Department Store Retailing - UK - January 2007

ISSUES IN THE MARKET
Department stores look more vulnerable
Courting the older consumer
Flexing prices
Vision and creativity
Main themes
Sector definitions
Starting point
Drilling down
Department store definition
 ABBREVIATIONS
INSIGHTS AND OPPORTUNITIES
MARKET IN BRIEF
Department stores will lose retail market share
More discerning consumer
M&S’ resurgence
Market positioning
Figure 1: UK department stores: Market positioning 2006
John Lewis looks imposing
Physical expansion
House of Fraser about to change
Price
Figure 2: M&S womenswear price architecture, 1998 and 2003-05
Home shopping
Market size
Sector size
Underperformance
FAST FORWARD TRENDS
 TREND 1: FIT OR FAT
Definition:
Market touchpoints/implications
 TREND 2: WISDOM MARKETS
Definition:
Market touchpoints/implications
 TREND 3: SENSE OF THE INTENSE
Definition:
Market touchpoints/implications
INTERNAL MARKET ENVIRONMENT
Consolidation
Privatisations
M&S’ resurgence
Home shopping
Foreign interests limited but growing
BROADER MARKET ENVIRONMENT
Ageing population
Figure 3: UK population, by age band, 2001, 2006 and 2011
More affluent population
Figure 4: UK population, by socio-economic group, 2001-11
Strong consumer confidence
Figure 5: UK: PDI and consumer expenditure, at current and constant 2001 prices, 2001-11
But can this be sustained?
Consumer prices
Figure 6: UK: Consumer prices, 1998-2005
Figure 7: UK: Clothing inflation, 1995-2005
THE MARKET IN CONTEXT
The end of the boom
Figure 8: UK: Retail sales volume growth, 1987-2006
Attitudes changed during the boom
Greater design input
Key product markets of department stores have performed well
Figure 9: UK: Consumer spending on key department store markets, 2001-05
Relative performances
Figure 10: UK: Relative performance of department stores and key product markets, 2001-05
Fragility of markets
High barriers to entry
STRENGTHS AND WEAKNESSES IN THE MARKET
WHO’S INNOVATING
Ethical and green issues
e-commerce
New services
MARKET SIZE AND FORECAST
Past
Economic outlook
Uncertainty in the market
Department store prospects
E-commerce
Forecast
Figure 11: UK: Mixed goods retailers’ sales, 2001-11
Figure 12: UK: Mixed goods retailers’ sales as % of all retail sales, 2001-11
Mixed goods retailers lose market share
Figure 13: UK: Mixed goods retailers, 2001-05
Drilling down to department stores
Figure 14: UK: Identified department stores, sales performance, 2001-05
Figure 15: UK: Relative sales performance of department stores and mixed goods retailers, 2001-05
Department store sector drivers
Outlet data
Figure 16: UK: Retail outlets by sector, 2000-04
Figure 17: UK: Identified department stores, outlet numbers, 2001-05
THE CONSUMER – WHERE
 WHO SHOPS AT DEPARTMENT STORES
Figure 18: Consumers who have bought something from a department store in the last six months, by age October 2006
Figure 19: Consumers who have bought something from a department store in the last six months, by socio-economic group, October 2006
 WHERE PEOPLE BUY
Figure 20: Which department stores consumers have bought from in the last six months, October 2006
 WHO BUYS WHERE
Upmarket but broad appeal by age
Figure 21: Which department stores consumers have bought from in the last six months, by gender, age and socio-economic group, October 2006
Figure 22: Which department stores consumers have bought from in the last six months, by ACORN group, October 2006
Figure 23: Which department stores consumers have bought from in the last six months, by regular grocery shop, October 2006
 MARKET POSITIONING
Figure 24: Department stores – market positioning, 2006
 WHERE PEOPLE BUY – TREND DATA
Figure 25: Which department stores consumers have bought from in previous six months, 2000, 2001, 2003, 2004 and 2006
 CHANGE IN RETAIL AUDIENCE
Figure 26: Consumers who have bought something from Debenhams, John Lewis and the Co-op in the previous six months by age, September 2000 and October 2006
Figure 27: Consumers who have bought something from House of Fraser and Selfridges in the previous six months, by age, September 2000 and October 2006
Figure 28: Consumers who have bought something from Debenhams, John Lewis and the Co-op in the previous six months, by socio-economic group, September 2000 and October 2006
Figure 29: Consumers who have bought something from House of Fraser and Selfridges in the previous six months, by socio-economic group, September 2000 and October 2006
THE CONSUMER – WHERE: DETAILED CONSUMER DEMOGRAPHICS
Figure 30: Which department stores consumers have bought from in previous six months, October 2006
