Table of Contents
Executive Summary
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- The market
- The department store sector continues to decline
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- Figure 1: UK department store sector size and forecast (Post-COVID-19 lockdown forecast), 2014-24
- Footfall across the high street has seen steep declines
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- Figure 2: Year-on-year footfall change, by location, January 2015-February 2020
- Impact of COVID-19 on department stores
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- Figure 3: Short, Medium and long term impact of COVID-19 on Department Stores, April 2020
- Companies and brands
- Major leading players struggle
- House of Fraser loses market share
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- Figure 4: Leading department stores, estimated market shares, 2017-19
- Brand research shows that John Lewis is highly regarded
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- Figure 5: Attitudes towards and usage of selected brands, March 2020
- The consumer
- Department stores attract two thirds of shoppers
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- Figure 6: Department stores used in the last 12 months, 2018-20
- Fashion is the most commonly bought category at department stores
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- Figure 7: What consumers bought from department stores in the last 12 months, May 2019 and February 2020
- Gifting brings shoppers into department stores
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- Figure 8: Reasons given for visiting a department store, February 2020
- Consumers prefer the ease of online shopping
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- Figure 9: Department store shopper behaviours, February 2020
- Shoppers are suffering from discount fatigue
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- Figure 10: Consumer attitudes towards department stores, February 2020
- Department stores are perceived by some as pricey and inconvenient
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- Figure 11: Top reasons given for not purchasing items at department stores, February 2020
- What we think
The Impact of COVID-19 on Department Stores
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- Short, medium and long-term impact on the industry
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- Figure 12: Short, Medium and long term impact of COVID-19 on Department Stores, April 2020
- Opportunities and Threats
- COVID-19 hastens department store closures
- Focus on community and personalisation
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- Figure 13: John Lewis has been providing care packages to key workers in the UK to show support, April 2020
- Digital innovations will grow in importance
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- Figure 14: John Lewis – virtual home design service, April 2020
- Impact on the department store sector
- COVID-19 set to cause steep declines for department stores
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- Figure 15: UK department store sector size and forecast (Post-COVID-19 lockdown forecast), 2014-24
- Shifting consumer behaviours
- During lockdown there has been an almost total reliance on online shopping for non-foods…
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- Figure 16: People who said they have increased the amount of shopping done online as a result of COVID-19, 28th February 2020-16th April 2020
- …but a lack of spending on discretionary items
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- Figure 17: Changes in shopping habits since the outbreak of COVID-19 between 23rd April – 30th April 2020
- Almost half of shoppers expect to spend less on fashion items
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- Figure 18: Expected spending patterns due to COVID-19, 23rd-30th April 2020
- Key consumer segments
- Lack of tourism due to COVID-19 will impact high-end department stores
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- Figure 19: Country or region of origin of non-UK-resident purchasers of high-end products, 2019
- ABs are slightly less concerned about changes to their lifestyle
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- Figure 20: Worries about how COVID-19 will impact lifestyles, by socioeconomic group, 23rd-30th April 2020
- Women are more likely to have cut back on non-essential spending
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- Figure 21: Expected changes in shopping for fashion items since the outbreak of COVID-19, by gender, 23rd – 20th April 2020
- How a COVID-19 recession will reshape the department store sector
- Unemployment will impact discretionary spend
- Marketing and sales activities will need to be pitched appropriately
- A recession could see a dip in conspicuous consumption
- Increased discounting
- Dealing with excess stock
- COVID-19: Market context
Issues and Insights
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- COVID-19 predicted to hugely disrupt the department store sector
- The facts
- The implications
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- Figure 22: Expected spending patterns due to COVID-19, 23rd-30th April 2020
- Is online shopping the new ‘department store’?
