to offer something that its competitors – online retailers, could not. As technology has become more omnipresent, people have foregone face-to-face interaction and are less likely to leave their homes – a key factor in why feelings of isolation and lack of community have increased in recent years. John Lewis has offered its solution to both these problems – an “experience playground” which just launched on November 19th of this year. The concept offers customers a community experience in the form of amenities such as stay and play gadget areas, roof gardens, personal styling packages, adult classes for cooking, photography, and a barista. The partnership also plans to operate John Lewis and Waitrose as a single entity, rather than two separate businesses, by the next decade.
Marks and Spencer
Marks & Spencer is a major British multinational retailer that specialises in selling high-quality clothing, home products and food products. It is listed on the London Stock Exchange and is a constituent of the FTSE 250 Index. It has 300 stores in 40 overseas locations and was the retailing juggernaut of the 80s and 90s. But, by the mid-2000s, they realised that they faced serious competition from contemporaries like Tesco – who were shifting to the then-new digital market. In response, they too began rapidly expanding online. However, the economic hard times of the late-2000s hit the chain hard. It was forced to close twenty-two unprofitable stores and restructure their entire product range, culling dozens of stores in the process. Yet, as the new decade approaches, Marks and Spencer is beginning to make a comeback.. Results for the six months to September showed the food business returning to growth for the first time in more than two years, delivering same-store sales growth of 0.9% as ranges were simplified and prices reduced. October full-price and planned promotional sales were up 2.7% in clothing and sales of autumn denim ranges had risen 30%. However, only time will tell if Marks and Spencer can maintain these numbers in the next 10 years.
Harrods is a department store located on Brompton Road in Knightsbridge, London, England. It is owned by the state of Qatar via its sovereign wealth fund, the Qatar Investment Authority. Like John Lewis, it keeps itself afloat by offering a unique experience that cannot be found online. It posits itself on its image as both a destination for the elite and as a tourist hub. It offers over 330 departments on seven floors, most of which are exclusive luxury brands and over 30 restaurants serving haute cuisine. They also offer food festivals and tasting events throughout the year and souvenirs for tourists. However, of late, it’s garnered a reputation of being too high-end for its own good. Its exclusive dress code and propensity for turning away customers who do not follow it has caused celebrities and athletes to be banned from its premises. Its most recent controversy was when they made its 50-year-old Christmas tradition – Santa’s Grotto, which was once free, only accessible to customers who spend more than 2000 pounds. In spite of the backlash, however, Harrods is still going strong and generated approximately 513 million British pounds in the 2017-2018 financial year.
Debenhams was founded in the eighteenth century as a single store in London and has now grown to 178 locations across the UK, Ireland and Denmark. It sells a range of clothing, household items and furniture and has been known since 1993 for its Designers at Debenhams’ brand range which put designer names and brands at High Street prices. It remains the only U.K store to have retained an individual identity. But sadly the chain was one of the most affected by the death of the High Street and is still trying to recover from this slump. Debenhams has faced both the challenges affecting all UK retailers, as well as a few issues of its own making such as being saddled with too many stores on long, expensive leases signed during the Private Equity years. Its eCommerce store is also seriously lacking compared to that of its rivals: with styles at least 20 years out of date and comparatively steep prices. Lack of investment in its stores over a number of years has left its oversized real estate looking tired, while its range of clothes is seen as purely utilitarian rather than fashionable. Just this year, they planned a mass hiring of over 500 employees for the Christmas season, hoping to get back on its feet. It is also currently undergoing a restructuring that includes closing down stores, cutting jobs and scraping product lines to address poorly performing assets.
Liberty’s is a department store in Great Marlborough Street, in the West End of London. It sells women’s, men’s and children’s clothing, make-up and perfume, jewellery, accessories, furniture and furnishings, stationery and gifts, and is known for its floral and graphic prints. Many people from the UK know the store from the TV documentary series “Liberty of London”, which featured the workers’ preparations for the busy holiday season. Liberty’s group sales reached £133m in the year to February 2018, up 8% year on year, while pretax profits more than tripled to nearly £7m. About 60% of the store’s profits comes from selling own-label merchandise. Like most department stores, it too faces great competition from online retailers and was losing money for years since 2009 before coming up with strategies to stay relevant. Taking note that dog owners often frequented the store, Liberty’s launched a line of high-end dog products and made their building dog-friendly, encouraging customers to visit with their pets. Just recently Liberty has decided to think outside the box this holiday season and constructed a floating Bonsai tree for Christmas, and this display attracted many customers to its doors.
Fortnum and Mason
Fortnum and Mason is the place to go if you want quality and exotic foods. It also is known for its unique gift hampers which are popular during the holidays. However, most people, tourists, in particular, frequent the place for its high-end tea restaurant. Fortnum and Mason has, in the last decade, been working to shape itself as a tourist destination by emphasizing its vast heritage. They also run a Food and Drink Awards campaign where they celebrate the best writers, publishers, presenters, image-makers and personalities working in the food and drink industry. As for their eCommerce ventures, in 2016 their online website improved their conversion rate, which rose 14% year on year, while total sales grew by 30% year on year. Personalisation services such as Build Your Own Hamper were the most popular and soared by 261% year-on-year. Recently, however, Fortnum and Mason may be finding itself in hot water as in September of this year, it made its debut in Hong Kong despite the ongoing protests being a detriment to future business success. Though this would be deemed its first overseas store, whether it will be received warmly in Hong Kong is yet to be seen.
Selfridges & Co. is a chain of high-end department stores in the United Kingdom that is operated by Selfridges Retail Limited, part of the Selfridges Group of department stores. Originally founded on the principle that shopping should be seen as a leisure activity rather than a mundane chore, the store was one of the first establishments to adapt now-standard practices such as placing merchandise on display so customers could examine it, moving the perfume counter to the ground floor, and other such policies that made it safe and easy for customers to shop. Today, the store is also known as an architectural marvel and tourist attraction. Unlike Debenhams, Selfridges wasn’t crippled by the death of the High Street, as its operating profit rose £1 million to £181 million in the year to February 3 on the back of an 11.5% increase in sales to more than £1.75 million. Just recently, they opened a second-hand clothing concession and launched sustainable Christmas packaging.