THE CONSUMER – WHAT
 WHAT PEOPLE BUY
Womenswear and beauty halls a major draw
Buy a complete outfit under one roof
Slow moving big ticket items
Greeting cards and household textiles out of sync with market size
Figure 31: What people have bought from department stores in the last six months, October 2006
 WHO BUYS WHAT
Fashion
Figure 32: What fashion items people have bought from department stores in the last six months, by gender, age and socio-economic group, October 2006
Home goods
Figure 33: What home items people have bought from department stores in the last six months, by gender, age and socio-economic group, October 2006
Leisure and personal care
Figure 34: What leisure and personal care items people have bought from department stores in the last six months, by gender, age and socio-economic group, October 2006
THE CONSUMER – WHAT: DETAILED CONSUMER DEMOGRAPHICS
Figure 35: What items people have bought from department stores in the last six months, October 2006
Figure 36: What items people have bought from department stores in the last six months, October 2006
Figure 37: What items people have bought from department stores in the last six months, October 2006
Figure 38: What items people have bought from department stores in the last six months, October 2006
THE CONSUMER – HOW AND WHY
 HOW PEOPLE BUY
Figure 39: Statements agreed with when shopping in department stores, October 2006
 WHAT CONSUMERS LIKE ABOUT DEPARTMENT STORES
Figure 40: What people like about department stores, October 2006
 KEY TOPICS
 SHOPPING PATTERNS
Figure 41: Department stores – shopping patterns, October, 2006
Shopping patterns – by retailer
Figure 42: Department stores – visiting patterns, by where people shopped, October 2006
Range and brands
Figure 43: Department stores – attitudes to range and brands, October 2006
Range and brands – by retailer
Figure 44: Department stores – attitudes to range by retailer used, October 2006
Figure 45: Department stores – attitudes to brands, by retailer used, October 2006
Range and brands – trend data
Figure 46: Department stores – attitudes to range and brands, 2001, 2003, 2004 and 2006
 HOME SHOPPING AND HOME DELIVERY
Figure 47: Department stores – home shopping and home delivery, October 2006
Home shopping and home delivery – by retailer
Figure 48: Department stores – home shopping and home delivery, by retailer used, October 2006
 SERVICE
Figure 49: Department stores – attitudes to services, October 2006
Service – by retailer
Figure 50: Department stores – service issues by retailer, October 2006
 REPERTOIRE ANALYSIS
Figure 51: Department stores where purchases made in past six months (excluding food shopping), by number of stores shopped, October 2006
THE CONSUMER – HOW AND WHY: DETAILED CONSUMER DEMOGRAPHICS
Figure 52: How often people visit department stores
Figure 53: How often people visit department stores
RETAIL COMPETITOR ANALYSIS
Share of the market
Leading retailers
Figure 54: UK: Leading department store retailers, 2005/06
Market shares
Figure 55: UK: Leading department stores: market shares, 2005
 EVALUATION
Figure 56: UK: Department store retailers, evaluation, 2006/07
RETAIL ADVERTISING AND PROMOTION
 UK ADVERTISING EXPENDITURE
Total spending
Figure 57: Main media advertising spend by department stores, 2002-06
Figure 58: Main media advertising spend as % of department store sector sales, 2002-06
Figure 59: Main media advertising spend by department store, grand total, 2002-06
Figure 60: Main media advertising spend by department stores, grand total, 2002-06
Split of spending by media
Figure 61: Main media advertising by department stores, by media used, 2005/06
Figure 62: Breakdown of total main media advertising expenditure by department stores, 2005/06
BRAND ELEMENTS
 BRAND ANALYSIS AND RECOMMENDATIONS
Debenhams – isn’t it unique anymore?
Figure 63: Words associated with Debenhams
Recommendations
House of Fraser – what does it stand for?
Figure 64: Words associated with House of Fraser
Recommendations
John Lewis – a safe pair of hands
Figure 65: Words associated with John Lewis
Recommendations
Marks & Spencer – trustworthy, ethical but what about the glamour?
Figure 66: Words associated with Marks & Spencer
Recommendations
Selfridges – young, trendy and fun
Figure 67: Words associated with Selfridges
Recommendations
 USAGE OF DEPARTMENT STORE BRANDS
Figure 68: Consumer usage of…..
 ATTITUDES TOWARDS DEPARTMENT STORE BRANDS
M&S shines out…
Figure 69: Consumer attitudes towards…
 BRAND SATISFACTION AND PERFORMANCE
Figure 70: Consumer rating of experience of…..