- The facts
- The implications
The Market – What You Need to Know
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- Department stores continue to experience declines
- COVID-19 set to have a big impact on the market
- Key department store categories expected to grow
- Lack of tourism in 2020 to impact high-end department stores
- Consumer uncertainty over Brexit eases up
- Footfall has been steadily declining
Market Size and Forecast
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- The decline is predicted to continue for department stores
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- Figure 23: UK department store sector size and forecast (Pre-COVID-19 lockdown forecast), 2014-24
- Figure 24: UK department store sector size and forecast, at constant and current prices (Pre-COVID-19 lockdown forecast), 2014-24
- Impact of COVID-19
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- Figure 25: UK department store sector size and forecast (Post-COVID-19 lockdown forecast), 2014-24
- Figure 26: UK department store sector size and forecast, at constant and current prices (Post-COVID-19 lockdown forecast), 2014-24
- Forecast methodology
Consumer Spending
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- Spending has grown in the key categories
- Fashion sales slow
- Opportunities in prestige beauty
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- Figure 27: Consumer spending on the core department store categories, 2015-19
Market Drivers
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- Inbound tourism rose in 2019…
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- Figure 28: Number of inbound tourists and tourist expenditure in the UK, 2009-19
- …but COVID-19 will hamper department store sales
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- Figure 29: Country or region of origin of non-UK-resident purchasers of high-end products, 2019
- Consumer uncertainty over Brexit lessens
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- Figure 30: Consumer sentiment towards Brexit, February 2020
- Footfall continues to decline…
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- Figure 31: Year-on-year footfall change, by location, January 2015-February 2020
- …as extreme weather conditions affect the high street
- Online continues to grow
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- Figure 32: Internet sales as a proportion of total retail sales, 2009-19
Companies and Brands – What You Need to Know
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- Major leading players struggle
- House of Fraser loses market share
- John Lewis has the most established online presence
- Department stores get more experiential
- Advertising spend was down nearly 30% in 2019
Leading Players
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- Note on department store sales
- Major players struggle with slowing sales
- All change at John Lewis
- Debenhams and House of Fraser continue to struggle post-administration
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- Figure 33: Leading department stores, net sales, 2015-19
- Store closures continue…
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- Figure 34: Leading department stores, outlet numbers, 2015-19
- …leading some to see an increase in sales per outlet
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- Figure 35: Leading department stores, estimated sales per outlet, 2015-19
- Profits at the major department stores are shrinking
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- Figure 36: Leading department stores, operating profits, 2015-19
- Figure 37: Leading department stores, operating margins, 2015-19
Market Share
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- House of Fraser rapidly losing market share
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- Figure 38: Leading department stores, estimated market shares, 2017-19
- Figure 39: Leading department stores, market shares, 2015-19
Online
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- Struggling department stores suffer with slowing online sales
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- Figure 40: Select leading department stores, estimated online revenues, 2015-19
- Online share for top department stores grows
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- Figure 41: Estimated online share of select leading department stores’ total revenues, 2015-19
- Figure 42: Estimated online department store market size, 2015-19
- Online becomes more important for department stores
- Note on methodology
Launch Activity and Innovation
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- Department stores enter rental territory
- Selfridges hosts Hurr Collective pop-up
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- Figure 43: Hurr’s pop-up in Selfridges, 2020
- Liberty teams up with My Wardrobe HQ
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- Figure 44: My Wardrobe HQ space in Liberty, 2020
- Luxury department stores offer second-hand options
- Selfridges opens Vestiaire concession
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- Figure 45: Vestiaire’s permanent Selfridges concession, 2019
- Harrods and NSPCC team up for the second time
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- Figure 46: Inside Harrods latest Re-Told charity shop, April 2019
- Selfridges launches pre-loved childrenswear pop-up
- Depop pop-up opens in August 2019
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- Figure 47: Depop pop-up shop, 2019
- L’Agence and Fenty pop-ups in October 2019
- Selfridges teams up with Instagram
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- Figure 48: Selfridges Instagram pop-up, 2019
- Highsnobiety launches The Co. Lab in partnership with Selfridges
- Department stores bet on beauty
- Harrods to open line of beauty stores
- Dazed opens beauty pop-up in Selfridges
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- Figure 49: Dazed Beauty Space pop-up, 2020
- John Lewis unveils beauty counter for men
- UK department stores venture abroad
- Fortnum & Mason opens in Hong Kong
