Well-known Department Stores Fight Back Online Competitors


Previously, locals and foreign tourists to London and New York would head to Harrods, Barneys, Bloomingdale’s when they were in town. Lately, lesser number of tourists is shopping at these grand department stores as they have been buying luxury handbags and cloths online.

A Neiman Marcus’s Department Store

The grand department stores are fighting back with an array of initiatives to draw customers in and engage them longer, according to an article in Financial Times, How to Spent  It, published on October 7th, 2017.

They have been troubling times for department stores in London and Manhattan, New York, where competition from internet shopping is merely one of the challenges facing the grand old department stores. In their heyday they and their global counterparts encapsulated the spirit of their age, but that age is no more. What is left are vats edifices, which if they are to survive, have to reinvent themselves for the new times we are lining in and keep on their toes as their customers’ tastes and habits continue to evolve.

As Trevor Hardy, CEO of trend-forecasting agency The Future Laboratory, puts it, “ The department-store concept was invented for an era when consumption was inspired to-in had cultural currency. Today, the mere act of consumption is not much aspired to; the new breed of entrepreneurs notably spends very differently for the way earlier wealthy individuals used to spend, but that does not mean there is not still a lot of spending going on.”

If the reason of a department store is to sell, then it must sell those things that today’s consumers want to buy. It must also re-imagine the way it uses its space.

Mortimer Singer, president and CEO of business development and strategic consultancy firm, Marvin Traub Associates, identifies several “headwinds” that the US stores are struggling with.  Firstly, there is what he calls the “new Davids”-lesser-known brands , well over 200 of them, that were born online and in many cases may only be doing about US$10 of business a year each, but collectively “are taking some US$4.2 billion out of the more established retail sector”.

Then there is the clothing and accessories rental business, which he says is booming in New York. This new business has saved consumers a lot of money a year.

Thirdly, what Singer calls the “aftermarket” is also affecting the department stores, with more and more women buying second-hand or “pre-loved” clothing and accessories from luxury websites such as Therearreal.com. Finally, Singer points to the mega-growth of the health and wellness industry, which is also taking huge sums of money that might in the past have been spent in traditional department stores.

In addition, to all that there is Amazon, which is expected to overtake Bloomingdale’s owner Macy’s this year as the seller of what in the US is known as “apparel”. Many grand department stores in New York are using new technology as one way to tackle the “headwinds”. Neiman Marcus, for instance, added features to its app that mean a friend could paragraph a pair of shoes and ask Neiman Marcus whether it stocks them or a similar design. On top of that, its stores now have “Memory Mirrors”, which offer customers 360 degree views of exactly how they look in the chosen garment.

Re-imagining Department Stores

Several department stores are beginning to offer food, while there is a recognition that their stores  had not kept pace will all technology has to offer. Seamless omni-channel service is now mandatory.

Marigay McKee, former chef merchant at Harrods and former president of Saks Fifth  Avenue, who now runs strategic business development company, MM Luxe Consulting, believes, “We have to bring the love and the humanity back into the experience of shopping. Stores need to concentrate on what I call ‘the three Es” – emotion, environment and experience-if they are to appeal to today’s customers.”

This means doing things like ringing up customers when an item comes in that the assistant feels the customer would like, letting people buy a dress in Chicago and change it in New York, or allowing them to buy online and return to a store ( or vice versa).

Hardy, of The Future Laboratory, identifies one of the key problems for modern-day department stored as the dramatic decline in the time customers spend in stores. “Managers need to work out how to get shoppers to stay longer, “ he says. “ They need to bring popular culture back into stores.”

One area with significant growth potential is wellness, health and beauty, and what Hardy call “self- transformation”.    Saks Fifth Avenue offers skiing lessons. There are also boot-camp-style exercise classes and therapy treatments, from the natural to the high tech. Customers can also buy a Peleton exercise bicycle and follow spinning classes from home on a screen attached to the handle bars.

In London, department store, Harvey Nichols, is enticing customers into its stores and keeping them longer. It has invested a great deal in beauty and wellness, opening a new beauty lounge. As well as offering treatments such as LED facial, cryotherapy and vitamin and nutrient injections, the beauty lounge offer make-up masterclasses. It also makes a [pint of always having something exceptional to offer connected with these events.

A Harvey Nichols’s Department Store in London

The Future

Meanwhile a buying director of Liberty, which struggled for many years but is now trading profitability believes firmly  that department stores are here to stay, but says they have to offer a compelling reason for customers to visit. “I try to enhance all the things that you cannot get online-this means we offer advice and in-depth knowledge about our products. It is all about eccentricity and the story behind a product. “I also see us as neighbourhood store.”

McKee, with her experience of managing retailers on both UK and US, is a believer in the future of department stores, but says they need to remember that they “have to become the host or hostess, while the customer is the guest”.

What is indisputable is that no stores can expect to survive if, as The Future Laboratory’s Hardy puts it, “all they do is to try to sell us more stuff”.


Reference: Lucia van der Post, Retail of two cities, Financial Times, How to spend it, October 7 2017.