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As another high street name departs, is it all over for department stores?

I was sad to see the news about Beales going into administration. I grew up in Bournemouth and Beales was a major landmark in the town centre.

(An advert in 1963 Kelly’s – Photo by Pete Rowe from Memories of Old Poole & Bournemouth Facebook Group)

As a child I remember walking around the various floors on Saturday afternoons and as a teenager I even applied for a Saturday job in their audiovisual department – I can still remember the interview (and my lengthy explanation of how NICAM stereo worked). I didn’t get the job!

Beales was an institution, a constant, an anchor store if ever there was one. But like so many other department stores up and down the country it appears that its time has come.

Why is this happening?

Most of the commentary on the death of department stores blames some or all of the following: 

  • the internet
  • business rates
  • town centre car parking charges
  • rises in the minimum wage
  • ever increasing rent

I think it’s simpler than that.  Department stores stopped offering value to their customers.   By value I don’t just mean price. I mean utility – providing something that is useful or beneficial.  

If you provide value to your customers they will pay high town centre car parking charges. 

If you provide value your customers will come back.  

If you provide value your customers will tell their friends.

Where did department stores come from? 

There is a really great history of department stores over at bbc.co.uk – check it out – department stores were the original home of innovation.  

It wasn’t just having lots of things under one roof, it was having things you couldn’t get elsewhere being sold by knowledgeable, passionate and highly trained staff.   

Stores were founded by retail entrepreneurs who saw a gap in the market and filled it. They offered their customers value. 

The last 20 years

As we rolled into the 2000s the value department stores offered was being competed away. 

Stock and product became less and less unique.  Virtually any item could be found and bought online with a few clicks.  Knowledge and advice could be crowdsourced via online reviews, forums and social media. 

This left department stores with two remaining assets: their staff and their physical stores.  

Sadly, and somewhat bizarrely, most department store chains set about cutting investment in their staff, introduced zero hour contracts and frantically tried to reduce their pension liability. 

They then sold their physical premises and entered into leasebacks – a catastrophic mistake fuelled by management who seemed less fascinated with customers and retailing and more focused on their bonuses and “shareholder value”. 

This corporate version of taking your eye off the ball meant department stores stopped innovating.  They stopped evolving. They stopped providing value to their customers. They got stuck in their ways. They lost their best staff and their valuable freehold assets.

They began to die – and it’s been a very long and slow death.

Is it game over?

I think there is still a place for department stores.  The original vision of a collection of things that you can’t get elsewhere all under one roof can still work – but the “things” that customers value are very different today. 

Here’s are some ideas: 

1. Make selection seamless and cross channel 

A department store’s actual shop and website need to live together in perfect harmony.  

Tried on a dress in store and want to add it to your online basket? Should be super easy – you just scan a barcode or similar.  None of this separate stock online / in store malarkey. 

Many customers prefer to see things in the flesh before purchase – the problem for department stores has often been that customers will come to see a product but then order it online from someone else. Department stores need to offer discounts and value-adds to stop that happening – eg order the item from us now, we’ll match the price, deliver it and give you a free coffee!

2. Cater for collectors as well as selectors

Sometimes it can be easier to have something delivered to a store, for example if it’s near your work and you can pick it up at lunchtime.  Click n collect is the grudging concession department stores seem to have made to online ordering and it’s usually an awful experience involving being directed to the corner of a dingy basement where a bored member of staff eventually finds your package and sends you on your way. 

This is a massive missed opportunity – make the collection area bright, cheerful and easy to find.  Incentivise in store collection – make it cheaper than home delivery – and use the fact you know what your customer has ordered (surely a marketers dream) to offer relevant help, advice and contextual cross and upsell when they turn up. 

3. Invest in your staff

This may seem an obvious point but it’s astounding how badly many department stores have treated their staff in recent years.  The primary point of differentiation and value creation department stores had left was their people.  

Quality staff are an essential ingredient for all the other ideas to work effectively. The retailers that still do treat their staff well – for example Richer Sounds or Greggs – get a massive return on that investment. 

4. Focus on the interaction not the transaction 

Whether someone is selecting and buying in store or just collecting the quality of interactions can provide a massive point of difference.  Despite there being an app for everything these days face-to-face one-to-one interaction in the real world is still the best way to connect human to human.  

Staff should not just be stating the price and asking how you want to pay, they should be checking if you have any questions about the product, need any help or knew they also offered home delivery. 

There is an art to getting customer communication right and not being pushy so training needs to be top notch.  If interactions are useful, correctly pitched and genuine customers will attach value to them.

5. Make service a product in its own right

If you have high quality, knowledgeable and motivated staff your service will stand out and differentiate you from other retailers. You could even go one step further and productise elements of service that customers can book online ahead of their visit. 

Think of the value people get from the Apple Genius Bar and design similar service offerings. An interior design consultation perhaps or a fact finder about building your own home gym. 

Service led selling is a great way to get people to come into a store and build rapport. 

6. Education, Education, Education

Related to the service point above, there is a massive market for people who want to know more about things.  

What is Alexa, how can I use it?  How do I get the Internet in my garden shed?  What exactly is veganism and what are the benefits?  Why is a good mattress more expensive than a cheap one?  How can I video call my family in Australia? 

All of these questions and hundreds more like them are thought and asked by thousands of people each day.  Of course a large proportion of people will google things – but – and here is the point marketers seem to keep missing – a huge proportion won’t – those are the people department stores could be talking to. 

Education could be delivered via casual and ad hoc one to ones with quality staff and also on a bigger scale by timetabled and bookable talks and classes that get people in store.

7. Community

This area I think offers the biggest opportunity of all – make department stores a place for the local community to hang out. 

I’ve observed that even today one of the most popular places in otherwise empty department stores is the cafe. Cafes are so popular that traditional supermarkets are adding them all over the country.  

A lot of department stores have lots of space – why not use some of that space to let people work and be sociable?  Offer a simple membership system that includes hot drinks & wifi.  

Co-location is another option.  Offer small units on flexible leases for small local businesses to retail from.   Consider having a market area where each day different types of trade and craft based businesses could set up. 

Use your space to bring people in!  Put in a Cinema – like Selfridges on Oxford Street just have – and show interesting films the community will be interested in.  Let people private hire it. 

Offer meeting space for local groups and initiatives.  Try and rent some space part time to a bank so there are days when people can still bank face to face.  

Put in a gym or squash courts. You could sell sports gear next to it.   Have a creche. Host antenatal classes. Sell products to the parents. Do a deal with local councils to put libraries in store.  Sell new books nearby. 

Become the hub of the local community.    In an era when other community services are being closed down department stores could fill that gap.  They can become a real life social network, catering for the departments of people’s lives! 

Closing Thought

You may notice that the “things” I mention Department Stores should do are all service and experience led rather than product led – and this is really the point I’m making. 

Department stores came of age when products were less commoditised, harder to source and more desirable – consumers were more materialistic in their behaviour during this time.

Today we live in the experience economy with consumers valuing experiences over possessions. 

If department stores focus on offering a diverse range of experiences that today’s customers want all under one roof then I think they’ll be back in business – it just needs a little imagination and a relentless obsession around creating customer value above all else. What will create value in the future is different from what created value in the past.



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