Table of Contents
Executive Summary
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- The market
- Sector expected to see some recovery in 2019
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- Figure 1: UK department store sector size and forecast, 2014-24
- Consumer spending on core categories continues to rise
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- Figure 2: Year-on-year percentage change in consumer spending on the core department store categories, 2014-19
- Companies and brands
- Online department store market growing at a faster rate
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- Figure 3: Online as a percentage of the total department store sector, 2014-18
- Mixed performance amongst the leading players
- John Lewis becomes the UK department store market leader
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- Figure 4: Leading department stores, estimated market shares, 2018
- Brand research further confirms House of Fraser’s struggles
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- Figure 5: Attitudes towards and usage of selected brands, April 2019
- The consumer
- Leading players losing customers to other retailers
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- Figure 6: Department stores used in the last 12 months, February 2018 and May 2019
- Most consumers buy fashion from the department stores
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- Figure 7: What consumers bought from department stores in the last 12 months, May 2019
- Purchasing from department stores is infrequent
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- Figure 8: Frequency of department store usage in the last 12 months, May 2019
- Satisfaction with the shopping experience is high
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- Figure 9: Key drivers of overall satisfaction with department stores, May 2019
- Differentiation needed to offset discounting
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- Figure 10: Attitudes towards department stores, May 2019
- What we think
Issues and Insights
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- What can the mass-market players do to revive their fortunes?
- The facts
- The implications
- If experience is a differentiator, what can department stores do next?
- The facts
- The implications
- How can department stores reassert their position as experts?
- The facts
- The implications
The Market – What You Need to Know
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- The sector declined in 2018
- Future growth expected to be slow
- Core department store categories perform well
- Beauty market set to become more challenging
- Brexit uncertainty is ongoing
- High street footfall continues to fall
Market Size and Forecast
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- A slow department store recovery forecast
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- Figure 11: UK department store sector size and forecast, 2014-24
- Figure 12: UK department store sector size and forecast, at constant and current prices, 2014-24
- Forecast methodology
Consumer Spending
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- Growth in core categories
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- Figure 13: Consumer spending on the core department store categories, 2015-19
Market Drivers
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- Uplift in consumer confidence
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- Figure 14: Mintel’s Financial Confidence Tracker, January 2017-May 2019
- Real incomes continue to grow
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- Figure 15: Real wage growth – Average weekly earnings vs inflation, June 2016-May 2019
- Private renting on the up
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- Figure 16: UK households, by tenure status, 2013-17
- Rising internet access boosts online market
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- Figure 17: Household internet access, 2009-18
- Footfall continues to decline
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- Figure 18: Change in UK retail footfall, by location, June 2016-May 2019
- Inbound tourism dipped in 2018
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- Figure 19: Total overseas visits to the UK, 2010-19
- The value of Sterling stabilises
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- Figure 20: Select international currency exchange rates, annual averages, 2005-19
- Figure 21: Select international currency exchange rates, annual averages, 2015-19
- The threat of Amazon
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- Figure 22: Amazon reported and gross transactional value revenues, 2015-18
Companies and Brands – What You Need to Know
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- Polarised performance amongst the leading players
- John Lewis becomes the market leader
- Online sales continue to grow at a faster rate than stores
- Store innovation continues
- Perceptions of House of Fraser deteriorate
- Changes in the UK department store sector are ongoing
Leading Players
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- Note on department store sales
- Majors players struggling
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- Figure 23: Leading department stores, net sales, 2014-18
- Ongoing store closures
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- Figure 24: Leading department stores, outlet numbers, 2014-18
- A number battling with declining sales per outlet
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- Figure 25: Leading department stores, estimated sales per outlet, 2014-18
- Operating profits are also falling, and margins being eroded
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- Figure 26: Leading department stores, operating profits, 2014-18
- Figure 27: Leading department stores, operating margins, 2014-18
Market Shares
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- Leading players lose market share
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- Figure 28: Leading department stores, estimated market shares, 2018
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- Figure 29: Leading department stores, market shares, 2014-18
Online
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- Most leading players report strong online growth
