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
- Growth remains flat in 2017
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- Figure 1: Best and worst case forecast for department store sales, 2012-22
- Weak sterling attracts foreign visitors
- Companies and brands
- Innovations
- High-end department stores outperform
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- Figure 2: Annual segment growth: mid-market versus high-end, 2012-16
- M&S loses share as John Lewis grows its share
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- Figure 3: Top department stores’ market shares, 2015 and 2016
- John Lewis leads online
- Brand research
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- Figure 4: Attitudes towards and usage of selected brands, December 2016-June 2017
- Fenwick’s new concepts to encourage customers to visit
- The consumer
- Debenhams falls out of favour with young women
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- Figure 5: Department stores purchased from in the last six months, in-store and online, May 2017
- Store experience key reason for shopping
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- Figure 6: Reasons for shopping at department stores over other types of retailers, May 2017
- Millennials want more food and drink venues
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- Figure 7: Interest in additional services offered by department stores, May 2017
- Women want more updated fashion
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- Figure 8: Interest in innovations when shopping at department stores, May 2017
- Mid-market department stores stand out for customer service
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- Figure 9: Correspondence analysis, May 2017
- What we think
Issues and Insights
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- How is the role of department stores changing?
- The facts
- The implications
- Who are the winners and losers in the department store sector?
- The facts
- The implications
- What are the main growth opportunities for department stores?
- The facts
- The implications
The Market – What You Need to Know
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- Growth remains flat in 2017
- Outlook for department store sector
- Millennials shun ownership in favour of experiences
- Experiences continue to take precedence over retail spend
- Weak sterling attracts foreign visitors
- Home and garden grew 5% in 2016
Market Size and Forecast
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- Definitions
- Growth remains flat in 2017
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- Figure 10: Department stores: sector sales, 2012-17 (est)
- Outlook
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- Figure 11: Best and worst case forecast for department store sales, 2012-22
- Forecast – The data and methodology
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- Figure 12: Department store sales in current and constant prices, 2012-22
Consumer Spending
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- Figure 13: Consumer spending on key department store categories, 2012-16
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Market Drivers
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- Changes in population
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- Figure 14: Trends in the age structure of the UK population, 2011-21
- Fall in sterling expected to dent consumer confidence
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- Figure 15: Trends in consumer sentiment for the coming year, June 2012-June 2017
- Experiences continue to take precedence over retail spend
- Weak sterling attracts foreign visitors
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- Figure 16: Spending by overseas residents on visits to the UK, by area of residence, 2014-16
Companies and Brands – What You Need to Know
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- 24/7 personalised e-commerce experience
- EWM rolls out new department store concept
- Ad spend down 5.6% in 2016 to £120 million
- High-end department stores outperform
- M&S loses share as John Lewis grows its share
- Debenhams falls behind
- John Lewis leads online
- Online sales grow to £3.3 billion
Launch Activity and Innovation
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- Concierge services
- Rental service for fashion and accessory items
- 24/7 personalised e-commerce experience
- Virtual reality shopping experience
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- Figure 17: Rodarte’s romantic styling for Romeo and Juliet, 2016
- Brand extension
- Celebrating emerging talent with new concept
Leading Specialist Retailers
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- High-end department stores outperform
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- Figure 18: Annual segment growth: mid-market versus high-end, 2012-16
- Fortnum & Mason sees strongest sales growth
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- Figure 19: Major retailers’ annual sales growth versus average segment growth, 2016
- Leading retailers by sales
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- Figure 20: Leading department stores: net revenues, 2012-16
- Store numbers
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- Figure 21: Leading department stores: outlet numbers, 2012-16
- Sales per store
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- Figure 22: Leading department stores: annual sales per outlet, 2012-16
- Total sales area
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- Figure 23: Leading department stores: total sales area, 2012-16
- Sales densities
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- Figure 24: Leading department stores: annual sales per sq m, 2012-16
- Operating profits and margins
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- Figure 25: Leading department stores: operating profits, 2012-16
- Figure 26: Leading department stores: operating margins, 2012-16
Market Shares
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- John Lewis grows share
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- Figure 27: Top department stores’ market shares, 2015 and 2016
- Debenhams loses share
- M&S to fall behind John Lewis
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- Figure 28: Leading department stores’ market shares, 2012-16
Online
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- Figure 29: Leading department stores, estimated online sales, 2013-16
- John Lewis leads online
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- Figure 30: Online share of leading department store sales as a % of total sales, 2013-16
- Online sales grow to £3.3 billion
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- Figure 31: Department store online sales, 2013-16
- Click-and-collect
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Space Allocation Summary
