The demise of department stores

 

departmentstoreThe French claim to have opened the first department store but the British claim it was them.

They can never agree on anything!

They appeared first in the late 1700s and early 1800s in an era when the motor car was non-existent (the birth of the first car was in 1886).

The debate has raged for years – is the department store like a product with a life cycle – introduction, growth, maturity, and decline? And if it is, what stage in the cycle are we seeing now?

According to Wikipedia, this is the list of Australian department stores that are deceased:

  • Anthony Hordern & Sons
  • Ball & Welch
  • Boans
  • Bright and Hitchcocks
  • Buckley & Nunn
  • Charles Davis Limited
  • FitzGerald’s Department Stores
  • Foy & Gibson
  • Georges (store)
  • H. A. and W. Goode
  • Gowings
  • Grace Bros.
  • J. B. Young Ltd
  • John Martin & Co.
  • Marcus Clark & Co.
  • Mark Foy’s
  • Charles Moore and Co.
  • Tom the Cheap
  • Venture
  • Waltons

This long list would suggest that the department store is in decline and has been for the past 50 years.

Gone are the days in the 1920s and 1930s when department stores doubled in number.

In those days there was personal service and a touch of magic. Nowadays, it is sometimes difficult to find any kind of service, let alone personal service.

The struggle for survival is never more evident than on our doorstep which begs the question – can Myer and David Jones co-exist? Or does one have to go and if so, which one?

Are they on their last legs and should we be bracing ourselves to grieve over the demise of one of them?

In a highly competitive environment, the word ‘department’ lies at the heart of the challenge.

A department store strives to have every imaginable department under one roof.  After all, that is the definition.

The founder of London’s first department store was William Whiteley, who opened the Bayswater, later known as the Universal Provider store in 1863.

Whiteley’s slogan was “Anything from a pin to an elephant” and it wasn’t just an empty boast – as he did actually sell one of the creatures to a clergyman.

The real golden age came in the Edwardian era.

In 1909, Harry Gordon Selfridge opened his famous emporium on Oxford St.

“I am prepared to sell anything, from an aeroplane to a cigar,” he said.

But can department stores compete in selling aeroplanes and elephants?

Can Myer or DJ’s compete with JB Hi-Fi and Harvey Norman in electronics?  Should they even try?

The flip side is to cherry pick which departments to have, but then the department store concept is under threat.

Department stores will never disappear completely. It’s similar to Armageddon. Something must survive – maybe only a cockroach!

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 0414 631 702

 

Comments

5 comments

  1. Darrell Wisbey posted on October 3, 2014

    Spot on Stuart. For as long as I can remember, (many decades), the debate over Department Store survival has been raging. As a youngster my parents would once a month give my sister and I the choice for a family outing and we could select between the beach, the park, visiting relatives or go to Myer Department Store. Without hesitation we would chorus "Myer Department Store". I still hold memories of those visits and whilst they may have eventuated in spending adventures for my parents, for my sister and I they were filled with excitement, smiles and fantasy. Here are some observations: 1. The capital city Department Store icon lost its' unique status as the suburban shopping center with a Department Store anchor tenant gained momentum offering location convenience and free parking. This reinforces shopping and diminishes pleasure! 2. New retail formats invaded the Department Store playing arena - Mass Merchandising Department Stores arrived in the mid 60's with self-serve presentation and lower prices. Because of increased shopper choice the Department Stores suffered sales decline. NOTE: overtime some of the new M.M.D.S. formats failed and disappeared suggesting there is more to this than just having a new retail format. 3. The never ending arrival of new retail options in formats and options within format,(local and international), all of which have a diluting impact on Department Store market-share. Can you ever remember a time in the Australian retail history when there has been more retail players, more retail formats and more retail options ... I cannot! How many slices can you get from the one apple pie? 4. The Department Store blunder to "throw out" those unique, exciting and entertaining reasons to visit the store. The accountants and non retail members of the executive would justify the shopping experience based only on direct sales and profit from the product with all else being non cost justified and this despite the continual loss of market success. 5. Today of course we have the impact of shopping technology giving another dimension to shopper options. On-line and and in-hand shopping is here to stay and so the wheel of retail evolution continues to turn bringing with it another impact on the Department Store. Around the world there are Department Stores who have survived and will continue to survive the impacts of retail change. This appears possible if the Department Store delivers the unique experience, offers service excellence supported with phenomenal product knowledge, P.O.S efficiency and today embraces technology to excite, entertain, educate and add efficiency to the shopping experience. Department Stores can survive in Australia. The question is can their management come to grips with the retail truth? Do they really understand what motivates the customer and can they give rather than just expect to take?

  2. martin butler posted on October 3, 2014

    Interesting piece Stuart...thx. Think the world is dancing on a pin head. Never let a category name define your business. A department store is simply a retailer with varying numbers of departments....correction varying numbers of departments relevant to the audience it is trying to appeal to. Looking through the correct end of the telescope future success is all about customer relevance. So to me, as a customer, Amazon & Alibaba are as much department stores as Selfridges (voted worlds best) and John Lewis (possibly the most trusted retail brand in the world)...all four, in differing ways, have always put the customer at the heart of their very 'being' and all four are phenomenally successful.....all four are burgeoning businesses and all four know they are in the business of being chosen, know precisely why they exist, and relentlessly build their businesses around their customers in a highly emotional, highly differentiated and forensically smart manner. If you fall short on any one of these evolving customer needs you'll end up like a dinosaur....big and extinct! Now what's the question....martin-butler

  3. Ken Mullins posted on October 4, 2014

    Re-invention of sub-regional and super regional Department Stores is the key here. The CBD Department Store enjoys critical mass which allows a full line offer and a customer spoilt for choice off the back of high volume. Perfect Cemistry. In suburban centres however, the DS continues to try and be everything to everyone. Distill the offer to the essential ingredients. Provide variety and a full range of sizes and leave the wedding presents, strandbags and JB Hi Fi to the others. Do fashion well, expand it to cosmetics fragrance and even a spa. Include a boutique DJ's food hall concept for the sensory experience and through in valet parking for the V.IP customers. This demographic will then gravitate back more often than not and we may see some balance of increasing turnover and good old fashioned customer service because all parties feel valued.

  4. Kristian Mahony posted on October 4, 2014

    I would say Stuart that the business model department stores are built on is redundant. So the question isn't whether David Jones will make way for Myer of vice versa, it's whether either of them can survive? My call is not unless they pivot their strategy. Mini Majors like JB and Harveys will face similar challenges in time to come unless they can 'lift' their total in store experience to be something more than just a good price, as price propositioning doesn't stack up anymore... Good article, well done.

  5. Stuart Bennie posted on October 5, 2014

    Dear Darrell, Martin and Kristian, Wow !!! Many thanks for your responses and support. Having spent almost 20 years in Department stores I find it all a little sad. One of my favourite TV series ??? Of course "Are you being served". Kind regards. Stuart

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