The future of the department store

store. A department store was an emporium that carried everything for everybody, agrees Michael Lisicky, a department store historian: “It really was the social centre of the city.” People went to those stores not only to buy but basically to spend time, to socialise and to browse. Today, department stores have lost some of their lustre, along with a significant share of total retail sales. According to Michael Brown, a partner at global consulting firm A.T. Kearney, the department-store sector has been affected by a number of retail trends over the last 35 years, forcing the majority of them to close for good. The trends include the launching of monobrand stores and specialty retailers, such as Zara, Sephora and H&M, designer brands moving out of the department stores and opening up their own stores and, finally, the rise of online shopping. Consequently, according to some industry leaders, the traditional, everything-under-one-roof, multi-storeyed department store is increasingly looking like a worn-out concept. As George Jones, the chief executive of Saks department store puts it, “The model is so illogical. The model is messed up. There’s a real win out there for a company that can break out of that mould.” Hence, a number of the world’s leading luxury players today are reasserting their position in a fast-evolving consumer landscape, with a range of new strategies aimed at reinventing the department store. Are you being served? Nordstrom, the high-end department store established in 1901, is outperforming every other retail company in North America, with over 300 stores and counting. Robin Lewis, co-author of The New Rules of Retail, claims that Nordstrom’s long-term success could be largely contributed to their top-notch customer focus; their marketing strategy actually uses customer experience design as a key difference-maker. As Nordstrom CEO, Jamie Nordstrom, points out, “Customers will buy more when they’re happy.” In the stores, you’ll find a piano player, a concierge at the front door ready to help with making dinner reservations and an in-store cocktail and wine bar, plus Nordstrom is very choosy about hiring “nice, capable people”, according to Forbes. There’s even a book dedicated to distilling their unique formula, titled The Nordstrom Way to Customer Service Excellence, along with several articles in top-tier business publications trying to do the same. True to their legendary in-store customer service reputation, Nordstrom came up with some clever strategies to provide the same level of personalisation online, by engaging with popular social apps, like Pinterest and Instagram. Items popular on Pinterest are tagged with a red tag bearing the Pinterest logo and prominently displayed in the store, linking their online and offline worlds. Nordstrom also allows Instagram users to instantly make purchases when they see an item they like on their feeds. Thus Nordstrom employees, famous for providing customer service, are now armed with information not only about what a customer has bought in the past, but what they like, and even what they shopped for but could not find. Nordstrom is determined to be the world’s top omni-channel retailer, and it is focused on providing a great shopping experience, no matter how a customer shops with it. As Pete Nordstrom, executive vice president puts it: “We strongly believe that customers don’t value channels, they value experiences.” Among their initiatives is Pop-In@Nordstrom, a series of themed monthly shop-in-shops run online and at selected Nordstrom locations at the same time. Each shop lasts four to five weeks and features items curated to a theme by Olivia Kim, the Director of Creative Projects for Nordstrom. The latest pop-in is called ‘New Classics’, featuring favourite versions of iconic life essentials, from perfect sweaters to exclusively designed blankets. Pop-In@Nordstrom is bringing new designers to a new audience while bringing buzz – which Kim calls a “retail frenzy” – to Nordstrom’s stores by being stimulating or even jarring. Recently, Nordstrom teamed up with leading eyewear brand Warby Parker to launch a literary-themed pop shop featuring exclusive, new Warby Parker frames. Then there was a ‘Heartbreakers Club’ Pop-In, featuring exclusive products from VFiles, Hood by Air and Pendleton. ‘Heartbreakers Club’ was also the first retail outlet sale of rapper Drake’s collaborative line OVO (October’s Very Own). “I like that grass-roots approach,” Kim says. “It should look scrappy – very scrappy. It should be guerrilla-style.” Another novel offering is the design-your-own shoes kiosk, powered by e-tailer Shoes of Prey. The Shoes of Prey design studios, located within Nordstrom, serve as ‘a shoe-lover’s beacon in the store’, with each featuring a towering flower sculpture made out of shoes, and a shoe wall that demonstrates their diverse styles and options, with over 70 trillion combinations said to be possible. The stores have mounted touchscreen tablets where customers can use 3-D design to create their own shoes, by choosing their preferred colour, material and heel height. The customers are given a choice and the ability to explore their creative side, which makes them feel good, explains Scott Meden, General Manager of the Nordstrom shoe division, adding, “we know there is something special about finding just the right pair of shoes”. The show must go on Over in Europe, legendary British department store Selfridges has been voted 2014 Luxury Retailer of the Year by Luxury Daily, for its use of entertainment to make itself a shopping destination. Selfridges won for its creative, multichannel campaigns to elevate their in-store customer service and make shopping enjoyable and fun for their consumers, getting them talking online. As Selfridges’ deputy chairman, Alannah