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- Space allocation summary
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- Figure 32: Department stores: summary of estimated in-store space allocation, June 2017
- Detailed space allocation estimates
- House of Fraser redefining itself as a ‘premium’ department store
- Debenhams focusing on making the shopping experience sociable and fun
- Selfridges’ £300 million Oxford Street revamp
- Fenwick’s new concepts and store attractions to encourage customers to visit
- John Lewis blurring shopping and leisure to create destination shopping
- M&S repurposing store space to meet changing customer needs
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- Figure 33: Department stores: detailed space allocation estimates, June 2017
Retail Product Mix
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- Sales
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- Figure 34: Leading department stores, estimated sales mix, 2016
- Sales density
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- Figure 35: Leading department stores, estimated sales density by broad product category, 2016 (est)
Advertising and Marketing Activity
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- Ad spend down 5.6% in 2016 to £120 million
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- Figure 36: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2013-16
- Leading department stores advertising spend
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- Figure 37: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2013-16
- TV and press the most favoured media type
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- Figure 38: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, by media type, 2016
- Nielsen Ad Intel coverage
Brand Research
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- What you need to know
- Brand map
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- Figure 39: Attitudes towards and usage of selected brands, December 2016-June 2017
- Key brand metrics
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- Figure 40: Key metrics for selected brands, December 2016-June 2017
- Brand attitudes: Debenhams and House of Fraser score highly on online perceptions
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- Figure 41: Attitudes, by brand, December 2016-June 2017
- Brand personality: John Lewis enjoys most positive brand personality perceptions
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- Figure 42: Brand personality – Macro image, December 2016-June 2017
- John Lewis clearly differentiated from rivals
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- Figure 43: Brand personality – Micro image, December 2016-June 2017
- Brand analysis
- John Lewis sets the benchmark others aspire to
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- Figure 44: User profile of John Lewis, December 2017
- Debenhams scores well online but brand needs refresh
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- Figure 45: User profile of Debenhams, June 2017
- Selfridges has low usage but strong brand personality
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- Figure 46: User profile of Selfridges, June 2017
- Harrods needs to improve online presence
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- Figure 47: User profile of Harrods, June 2017
- House of Fraser strong online but brand needs a refresh
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- Figure 48: User profile of House of Fraser, June 2017
The Consumer – What You Need to Know
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- Debenhams falls out of favour with young women
- Store experience key reason for shopping
- Only Gen X shop there for fashion
- Millennials want more food and drink venues
- Women want more updated fashion
- High demand for own brands from Millennial women
- Mid-market department stores stand out for customer service
- Department stores competing with online-only retailers for value and convenience
Where They Shop
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- Debenhams falls out of favour with young women
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- Figure 49: Department stores purchased from in the last six months, in-store and online, May 2017
- John Lewis leads online
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- Figure 50: Department stores purchased from in the last six months, whether in-store or online, May 2017
- M&S sees big drop in women aged 45-64
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- Figure 51: Department stores purchased from in the last six months, whether in-store or online, February 2016 and May 2017
- Figure 52: Department stores where consumers have browsed in the last six months, either in-store or online, May 2017
- Repertoire
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- Figure 53: Repertoire of department stores purchased from in the last six months, in-store and online, May 2017
Reasons for Shopping at Department Stores
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- Store experience key reason for shopping
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- Figure 54: Reasons for shopping at department stores over other types of retailers, May 2017
- Only Gen X shop there for fashion
- Wide selection of products is the main differentiator
Interest in Additional Services
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- Millennials want more food and drink venues
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- Figure 55: Interest in additional services offered by department stores, May 2017
- Men want furniture and technology fitting service
- Female under-45s keen on beauty services
Interest in Innovations
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- Women want more updated fashion
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- Figure 56: Interest in innovations when shopping at department stores, May 2017
- High demand for own brands from Millennial women
- Male under-45s interested in buying direct from social media
Attributes of Different Types of Retailers
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- Mid-market department stores stand out for customer service
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- Figure 57: Correspondence analysis, May 2017
- Mid-market department stores linked to boring designs
- Department stores competing with online-only retailers for value and convenience
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- Figure 58: Attributes associated with different types of retailers, May 2017
- Methodology
Debenhams
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- What we think
- A need to grow the online side of the business
- Creating more of an experiential destination
- Capitalising on ‘social shopping’
- Positioning mobile as the engine of growth
- Becoming more efficient
- Back to basics
- Reducing reliance on clothing
- Brexit impact still to be felt
- Where now?
