Department Store model "broken" says Fraser's [UK]

eCommerce and Retail Talk
1

The “broken” comment is further down in the article, but was more strongly highlighted in other reportage.

Is Fraser’s “pivoting” their business model?

With the significant number of purchases recently of other more specialist (and ecommerce heavy) businesses, maybe so.

And what does this say for other department store chains worldwide?

2

The department store is under threat and is currently going nowhere but down and closed. Large stores are no longer viable as most folks buy online or from nearby stores. These stores have forgotten the basics - selection, merchandising, and, in some cases, are simply horrible.

There are going to be fewer department stores. I suspect House of Frazer will close many stores by years end.

3

On a related point: space reduction by department stores

  • Marks & Spencer have submitted plans for redevelopment of one of their “flagship” stores on Oxford Street in London. The relevant summary in the proposal (buried in a wider controversy about building design) is a significant reduction in selling floor space, with the redevelopment being “funded” by significant increase of building size to create office space
  • John Lewis also have plans in at least one location to reduce/repurpose selling space to generate income.

@HendrikLaubscher How’s Edcon in South Africa doing (did some work there about 15 years ago) Or indeed Woolworths (who are very similar to M&S in the UK)

I don’t think department stores are completely broken, but need to go back to basics of right product, right place, right price, laser focused on key demographics.

Should be leveraging concession/consignment to allow brands to provide their expertise in terms of range, price and stock holding. This is effectively the same (in a more physical way) as dropship/marketplace, and probably should leverage the same connectivity services (e.g. Mirakl, CA/CH, Octopia, Marketplacr et al) that a website/digital marketplace would (with added capability for inventory intake/management in store).

So that customers can visit multiple shops in shop, especially in city centres, and brands don’t need to open their own stores.

I am more worried about the future of malls…but that’s not really the scope of this forum!

4

Edcon went bankrupt in 2020. Later in 2020, a part of the business was sold to Retailability, who started as a wholesaler. They have restarted offering online sales for Edgars and Boardmans; The new owner is doing a good job.

Woolworths has kept its M&S image but has kept its business model of being an anchor tenant in various malls and has struggled with its apparel business. They do not know who their customer is and have invested in quick commerce and other initiatives. They have lost a large percentage of their customers to Shoprite Checkers, whose Checkers stores have gone after Woolworths’ premium food business.