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- Figure 50: Fortnum & Mason’s Hong Kong store, 2019
- Harrods to open in Shanghai
- Department stores revamp floors
- John Lewis invests in menswear
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- Figure 51: Inside John Lewis’ Speak Easy area, 2019
- Selfridges opens new accessories hall in Trafford Centre
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- Figure 52: Selfridges new accessory hall in Manchester’s Trafford Centre, 2019
- Harrods continues its major revamp
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- Figure 53: Harrods’ new dining hall, 2019
- Figure 54: Harrods’ new beauty hall, 2019
- Department stores get more experiential
- John Lewis launches most experiential store yet
- Selfridges opens permanent cinema
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- Figure 55: The cinema at Selfridges, Oxford Street, London
- House of Fraser opens gaming arena
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- Figure 56: Belong’s Oxford Street arena in House of Fraser, 2019
- Alternative reality experiences
- John Lewis uses virtual app for furniture
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- Figure 57: John Lewis’ AR furniture app in use, 2020
- Harvey Nichols launches VR circus
- M&S to combine food hall and clothing store
Advertising and Marketing Activity
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- Advertising spend down nearly 30% in the last year
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- Figure 58: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2015-19
- Marks & Spencer remains the sector’s biggest spender
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- Figure 59: Recorded above-the-line, online display and direct mail total advertising expenditure, by selected leading UK department stores, 2015-19
- TV is the primary source of department store advertising
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- Figure 60: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, by media type, 2019
- Figure 61: Recorded above-the-line, online display and direct mail total advertising expenditure of selected leading UK department stores, by media type, 2019
- Key campaigns
- Christmas advertising is the highlight of the year
- John Lewis shelves first spring campaign due to COVID-19
- M&S revamps ‘This is Not Just’ food marketing campaign after 12-year absence
- Debenhams’ £3 million male-focused campaign
- Harvey Nichols parts ways with creative agency
- Nielsen Ad Intel coverage
Space Allocation Summary
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- Space allocation summary
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- Figure 62: Department stores: Summary of estimated in-store space allocation, March 2020
- Detailed space allocation estimates
- M&S revamping childrenswear department and introducing urban farming in stores
- New toy emporium and permanent cinema at Selfridges’ flagship London store
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- Figure 63: The cinema at Selfridges, Oxford Street, London
- John Lewis’ new experiential concept shop to attract footfall and increase dwell time
- Struggling Fenwick turns floor space into offices
- New-style House of Fraser being rolled out
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- Figure 64: Department stores: Detailed space allocation estimates, March 2020
Brand Research
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- Brand map
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- Figure 65: Attitudes towards and usage of selected brands, March 2020
- Key brand metrics
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- Figure 66: Key metrics for selected brands, March 2020
- Brand attitudes: John Lewis highly rated for customer service
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- Figure 67: Attitudes, by brand, March 2020
- Brand personality: Debenhams seen as accessible
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- Figure 68: Brand personality – macro image, March 2020
- House of Fraser perceived as impersonal
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- Figure 69: Brand personality – micro image, March 2020
- Brand analysis
- John Lewis is the favourite brand
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- Figure 70: User profile of John Lewis, March 2020
- Debenhams has high levels of usage, but is not rated for its experience
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- Figure 71: User profile of Debenhams, March 2020
- Fenwick lacks differentiation
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- Figure 72: User profile of Fenwick, March 2020
- Harvey Nichols worth paying more for
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- Figure 73: User profile of Harvey Nichols, March 2020
- House of Fraser perceived as boring
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- Figure 74: User profile of House of Fraser, March 2020
The Consumer – What You Need to Know
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- Department stores attract two thirds of shoppers
- Fashion is the most commonly bought category at department stores
- Gifting brings shoppers into department stores
- Consumers are turning to online shopping
- Shoppers are suffering from discount fatigue
Where They Shop
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- Department stores continue to attract two thirds of shoppers
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- Figure 75: Department stores used in the last 12 months, 2018-20
- In-store shopping more popular than online
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- Figure 76: Department stores used in-store and online in the last 12 months, February 2020
- Department stores appeal to those with higher socio-economic status
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- Figure 77: How consumers shopped with department stores in the last 12 months, by socio-economic status, February 2020
- Most shop across just one or two different stores
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- Figure 78: Repertoire of department stores used in the last 12 months, February 2020