- Company background
- Company performance
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- Figure 59: Debenhams: group financial performance, 2011/12-2015/16
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- Figure 60: Debenhams: outlet data, 2011/12-2015/16
- Retail offering
Fenwick Ltd
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- What we think
- New boss signals a new era in the family-owned retailer’s 135-year history
- Struggling against online competition
- New concepts and attractions to encourage store visits
- Data-capturing campaign to deliver a more personalised experience
- Company background
- Company performance
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- Figure 61: Fenwick Ltd: group financial performance, 2011/12-2015/16
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- Figure 62: Fenwick Ltd: outlet data, 2011/12-2015/16
- Retail offering
Harrods Ltd
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- What we think
- Influential MD reverses decision to step down
- Tapping into desire for advice
- Scope for improving online offer
- A Brexit boost?
- Rates hike to hit?
- Company background
- Company performance
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- Figure 63: Harrods Ltd: group financial performance, 2011/12-2015/16
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- Figure 64: Harrods Ltd: Outlet data, 2011/12-2015/16
- Retail offering
Harvey Nichols UK
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- What we think
- Gross profit margins and operating profits fall
- Looking ahead
- Company background
- Company performance
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- Figure 65: Harvey Nichols UK: group financial performance, 2011/12-2015/16
- Figure 66: Harvey Nichols UK: outlet data, 2011/12-2015/16
- Retail offering
House of Fraser Plc
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- What we think
- Online growth is encouraging
- Store performance more of a concern
- Plans to make stores more experiential
- Beauty identified as growth prospect
- Brand overhaul
- Company background
- Company performance
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- Figure 67: House of Fraser Plc: group financial performance, 2012/13-2016/17
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- Figure 68: House of Fraser Plc: GTV and sales by region, 2015/16-2016/17
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- Figure 69: House of Fraser Plc: outlet data, 2012/13-2016/17
- Retail offering
John Lewis
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- What we think
- A considered strategy which sees investment focus shift back towards existing estate
- Still opening new stores…for now
- Growing own brand and exclusives
- Modest international expansion with a focus on e-commerce
- Company background
- Company performance
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- Figure 70: John Lewis (department store): group financial performance, 2012/13-2016/17
- Investing in its stores
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- Figure 71: John Lewis (department store): outlet data, 2012/13-2016/17
- Retail offering
Marks & Spencer
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- What we think
- Tangible signs of improvements in clothing after price and product repositioning
- Stepping up the pace of its fashion collections with ‘See Now Buy Now’ capsule
- In-store customer service
- Capitalising on the healthy eating trend
- Tailored shopping experience encouraging customers to shop more frequently
- Company background
- Company performance
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- Figure 72: Marks & Spencer: group financial performance, 2012/13-2016/17
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- Figure 73: Marks & Spencer: outlet data, 2012/13-2016/17
- Figure 74: Marks & Spencer: Store portfolio, March 2017
- Retail offering
Selfridges Retail Ltd
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- What we think
- Experiential retailing
- Christmas comes early
- Looking ahead
- Company background
- Company performance
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- Figure 75: Selfridges Retail Ltd: group financial performance, 2011/12-2015/16
- Figure 76: Selfridges Retail Ltd: outlet data, 2011/12-2015/16
- 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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