Table of Contents
Overview
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- What you need to know
- Areas covered in this Report
Executive Summary
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- The market
- The UK department store sector forecast grow 10% by 2022
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- Figure 1: Best and worst case forecast for department store sector, 2012-22
- Continued growth in consumer spending, despite decline in real incomes
- Companies and brands
- Premium department stores buoying growth in the sector
- Mid-market retailers losing market share
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- Figure 2: Leading department stores’ estimated market shares, 2017
- Innovation remains focused on stores
- Brand research reveals a lack of trust in premium department stores
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- Figure 3: Attitudes towards and usage of selected brands, January 2018
- The consumer
- Geographical reach influences where people shop
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- Figure 4: Department store usage in-store and online in the last 12 months, by channel, February 2018
- Fashion drives volumes within the department store sector
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- Figure 5: What consumers bought from department stores in the last 12 months, February 2018
- Online increasingly part of the shopping journey
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- Figure 6: Online shopping behaviour, February 2018
- Products and in-store displays are more important than leisure
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- Figure 7: Important factors when shopping in-store, February 2018
- Department stores need to rebuild trust in pricing
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- Figure 8: Attitudes towards department stores, February 2018
- What we think
Issues & Insights
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- The pricing challenge continues as discounts erode price integrity
- The facts
- The implications
- The importance of creating a compelling multichannel experience
- The facts
- The implications
- Exclusive and own-label ranges increasingly essential to growth
- The facts
- The implications
The Market – What You Need to Know
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- Growth remains flat in 2017
- Core department store categories continue to grow
- Pressure mounting on UK consumers
- Increased inbound tourism boosts sector
Market Size and Forecast
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- Department store sector up 1.5% in 2017
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- Figure 9: Estimated UK department store sector sales, 2012-17
- Market forecast to reach £17.8 billion by 2022
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- Figure 10: Best and worst case forecast for department store sector, 2012-22
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- Figure 11: Forecast for department store sector, at current and constant prices, 2012-22
- Methodology
Consumer Spending
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- Continued growth in core department store categories
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- Figure 12: Consumer spending on key department store categories, 2013-17
Market Drivers
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- An ageing UK population
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- Figure 13: Trends in the age structure of the UK population, 2016-26
- Figure 14: Breakdown of trends in the age structure of the UK population, 2016-26
- Growth in inflation puts consumers under pressure…
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- Figure 15: Real wage growth – Average weekly earnings vs inflation, January 2014-December 2017
- …but on the whole consumers remain confident about their finances
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- Figure 16: Consumer confidence: current financial situation vs sentiment for the coming year, January 2013-February 2018
- Fashion and the home continue to be popular discretionary categories
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- Figure 17: Trends in what extra money is spent on, February 2018
- Value of Sterling falls following Brexit vote
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- Figure 18: Selected international currency exchange rates, annual averages, 2003-17
- Figure 19: Sterling exchange rate versus selected currencies, annual averages, 2013-17
- Inbound tourism boosted by weak Sterling
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- Figure 20: Total overseas residents’ visits to the UK, 2009-18
- Uplift in inbound tourism spend boosts sector
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- Figure 21: Total spend by overseas residents in the UK, 2008-18
- Private renting increases
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- Figure 22: UK household tenure status, 2012-16
Companies and Brands – What You Need to Know
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- High-end department stores outperform
- Debenhams and House of Fraser losing market share
- Online now accounts for a quarter of the sector
- Innovation continues to centre around in-store experience
- Greater trust placed with mid-market retailers
Leading Retailers
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- Note on department store sales
- Mid-market department stores struggle
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- Figure 23: Leading department stores’ net revenues, 2013-17
- New stores emphasise the importance of experience
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- Figure 24: Leading department stores’ outlet numbers, 2013-17
- Like-for-like growth strongest at the higher end of the market
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- Figure 25: Leading department stores’ estimated sales per outlet, 2013-17
- Ongoing investment dents profits for leading players
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- Figure 26: Leading department stores’ operating profits, 2013-17
- Figure 27: Leading department stores’ operating margins, 2013-17
Market Shares
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- John Lewis set to become the market leader
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- Figure 28: Leading department stores’ estimated market shares, 2017
- Figure 29: Leading department stores’ estimated market shares, 2012-17
Online
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- John Lewis also dominates online
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- Figure 30: Selected leading department stores’ estimated online revenues, 2013-17
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- Figure 31: Estimated online share of selected leading department stores’ total revenues, 2013-17
- Online increasing its share of the sector
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- Figure 32: Total estimated online department store revenues, 2013-17
- Digital developments
- Debenhams experiments with click, try and buy…
- …and also upgrades its mobile site
Launch Activity and Innovation
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- John Lewis invites customers for an in-store sleepover
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- Figure 33: The Residence at John Lewis, 2017