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- Figure 30: Select leading department stores, estimated online revenues, 2014-18
- Online continues to capture a greater share
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- Figure 31: Estimated online share of select leading department stores’ total revenues, 2014-18
- Growth in the online market subdued by House of Fraser
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- Figure 32: Estimated online department store market size, 2014-18
- Innovation in the online department store market
- Harrods and Farfetch enter new partnership
- Fenwick makes the move online, whilst Liberty strengthens its offer
- John Lewis improves online order fulfilment
- Harvey Nichols merges the online and offline experience
- John Lewis targets online beauty and homeware buyers
- Note on methodology
Launch Activity and Innovation
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- Ongoing investment into store experience
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- Figure 33: Selfridges’ menswear department, 2018
- In-store leisure gets an update
- Beauty continues to be a priority
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- Figure 34: Harvey Nichols’ Hershesons beauty lounge, 2019
- Focusing on health and wellness
- An arty twist on experiential retailing
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- Figure 35: Fortnum’s X Franks exhibition, 2018
- Figure 36: Selfridges’ State of The Arts campaign, 2019
- New ways to engage customers
- Additional services strengthen customer experience
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- Figure 37: The Restory Homepage, July 2019
- Figure 38: The Restory and Selfridges partnership, 2019
Advertising and Marketing Activity
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- Year-on-year advertising expenditure up 23.2%
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- Figure 39: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2014-18
- Marks & Spencer is the sector’s biggest advertising spender
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- Figure 40: Recorded above-the-line, online display and direct mail total advertising expenditure, by selected leading UK department stores, 2014-18
- A major uplift in digital spending
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- Figure 41: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, by media type, 2018
- Figure 42: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, by media type, 2014-18
- Key campaigns
- Christmas campaigns come thick and fast
- Debenhams’ rebranding campaign
- John Lewis & Partners’ product-led campaign
- Nielsen Ad Intel coverage
Space Allocation Summary
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- Methodology
- Space allocation summary
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- Figure 43: Department stores: summary of estimated in-store space allocation, July 2019
- Detailed space allocation estimates
- Marks & Spencer cutting floor space devoted to clothing and homeware
- John Lewis multi-million pound refurbishment scheme
- Selfridges opens the world’s largest accessories hall
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- Figure 44: Selfridges champagne bar in its new accessories department, 2018
- House of Fraser revamp under new owner Sports Direct
- Fenwick extends jewellery offering
- Debenhams Beauty Hall of the Future and concession deals with home décor brands
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- Figure 45: Department stores: detailed space allocation estimates, July 2019
Retail Product Mix
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- Methodology
- Estimated Sales Mix
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- Figure 46: Leading department stores, estimated sales mix, 2018
- Estimated Sales Density
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- Figure 47: Leading department stores, estimated sales density by broad product category, 2018
Brand Research
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- Brand map
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- Figure 48: Attitudes towards and usage of selected brands, April 2019
- Key brand metrics
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- Figure 49: Key metrics for selected brands, April 2019
- Brand attitudes: Debenhams offers good online service and value for money
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- Figure 50: Attitudes, by brand, April 2019
- Brand personality: M&S seen as ethical
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- Figure 51: Brand personality – macro image, April 2019
- House of Fraser thought to only care about profits
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- Figure 52: Brand personality – micro image, April 2019
- Brand analysis
- John Lewis has a broad brand appeal and is highly recommended
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- Figure 53: User profile of John Lewis, April 2019
- Marks & Spencer most trusted and offers the best customer service
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- Figure 54: User profile of Marks & Spencer, April 2019
- Debenhams thought to be accessible and offers value for money
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- Figure 55: User profile of Debenhams, April 2019
- Selfridges perceived as exclusive and expensive
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- Figure 56: User profile of Selfridges, April 2019
- House of Fraser seen as boring and overrated
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- Figure 57: User profile of House of Fraser, April 2019
Competitive Strategies
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- Acquisitions
- Store closures
- Rebranding
- Store investment
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- Figure 58: Selfridges eyewear department, 2018
- Sustainability
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- Figure 59: Harrods Fashion Re-Told Pop-Up, 2019
The Consumer – What You Need to Know
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- Leading players have lost customers
- Fashion remains a priority
- Online is encouraging shoppers away from department stores
- John Lewis’ customer experience stands out
- A need for more staff expertise
- Differentiation needs to be a priority
Where They Shop
