September 2020
Let us not mourn the demise of something without relevance.
The department store’s role in recent time has been as a key attractor for consumers to visit a place. Few large-scale shopping centres (an outdated term we have our views on that we will explore another time!) or significant extension has opened without one of ubiquitous brands acting as a beacon.
Covid 19 has many parts to play in accelerating the changes occurring to retail led locations but not the decline of department stores.
The reality is that most had forgotten their principal reason to justify their existence, knowing who their customer was and being relevant to them. They’d become mediocre and as the leading retail commentator Steve Dennis has stated ‘good enough no longer is’.
There are elements of the department store offer that can be stripped out wholesale, taking advantage of both consumer appetite for the product category and brands desire to reach that customer.
Harrods creation of the H Beauty to occupy space in Lakeside and Milton Keynes together with the more recent drive from Beauty Hall from Next acquiring space within stores previously occupied by Debenhams.
This demonstrates:
* Certain progressive occupiers can see the value of the physical environment to service a whole product category especially one which requires engagement and delivery of an experience. This can be leveraged throughout these occupier’s business to strengthen their connection consumer and grow this base.
* Demand from brands that held department store concessions to reach their customers in locations where a standalone store is not viable. Concessions drive loyalty and increase/ diversify spend beyond their ‘hero’ product lines.
How do we fulfil that requirement where it is not across a whole sector?
Outside of those destination centres the space left behind be a departing anchor is unlikely to be replaced by a single occupier but there should remain a desire to create a new anchor. A key attractor is necessary to create the interest for people to visit and do so with enthusiasm.
Getting engagement from the catchment is a local problem and requires a local solution. There are so many great examples of how these spaces can be broken up to if we adopt the ethos that stores aren’t (just) about selling product they’re about the acquisition of consumers we can think more broadly:
* Incubators for smaller occupiers – Neighborhood Goods with three locations in the US or the sponsorship of startups and makers and creators as Milligan are doing with Creative Trade
* Beauty Halls – via bigger players as mentioned above or independent
* Flexi spaces – Occupy by the hour for community, fitness, exhibition, wellbeing, retail, Sook are a provider shortly to open in Cambridge
* Foodhalls – smaller locally centred
* Collaborative workspace – hubs for new businesses and a location to ground home workers
* Urban self-storage – offering a solution to the inevitable problem of smaller residential units
* Cinemas/ theatres – mixed spaces for use across multiple platforms, not just films but sport, education, wellness
* Medical – providing convenience and reducing patient stress by providing a service in a familiar environment
Inspiring Spaces – ARhus in Roeselare, Belgium or Gronigen, Netherlands offer a blend library should be fostering knowledge, innovation and entrepreneurial spirit with an interactive museum like quality.
These solutions are not deliverable by a single commercial occupier on a traditional leasehold basis. This transition away from a rental to a management, operational model is a big but necessary step. It does not need to be taken alone, there are partners available to overcome and advise on the operational hurdles and requirements. Providing this flexible local space provides the opportunity to obtain valuable insights and data on consumers which can be acted on to tailor the experience and offer elsewhere to the catchment.
In a world where we explore alternative rental models it is incumbent on all of us to consider the roll and relevance of a brand or occupier’s resonance with the consumer we are trying to attract. Customer loyalty is based on creating a connection. The 'sticky' factor makes a place successful and successful places drive value for all stakeholders.