- Developments in experiential retailing
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- Figure 34: Debenhams’ Stevenage Store, 2017
- Figure 35: John Lewis Westfield London Store, 2018
- Music matters at Selfridges
- House of Fraser launches localised pop-up scheme
- Debenhams and Selfridges experiment with in-store gyms
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- Figure 36: The Boxing Gym at Selfridges, 2018
- Selfridges invests in bespoke beauty pioneers
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- Figure 37: Selfridges’ Bespoke Beauty Department, 2017
- John Lewis collaborates with PATTERNITY on exclusive collection
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- Figure 38: PATTERNITY + John Lewis Collaboration, 2018
- Debenhams revives its brand mix
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- Figure 39: Debenhams’ Scandi Brands, 2018
- Ongoing focus on menswear
- John Lewis’ Home Solutions
- House of Fraser opens new sustainable store
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- Figure 40: House of Fraser Rushden Lakes Store, 2017
Advertising and Marketing Activity
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- Advertising spend up 10% in 2017
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- Figure 41: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2013-17
- Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2013-17
- Digital the most favoured media type
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- Figure 43: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, by media type, 2017
- Key campaigns
- The battle of the Christmas campaign
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- Figure 44: John Lewis’ Moz The Monster Christmas Campaign, 2017
- Figure 45: Debenhams’ You Shall Christmas Campaign, 2017
- M&S shifts its advertising strategy
- Greater focus on specific product categories
- Lingerie campaigns look to promote body positivity
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- Figure 46: Debenhams’ SS18 DD+ Lingerie Campaign, 2018
- Nielsen Ad Intel coverage
Space Allocation Summary
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- Space allocation overview
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- Figure 47: Department stores: summary of estimated in-store space allocation, February 2018
- Detailed space allocation estimates
- House of Fraser multimillion-pound refurbishment programme
- Debenhams focused on making its stores more of a destination for social shopping to increase frequency of visits
- Selfridges’ flagship Oxford Street store revamp almost complete
- Fenwick’s new 80,000 sq ft next-generation department store
- John Lewis’ experience-led Oxford store
- M&S repurposing its stores
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- Figure 48: Department stores: detailed space allocation estimates, February 2018
Retail Product Mix
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- Methodology
- Sales
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- Figure 49: Leading department stores’ estimated sales mix, 2016/17
- Sales density
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- Figure 50: Leading department stores, Estimated sales density by broad product category, 2016/17
Brand Research
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- Brand map
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- Figure 51: Attitudes towards and usage of selected brands, January 2018
- Key brand metrics
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- Figure 52: Key metrics for selected brands, January 2018
- Brand attitudes: Debenhams offers value
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- Figure 53: Attitudes, by brand, January 2018
- Brand personality: Harrods seen as exclusive
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- Figure 54: Brand personality – Macro image, January 2018
- M&S viewed as reliable
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- Figure 55: Brand personality – Micro image, January 2018
- Brand analysis
- John Lewis has a broad appeal
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- Figure 56: User profile of John Lewis, January 2018
- Marks & Spencer shows bias towards older women
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- Figure 57: User profile of Marks & Spencer, January 2018
- Debenhams’ value proposition helps it to stand out
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- Figure 58: User profile of Debenhams, January 2018
- Harvey Nichols popular with affluent
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- Figure 59: User profile of Harvey Nichols, January 2018
- Fenwick attracts affluent Millennials
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- Figure 60: User profile of Fenwick, January 2018
- Harrods garners more positive perception among young
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- Figure 61: User profile of Harrods, January 2018
The Consumer – What You Need to Know
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- M&S benefits from wide geographical coverage
- Most department store shoppers buy clothing
- A third now compare prices whilst in-store
- In-store product displays are important
- Discounting continues to erode price integrity
Where They Shop
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- Almost half shop with M&S
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- Figure 62: Department store usage in-store and online in the last 12 months, February 2018
- Debenhams and John Lewis also popular online
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- Figure 63: Department store usage in-store and online in the last 12 months, by channel, February 2018
- Men more likely to shop with luxury department stores
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- Figure 64: Department store usage in-store and online in the last 12 months, by gender, February 2018
- House of Fraser attracts younger shoppers
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- Figure 65: Department store usage in-store and online in the last 12 months, by age and income, February 2018
- Almost half are loyal to one or two department stores
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- Figure 66: Repertoire analysis of department store usage in-store and online in the last 12 months, February 2018
What They Buy
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- Clothing most purchased category
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- Figure 67: What consumers bought from department stores in the last 12 months, February 2018
- Women more likely to shop most categories
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- Figure 68: What consumers bought from department stores in the last 12 months, by gender, February 2018
- Stationery important to young department store shoppers
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- Figure 69: What consumers bought from department stores in the last 12 months, by age, February 2018
- House of Fraser and Debenhams popular for BPC
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- Figure 70: What consumers bought from department stores in the last 12 months, by where they shopped, February 2018
- Most shop for multiple different types of product