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- Two thirds shop with department store retailers
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- Figure 60: Department stores used in the last 12 months, May 2019
- M&S leads both in-store and online
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- Figure 61: Department stores used in-store and online in the last 12 months, May 2019
- Young men are driving the shift online
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- Figure 62: How consumers shopped with department stores in the last 12 months, by age and gender, May 2019
- Most shop with just one or two retailers
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- Figure 63: Repertoire of department stores used in the last 12 months, May 2019
- M&S is also the most frequently used retailer
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- Figure 64: Department stores used most frequently in the last 12 months, May 2019
Customer Profiles
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- Luxury department stores attract more male consumers
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- Figure 65: Department store customer profiles, by gender, May 2019
- Leading players more popular with older shoppers
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- Figure 66: Department store customer profiles, by age, May 2019
- Most department stores have a bias towards urban shoppers
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- Figure 67: Department store customer profiles, by location, May 2019
- Market positioning doesn’t always determine customer affluence
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- Figure 68: Department store customer profiles, by socio-economic group, May 2019
What They Buy
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- Clothing remains the most purchased category
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- Figure 69: What consumers bought from department stores in the last 12 months, May 2019
- What people buy is influenced by gender
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- Figure 70: What consumers bought from department stores in the last 12 months, by gender, May 2019
- Department store fashion popular with older consumers
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- Figure 71: What consumers bought from department stores in the last 12 months, by age, May 2019
- One in three only buy one type of product
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- Figure 72: Repertoire of what consumers bought from department stores in the last 12 months, May 2019
Frequency of Use
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- Department store usage is infrequent
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- Figure 73: Frequency of department store usage in the last 12 months, May 2019
- Men shop more often
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- Figure 74: Frequency of department store usage in the last 12 months, by gender, May 2019
- Frequency highest amongst 25-34s
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- Figure 75: Frequency of department store usage in the last 12 months, by age, May 2019
- Clothing buyers shop less frequently
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- Figure 76: Frequency of department store usage in the last 12 months, by what consumers bought, May 2019
Changes in Usage
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- Department store usage is largely unchanged
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- Figure 77: Changes in department store usage in the last 12 months, May 2019
- Why consumers are shopping with department stores more
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- Figure 78: Why consumers used department stores more in the last 12 months, May 2019
- Why consumers are shopping with department stores less
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- Figure 79: Why consumers used department stores less in the last 12 months, May 2019
Satisfaction with Department Stores
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- Consumers are relatively content
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- Figure 80: Satisfaction with the department store retailer used most frequently in the last 12 months, May 2019
- John Lewis outperforms both M&S and Debenhams
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- Figure 81: Satisfaction with the department store retailer used most frequently in the last 12 months, by leading players, May 2019
- Clothing buyers are least satisfied
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- Figure 82: Satisfaction with the department store retailer used most frequently in the last 12 months, by core product categories, May 2019
Key Driver Analysis
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- Staff training should be a priority
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- Figure 83: Key drivers of overall satisfaction with department stores, May 2019
- Figure 84: Overall satisfaction with department stores – key driver output, May 2019
- Methodology
Attitudes towards Department Stores
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- The discounting challenge is ongoing
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- Figure 85: Attitudes towards department stores, May 2019
- Demand for own-label strongest amongst young consumers
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- Figure 86: Attitudes towards department stores, by age, May 2019
Appendix – Data Sources, Abbreviations and Supporting Information
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- Abbreviations
- Consumer research methodology
Appendix – Key Driver Analysis
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- Interpretation of results
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- Figure 87: Overall satisfaction with department stores – key driver output, May 2019
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- Figure 88: Satisfaction with department stores, May 2019
Appendix – Market Size and Forecast
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- Best- and worst-case forecast
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- Figure 89: UK department store sector size and forecast, best- and worst-case forecast, 2019-24
- Forecast methodology
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