What you need to know
The UK retail environment has become particularly challenging for department stores in recent years, especially for those operating at the lower end of the market. It has been well publicised that a number of the leading players, such as House of Fraser and Debenhams, are struggling in a competitive market, but research proves that the department store concept remains relevant in today’s retail market if it is executed well.
Mirroring the wider retail market, department stores now need to not only have a compelling product mix, but also need to offer the best possible customer experience, both in-store and online. However, as more and more retailers are using experiences as a point of difference in a crowded market, consumer expectations will only continue to heighten, and it will become harder for department stores to use this as a USP.
After a 2.6% decline in department store sales in 2018, Mintel thinks that the sector will see some recovery in 2019, with sales forecast to rise 0.8% to £15.3 billion. However, this growth will be driven by favourable comparisons against 2018, as well as the continued strength of the luxury players – meaning that the market remains tough for those in the mass market.
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.