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- Figure 71: Repertoire analysis of what consumers bought from department stores in the last 12 months, February 2018
Online Shopping Behaviour
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- A third research online before shopping with a department store
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- Figure 72: Online shopping behaviour, February 2018
- Omni-channel experience important to 25-34s
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- Figure 73: Online shopping behaviour, by age, February 2018
Important Factors When Shopping In-store
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- Product displays should be a priority
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- Figure 74: Important factors when shopping in-store, February 2018
- Men more likely to want product demonstrations
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- Figure 75: Important factors when shopping in-store, by gender, February 2018
- Testing areas important to young shoppers
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- Figure 76: Important factors when shopping in-store, by age, February 2018
- BPC buyers most attracted by exclusive products
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- Figure 77: Important factors when shopping in-store, by what they bought, February 2018
Attitudes towards Department Stores
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- Consumers see department stores as a discovery tool
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- Figure 78: Attitudes towards department stores, February 2018
- Men have stronger opinions of department stores’ product mix
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- Figure 79: Attitudes towards department stores, by gender, February 2018
- Young shoppers are price-sensitive…
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- Figure 80: Attitudes towards department stores, by age, February 2018
- …but also show more loyalty to department stores
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- Figure 81: Attitudes towards department stores, by age, February 2018
Target Groups
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- Figure 82: Attitudes towards department stores, target groups, February 2018
- Key characteristics
- Experience Seekers
- Apathetic Shoppers
- Price Sensitive
- Content Consumers
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Debenhams
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- What we think
- Digital sales growth momentum fuelled by mobile site enhancements
- Making its stores more of a destination for social shopping
- Consolidating position as a preferred destination for beauty
- A more compelling fashion proposition
- Using digital to reach territories that would not support a store
- Company background
- Company performance
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- Figure 83: Debenhams: group financial performance, 2012/13-2016/17
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- Figure 84: Debenhams: outlet data, 2012/13-2016/17
- Retail offering
Fenwick
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- What we think
- Expected to launch a full online proposition in 2019
- Experiential stores to drive footfall
- Company background
- Company performance
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- Figure 85: Fenwick Ltd: group financial performance, 2012/13-2016/17
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- Figure 86: Fenwick Ltd: outlet data, 2012/13-2016/17
- Retail offering
Harrods
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- What we think
- £200 million revamp to increase appeal to shoppers from China and South East Asia
- Enhanced in-store experiences
- Boosting brand awareness in China
- Expanded payment options to accommodate global customers
- Company background
- Company performance
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- Figure 87: Harrods Ltd: group financial performance, 2011/12-2016/17
- Figure 88: Harrods Ltd: outlet data, 2012/13-2016/17
- Retail offering
Harvey Nichols UK
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- What we think
- Menswear becomes more intimate and intuitive in-store
- A more inspirational digital shopping experience boosts online conversion rate
- New cardless loyalty scheme
- Company background
- Company performance
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- Figure 89: Harvey Nichols UK: group financial performance, 2012/13-2016/17
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- Figure 90: Harvey Nichols UK: outlet data, 2012/13-2016/17
- Retail offering
House of Fraser
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- What we think
- Refinance package, rent reductions and credit cover pulled
- E-commerce sales down, despite website relaunch
- Flagging womenswear offering
- Pop-up concessions that match the local demographics
- Lifestyle-led in-store experiences to drive footfall
- Company background
- Company performance
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- Figure 91: House of Fraser: group financial performance, 2012/13-2016/17
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- Figure 92: House of Fraser: outlet data, 2012/13-2016/17
- Retail offering
John Lewis
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- What we think
- More than just a shopping experience
- Personal shoppers for men
- Reducing the pain points in-store
- Record Black Friday sales
- New home maintenance service
- Extended fulfilment options
- Enhanced m-commerce proposition
- Company background
- Company performance
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- Figure 93: John Lewis Plc (department store): group financial performance, 2013/14-2017/18
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- Figure 94: John Lewis Plc (department store): outlet data, 2013/14-2017/18
- Retail offering
Marks & Spencer
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- What we think
- Closing ‘full-line’ stores and pushing online clothing sales with new personal shopping service
- Utilising data from Sparks to gain customer insight and boost customer engagement
- Boosting financial services offering to offset struggling clothing sales
- Capitalising on the success of its food offering
- New 495,000 sq ft Clothing & Home distribution centre
- Company background
- Company performance
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- Figure 95: Marks & Spencer: Group financial performance, 2012/13-2016/17
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- Figure 96: Marks & Spencer: outlet data, 2012/13-2016/17
- Retail offering
Selfridges Retail
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- What we think
- Compelling in-store experiences driving footfall
- Becoming a key Christmas shopping destination
- Embracing the mantra of ‘buying better’
- Company background
- Company performance
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- Figure 97: Selfridges Retail Ltd: group financial performance, 2012/13-2016/17
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- Figure 98: Selfridges Retail Ltd: outlet data, 2012/13-2016/17
- Retail offering
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Market Size and Forecast
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- Forecast methodology
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