Are UK department stores set to meet their doom in the near future? Evidence is certainly building to suggest a bleak time for them as more closures have begun to add up over recent months.
The UK alone has seen the likes of Debenhams and British Home Stores shutting all of their locations permanently over the past five years, with many other department outlets being forced to employ huge changes just to avoid insolvency. What can be done to save the last of the British department shop businesses? The answer is very complicated and difficult to narrow down at this moment in time.
Looking at the current state of the department store may lead you to believe that there is no hope for them to deliver any sort of revival in the future. Although, that may not be the case just yet. While things obviously do not look too great for them right now, there are certain things that can be done, such as connecting with a new audience, that may help to save them. We will touch on all this a little bit more later on.
The news is no better stateside
Reports from America have shown that this isn’t a problem unique to the United Kingdom, but rather a shift that is happening on a global scale. The New York Times have reported, “American department stores, once all-powerful shopping meccas that anchored malls and Main Streets across the country, have been dealt blow after blow in the past decade. J.C. Penney and Sears were upended by hedge funds. Macy’s has been closing stores and cutting corporate staff. Barneys New York filed for bankruptcy last year”.
If there is any good news within this information, it is that it isn’t only the UK who are suffering these detrimental effects of an ever-changing high street.
Online shopping has forced change
Since online shopping has become the new normal in many ways (long before the pandemic), many retailers have failed to come to terms with it and take full advantage of it. This includes department stores, especially the ones that have been really struggling in recent years.
You see, online sales rose by 52.7% year-on-year in August 2020, compared to an 11.6% rise in the same month of 2019. Evidence is that that the exponential growth in ecommerce seen in previous months has now shown the rise of online shopping has begun to slow. This is of course largely down to the pandemic, but you can see how it was taking off long before then too.
What can department stores do to turn things around?
To both survive and thrive, department shops are going to have to engage with a new, younger audience. This is something the vast majority of them have failed to do over the last few years. If our remaining department companies can reach an emotional connection with a new generation of consumers, they will be able to grow into a new market, and therefore get a second try at life as a business venture.
The future of department stores will come down to how successfully they respond to changes in the market, engage with a new generation of customers, and ultimately build lasting relationships with consumers both in person and in the online world. Think about a heightened use of social media channels for example.
The department store format has obviously worked in the past and could work again in the future. The success of Selfridges, Harvey Nichols and Fenwick are living proof of exactly that. For other brands such as John Lewis, shutting down a number of premises may award them with dividends, but if they are to succeed in the long-term, they need to engage their newly identified target audience.
In-store these businesses can attempt to create value and differentiate themselves from other retailers. However, they will also need to connect locally with consumers, as well as developing online relationships with a younger audience than they have ever targeted before. The key to long-term success here will be creating meaningful propositions that line up with the values held by consumers.
Physical store struggles
Nevertheless, the struggles of department shops continue. For this reason, the Government has extended its ban on evictions of retail tenants by landlords. This provides some comfort to the sector, which has warned the end of the ban could lead to a surge in store closures and job losses. The concession is part of a rebalancing of power in this space.
Landlords have historically seen near-continuous growth in rents. Whilst retailers are keen to build market share by expanding their physical footprints, the growth of ecommerce has changed that dynamic. Turnover-based agreements have become increasingly common.
As retail looks to the future, the sector is reflecting on three trends that have emerged amid the pandemic:
- channel shift – a move to online retail, but also towards more localised shopping and to a preference for open-air retail venues, such as retail parks
- spending transfers – consumers are spending less on restaurants, travel and holidays, and commuting. Saving is increasing, as is spending on groceries
- lifestyle changes – with people working from home and spending more of their leisure time there too, they’re more likely to be cooking from scratch and engaging in home improvement activities.
Current UK online shopping trends you should know about
Online shopping within the UK is set to rise by a whopping 30% over the next four years, which proves our ever-growing love for buying products via the internet is only progressing. Regardless of what kind of business you run, whether it’s a record shop or a fashion retailer, having a website is clearly a sure fire way to increase the size of your custom.
When it comes to striking at the right time, if you make sure you have a website set up and ready to go for Christmas time, you’re sure to reap the benefits, as 55% of all holiday transactions take place online.
Need cash to expand online? No problem
Business funding can be great for all types of business, especially those that want to move into the online space. With that being said, if you have an idea of how you’d like to use the cash and want to know more about how you can apply for this type of e-commerce funding, get in touch with PDQ Funding today.
You’ll speak to an expert member of our team and you’ll be informed of all the details within this funding option. If you’d like to discuss anything further, or even get any advice on how you’ll use your funds, you can choose to do that, and we’ll help you to the best of our abilities.