What They Buy
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- Eight in 10 made a fashion purchase
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- Figure 79: What consumers bought from department stores in the last 12 months, May 2019 and February 2020
- Older shoppers are more likely to buy clothing at department stores
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- Figure 80: What consumers bought from department stores in the last 12 months, by age, February 2020
- Two thirds bought more than one type of item
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- Figure 81: Repertoire of how many items consumers bought from department stores in the last 12 months, February 2020
Reasons for Visiting Department Stores
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- Three quarters visited a department store…
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- Figure 82: Visits to department stores, February 2020
- …with young people most likely to visit
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- Figure 83: Visits to department stores, by age, February 2020
- Over two in five visited for gift ideas
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- Figure 84: Reasons given for visiting a department store, February 2020
- Men aged 25-44 visit to use leisure facilities
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- Figure 85: Consumers who visited a department store to use the leisure facilities, by gender and age, February 2020
Behaviours of Department Store Shoppers
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- Online shopping is hampering the progress of department stores
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- Figure 86: Department store shopper behaviours, February 2020
- Men find it easier to shop online but could be swayed by exclusive items
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- Figure 87: Department store shopping behaviours, by gender, February 2020
- Younger generations want experiences
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- Figure 88: Behaviours towards shopping in a department store that has a selection of extra services, by generation, February 2020
Attitudes towards Department Stores
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- Consumers are suffering from discount fatigue
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- Figure 89: Consumer attitudes towards department stores, February 2020
- Shoppers across the board go to department stores to find unique items
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- Figure 90: People who agree that the main reason to visit a department store is to buy items that can’t be bought elsewhere, by gender and age, February 2020
- Store closures put off consumers
Reasons for Not Using Department Stores
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- Department stores viewed as pricey and inconvenient
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- Figure 91: Top reasons given for not purchasing items at department stores, February 2020
- People in small towns opt for more convenient options
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- Figure 92: People who have not shopped at a department store as there are more convenient places for them to shop, by location, February 2020
Debenhams
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- What we think
- COVID-19 threatens the future of the business
- Online lifeline?
- A need to focus on the UK
- Where now?
- Company background
- Company performance
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- Figure 93: Debenhams: Group financial performance, 2013/14-2017/18
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- Figure 94: Debenhams: Outlet data, 2013/14-2017/18
- Retail offering
House of Fraser
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- What we think
- COVID-19 threats
- COVID-19 opportunities
- A strategy of elevation
- Matching costs to revenues
- Further store closures inevitable
- Company background
- Company performance
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- Figure 95: House of Fraser Plc: Group financial performance, 2014/15-2018/19
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- Figure 96: House of Fraser Plc: Outlet data, 2014/15-2018/19
- Retail offering
John Lewis & Partners
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- What we think
- Merger of John Lewis & Partners and Waitrose & Partners head office functions brings challenges and opportunities
- Experiential concept shop showcases services and experiences across fashion, beauty, cookery, gadgets, gardening and home interiors
- Own-brand fashion investment
- Capitalising on male interest in beauty products
- Expanding click-and-collect and home delivery options
- Try before you buy augmented reality experience making online purchasing easier
- Rewarding customers’ ethical behaviour
- Extending into the home improvements market
- Temporarily closes its stores during COVID-19 crisis
- Company background
- Company performance
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- Figure 97: John Lewis & Partners Plc (department store): Group financial performance, 2015/16-2019/20
- Figure 98: John Lewis & Partners Plc (department store): Outlet data, 2015/16-2019/20
- Retail offering
Marks & Spencer
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- What we think
- COVID-19 threats
- COVID-19 opportunities
- Online ramping up
- Store portfolio is being cut back
- A conscious shift towards food
- Company background
- Company performance
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- Figure 99: Marks & Spencer: Group financial performance, 2014/15-2018/19
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- Figure 100: Marks & Spencer: Outlet data, 2014/15-2018/19
- 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
- Best- and worst-case forecast prior to the COVID-19 lockdown
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- Figure 101: UK department store sector size and forecast, best- and worst-case forecast (pre-COVID-19 lockdown), 2019-24
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