Are department stores becoming the dinosaur of retail or can good design, creative merchandizing and innovative experiences resurrect a dying breed?
As traditional retail giants like Macy’s close their doors in record numbers and online shopping continues to take a bite out of brick and mortar retail, one might think that physical store locations are on their way to becoming the dinosaur of retail. Despite a sluggish retail sector, RetailNext reports that about 94% of total retail sales are still generated in brick and mortar stores. Once the titan of retail, department stores represent two sides of a coin: ones that modernize through innovation and design and others that will close their doors. According to the Business of Fashion’s article Reinventing The Department Store, sales in department store as a percentage of total retail spending dropped from 10% during the mid-1980s to only 2.4% by 2011. The writing is on the changing room wall.
Once the titan of retail, department stores represent two sides of a coin: ones that modernize through innovation and design and others that will close their doors.
Once anchors attracting shoppers from all over, department stores today are facing unprecedented competition from every corner. It’s more than a shift online or the decline in large indoor malls that are impacting department stores. “The department store sector has been affected by a number of retail trends over the last 35 years, which includes the launching of specialty stores, a lot of these brands moving out of the department stores or opening up their own stores,” according to Michael Brown, a partner at global consulting firm A.T. Kearney. So while consumers migrated toward specialized retail, department stores stagnated, with nothing particularly special or new to offer shoppers.
The Evolution of Retail
“At the beginning, department stores were monsters, anchoring the city centre, with an enormous collection of product coming from all over the world,” according to Vittorio Radice, former head of London’s Selfridges and now chief executive of La Rinascente Italian department store, in the Business of Fashion’s article Reinventing The Department Store. “They were the souk of the 19th century. You went to those stores not only to buy but basically to spend time, to browse. It was the flâneur going in and spending time admiring beautiful goods that they had heard about.” But what was once a stunning shopping destination for consumers has now become merely a landlord for other brands – a mall within mall – selling uninspired, mass produced goods.
As consumer shopping habits evolve, all brick-and-mortar retailers have to learn that experiences are what lure shoppers through the doors and drive them to return. In the brick-and-mortar category, however, it is department stores that seem to be most challenged by this consumer ask. Across the department store landscape, common strategies include deploying seamless omni-channel commerce, enhanced customer service and specialized merchandise selection, but these are commonplace efforts across all retail settings. The endeavors that seem to be primed for success are ones that focus on stimulating design elements and wholesale reimagining the shopping experience.
Big City Makeovers
Saks Fifth Avenue got the memo. The iconic luxury store is opening a new store, only the second New York City location in its 114-year history. The new retail store allows the luxe retailer to apply fresh thinking to reimagine the department store concept. According to President Marc Metrick, the store will use gallery-style displays in a monthly “installation” featuring one designer. On the service side, “the ‘Power Lunch’ offering, will give customers a style consultation, a quick beauty treatment and a bite to eat within 60 minutes,” according to Fortune. Saks’ new approach bucks the trend that has commoditized luxe into a series of identical stores that mirror each other in both display and merchandising.
Another Saks’ approach is the remodeling of their Galleria Houston store. According to Houstonian Magazine, “[T]he renderings present a store infused with rich, non-retail finishes, including a spiral staircase to the second floor and a clean color palette in shades of white, from whitewashed woods to marble. But the biggest change is not the fixtures; it’s the layout, which radically rethinks what a department store should look like. Instead of big, open spaces, Saks is rolling out individual boutiques inside the store for its most prestigious brand partners.” The result in women’s apparel is 22 designer-driven shops within the store to create an intimate, curated experience for shoppers.
Macy’s is another company re-envisioning retail with its test store in Columbus, Ohio, transforming not only the look and feel, but the customer experience, as well. “Services have become just as important as the product,” says Andrea Schwartz, VP of media relations and cause marketing in Columbus Business First. The Connect @Macy’s service features easy parking access for online shoppers and the My Stylist @Macy’s, a personal shopping service, provides a stylist who assembles a collection prior to a customer’s arrival at the store. My Stylist @Macy’s also increases the number of available stylists, including one who specializes in wedding styles for brides and grooms. Another service enhancement is the shop-in-a-shop concept for Bluemercury, which features beauty products along with signature spa services.
With the Herald Square location in Manhattan, Macy’s is driving a Millennialized version of the shopping experience, fusing appealing design elements with a retooled merchandizing approach. In Bloomberg’s article This Is Macy’s Idea of a Millennial Wonderland, author Kim Bhasin says, “Instead of being segmented by types of merchandise, such as the store’s shoe floor or home goods section, the new area mixes all kinds of products for the 13- to 22-year old. It’s essentially its own 53,000-square-foot store filled with technology, apparel, accessories, cosmetics, food, and a constant electro soundtrack of house music.” Striking design elements merge with creative merchandizing and customization to create a playful, fun experience that leaves shoppers wanting to linger a little longer.
Seattle-based Nordstrom is also betting on a store-within-a-store concept with its Pop-In installations, a selective shop with thematic elements and a coordinating online micro-site that are changed out every four to eight weeks. With a focus on new, fresh merchandise and different up-and-coming featured designers every month or two, the store wants it to feel like Pop-In is an escape to an exotic locale where every detail is thought out. In the Business of Fashion article What’s Next for the American Department Store, Olivia Kim, vice president of creative projects at Nordstrom, says, “We don’t want it to feel temporary. With every change, we want the customer to walk in feeling like they’re somewhere different.”
What’s In Store
One of the advantages that department stores have over other retail brands is their long, storied history. While that reputation could result in safe choices and stale experiences, brands that embrace their status as cultural icons while amping the experience for shoppers, enables these stores to show they’re here to stay. Many shoppers have built their family traditions around these cultural icons, including memories of trips built entirely around the shopping experiences in anchor stores in New York and other big cities across the globe. While embracing its role as a cultural icon, these influential department stores are elevating the in-store experience with interactive, customizable elements and deploying creative and bold visual merchandizing to enhance the sensory experience.
In our next retail design post just in time for Black Friday, we’ll address revolutionary retail in the department store landscape. The innovators that take thinking outside of the box quite literally and redefine everything about the department store experience to create a new category of consumer experience.