 BRAND COMMITMENT
Figure 71: Degree of customer commitment to
RETAILER PROFILES
BEALES
Figure 72: Beales: Sales as share of all mixed goods retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 73: Beales: Group financial performance, 2001-06
Store portfolio
Figure 74: Beales: Outlet data, 2001-06
Retail offering
Market positioning
Brands
Product offer
Pricing
e-commerce & home shopping
DEBENHAMS
Figure 75: Debenhams: Sales as share of mixed goods retailers and department store sales in UK, 2001/02-2005/06
Strategic evaluation
Background
Financial performance
Figure 76: Debenhams: Group financial performance, 2001/02-2005/06
Figure 77: Debenhams: Breakdown of capital expenditure, 2005/06
Store portfolio
Figure 78: Debenhams: UK and Republic of Ireland outlet data, 2001/02-2005/06
International franchises
Figure 79: Debenhams: International franchise outlet numbers, 2001/02-2005/06
Figure 80: International franchises as of August 2006
Retail offering
Market positioning
Brands
Figure 81: Debenhams’ product brand sales mix, 2005/06
Product offer
Figure 82: Debenhams: Product mix, 2006
Pricing
Operational issues
Advertising & marketing
e-commerce & home shopping
FENWICK
Figure 83: Fenwick : Sales as share of all non-food retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 84: Fenwick : Group financial performance, 2001-05
Store portfolio
Figure 85: Fenwick Ltd: Outlet data, 2001-05
Retail offering
Market positioning
Brands
Product offer
Pricing
e-commerce & home shopping
HARRODS LTD
Figure 86: Harrods Ltd: Sales as share of mixed goods retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 87: Harrods Ltd: Financial performance, 2001-05
Store portfolio
Figure 88: Harrods Ltd: Outlet data, 2001-05
Retail offering
Market positioning
Brands
Product offer
Pricing
e-commerce & home shopping
HARVEY NICHOLS GROUP LTD
Figure 89: Harvey Nichols Group Ltd: Sales as share of all mixed goods retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 90: Harvey Nichols Group Ltd: UK financial performance, 2001/02-2005/06
Store portfolio
Figure 91: Harvey Nichols Group Ltd: UK outlet data, 2001/02-2005/06
Figure 92: Harvey Nichols Group Ltd: Group outlet data, March 2006
Retail offering
Market positioning
Brands
Product offer
e-commerce & home shopping
HOUSE OF FRASER PLC
Figure 93: House of Fraser Plc: Sales as share of all mixed goods retailers in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 94: House of Fraser Plc: Group financial performance, 2001/02-2005/06
Store portfolio
Figure 95: House of Fraser Plc: Outlet data, 2001/02-2005/06
Retail offering
Market positioning
Figure 96: House of Fraser Plc: Market positioning, 2006
Brands
Private labels
Product offer
Pricing
Operational issues
Advertising & marketing
e-commerce & home shopping
JOHN LEWIS PLC
Figure 97: John Lewis Plc: Sales as share of all mixed goods retailers’ sales in UK, 2001-05
Strategic evaluation
Background
The partnership principle
Financial performance
Figure 98: John Lewis Partnership: Group financial performance, 2001/02-2005/06
Store portfolio
Figure 99: John Lewis Plc: Outlet data, 2001/02-2005/06
Recent developments
Figure 100: John Lewis: Department stores, locations 2005/06
Expansion programme
Figure 101: John Lewis: Planned new department stores, 2005/06
Store services
Retail offering
Market positioning
Figure 102: UK Department stores – market positioning, 2006
Brands
Product offer
Figure 103: John Lewis: Estimated product mix, 2005/06
Pricing
Operational issues
Advertising & marketing
Figure 104: Advertising spending in the UK, 2005/06
e-commerce & home shopping
MARKS & SPENCER
Figure 105: Marks & Spencer (UK): Sales as share of all non-food non-specialist retailers in UK, 2001-05
Strategic evaluation
Background
Figure 106: Marks & Spencer: Business targets 2004-08 and beyond
Financial performance
Figure 107: Marks & Spencer: Group financial performance, 2002-06
Figure 108: Marks & Spencer: Interim financial performance, September 2005-October 2006
Figure 109: M&S: UK sales and like-for-like growth, 2001/02-2005/06
Figure 110: M&S: UK retail sales by product category, 2003-06
Figure 111: M&S: UK retail sales by product category, 2003-06
Store portfolio
Figure 112: M&S: UK outlet data, 2002-06
Figure 113: Marks & Spencer: UK stores by type, 2004/05 and 2005/06
Retail offering
Market positioning
Brands
Figure 114: Marks & Spencer: Own brand portfolio, 2006
Product offer
Figure 115: Marks & Spencer: Product offer, 2006
Pricing
Figure 116: Marks & Spencer: Price architecture, 2005/06
Figure 117: M&S womenswear price architecture, 1998-2005
Operational issues
Advertising & marketing
Figure 118: Advertising spending in the UK, 2005/06
e-commerce & home shopping
SELFRIDGES LTD
Figure 119: Selfridges Ltd: Sales as share of mixed goods in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 120: Selfridges Ltd: Group financial performance, 2001/02-2005/06
Store portfolio
Figure 121: UK: Selfridges, store data, 2006
Figure 122: Selfridges Ltd: Outlet data, 2001/02-2005/06
Retail offering
Market positioning
Brands
Product offer
e-commerce & home shopping
TJ HUGHES
Figure 123: TJ Hughes: Sales as share of mixed goods retailers’ sales in UK, 2001-05
Strategic evaluation
Background
Financial performance
Figure 124: TJ Hughes Plc: Group financial performance, 2001-05
Store portfolio
Figure 125: TJ Hughes Plc: Outlet data, 2001-05
Retail offering
Market positioning
Brands
Product offer
Pricing
Advertising & marketing
e-commerce & home shopping