What you need to know

The UK retail industry had a challenging 2019, with several retailers downsizing or shutting shop completely. This has been exacerbated at the start of 2020 with the outbreak of COVID-19, which has presented huge challenges for department stores across the spectrum, and not just in terms of the immediate impact of the lockdown. Luxury stores, for example, have been worried about the impact a decline in tourism will have throughout 2020. Furthermore, department stores’ reliance on fashion and other discretionary items means that they are predicted to be particularly hard hit by inevitable economic slowdown. The decline in the department store market size is set to drop by a further 28% in 2020 due to COVID-19.

During 2019 and so far in 2020, there have been challenges for the leading players – Debenhams announced its second administration in the space of a year in April 2020, leading to further store closures and John Lewis has suffered from slowing sales and profits. Meanwhile, secondary town staple, Beales, shut all stores in March 2020.

Mirroring trends across the retail market, department stores must continue to focus on offering a differentiated customer experience, with a focus on customer service as well as complementary experiential elements. Selfridges has begun to offer various experiences including a skate bowl and cinema in its Oxford Street flagship store to entice a new demographic into its store and John Lewis has revamped several stores, including a more personalised shopping experience for men in its London flagship. This experiential angle will only become more important once the initial lockdown phase of COVID-19 ends, and retailers face up to the huge challenge of how to coax wary shoppers back onto the high street.

Key issues covered in this report

  • • The impact of COVID-19 on consumer behaviour in the department store sector.

  • • How COVID-19 will affect the market dynamics within the department store sector.

  • • Brand research on leading players within the sector and key launches and innovations.

  • • Consumer attitudes and shopper behaviours towards department stores.

Products covered in this Report

For the purposes of this Report, Mintel has used the following definitions:

It is difficult to define a department store and, as a result, there are no hard and fast rules to Mintel’s definition. However, we would expect stores to typically trade from a minimum of 1,000 sq m and stock at least half a dozen different broad product categories, with one category unlikely to account for more than two thirds of turnover, and usually significantly less than this. Stores must carry a range of brands and be clearly departmentalised – so we include M&S, but not Next. Most department stores trade in stores with multiple floors, though this is not necessarily a defining factor.

As a minimum, all department stores covered in this Report sell adults’ and children’s clothing, underwear, footwear, fashion accessories, beauty/grooming products and some homewares. Larger full-line stores have a much wider product assortment. They should also have at least one café or restaurant. Some department stores retained their food halls through the 1990s and others have been reintroducing them. The food offer is typically upmarket and geared towards fine foods and delicatessen, and therefore differentiated from the everyday supermarket.

Most department stores operate with a mix of own-bought and concession departments.

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