Weston, explains it, “I like to think we’re in the entertainment business as much as the retail business.” The store keeps up a continual stream of inventive in-store events, from a walking chocolate tour through its confectionery department to a new cinema playing both new and classic films. For instance, last year Selfridges launched ‘Destination Christmas’ in-store, which included a Paddington Bear-themed pop-up, wintry restaurant and live entertainment. Getting consumers involved outside of the store, Selfridges created a mobile game that allowed them to play as a sales associate. Selfridges is renowned for extraordinary visual displays and the transformation of retail into a theatrical production, often creating a sort of ‘retail theatre’, such as The Louis Vuitton Townhouse that opened a couple of years ago in their London store. The staggering 930m2 ‘store within a store’ spreads over three interconnecting floors linked by the world’s first fully revolving, circular glass elevator. Wrapped with undulating spirals in the shape of a giant double helix, the state-of-the-art circular elevator gently revolves between the floors to display ‘floating’ handbags, allowing the customers to travel up and down the collections. The elevator, designed by French Japan-based designer Gwenaël Nicolas, is expected to serve as a star attraction for Selfridges customers. “I loved the notion of travel, the sense of a journey,” explains Weston, also creative director at Selfridges. “I wanted this store to be a one-off, something that people would travel to see.” LV Townhouse design touches include mirrors embedded with porcelain flowers and butterflies, decadent fitting rooms and a digital atelier which allows customers to experience the history and craftsmanship of the brand via table-mounted touchscreens. Customers are then invited to create bespoke bags and luggage using touchscreen technology, and make wishlists that are automatically transferred to the shop assistants’ iPads. There is also a personal monogramming service. “The Townhouse is designed to surpass the expectation of the Selfridges client by offering a completely new interactive in-store experience,” said Tom Meggle, managing director of Louis Vuitton UK. Besides being a showcase of incredible art and technology, the name ‘Townhouse’ is a strategic move in itself. As per a recent article in Stylus, tailoring the store environment to a specific demographic, lifestyle interest or locality is an increasingly smart way to engage clued-up, time-pressed consumers for whom homogenous retail formats are no longer enough. Hence, the store has dropped the ‘maison’ title traditionally attached to its flagships, redubbing it the Louis Vuitton Townhouse. While Louis Vuitton is a global brand, “the Townhouse at Selfridges has been created with Londoners in mind,” explained Selfridges managing director Anne Pitcher. Selfridges has made a number of investments in showing its commitment to bring a heightened sense of customer service and these investments have paid off. Last year, Selfridges has been named the best department store in the world for an unprecedented third consecutive time by The Intercontinental Group of Department Stores – the world’s largest association for department stores. Multi-sensory department store of tomorrow During this year’s London Design Festival, British designer Tom Dixon has partnered with Selfridges to open Multiplex, an immersive, multi-sensory, temporary department store at the old Selfridges Hotel, behind the iconic Oxford Street flagship. Describing itself as the ‘Department Store of the Future,’ its aim is to explore “how future might look, sound, smell, taste and feel.” The Multiplex brings together fashion, fragrance, technology, furniture, accessories, beauty and food from over 30 international brands and designers. The site also hosts an eclectic range of events, installations, pop-ups and interventions. There is a live Pinterest feed, featuring MULTIPLEX pins, to encourage consumers to spread the word after they have visited. The 1860m2 space, inspired by Andy Warhol’s infamous New York studio called ‘The Factory’, with its concrete interiors draped in folded silver-foil hangings, looks quite novel and futuristic. Suitably, all collections on display are innovative and eclectic, ranging from black bread to intravenous vitamins on offer. You can buy Haeckel’s all-natural, Margate-made fragrances or order a customised design from Obataimu and then watch it being made on-screen in the Mumbai production studio. The Cubitts eyewear area allows you to try before you buy with their digital eyewear changing room, and they can also hand-make charcoal and concrete frames in-store for customers. The specially assigned technology space is filled with speakers and screens to use for events and screenings, but it’s mainly used by small tech business to demonstrate their products. Idea-to-product platform Mindblower are also on hand to offer business advice for start-ups. There is a pop-up photo studio hosting shoots throughout the day. You can grab a drink from the nearby bar and watch the action live on set, or you can set up your own office, courtesy of Macs provided by Apple. Finally, rather than the standard food stalls, Multiplex offers you the chance to dine in with a takeaway from a local restaurant delivered by Deliveroo and, of course, you can shop while you wait. Whether Multiplex is simply a creative or a genuine display of retail’s future direction remains to be seen. Though some may be sceptical, Dixon describes the installation as an attempt to reclaim the world of retail from the ever-growing threat of online stores. The whole store has been carefully focused on re-engaging the consumer with the multi-sensory and multi-faceted lived experience of a brand’s products, often embracing experiences that can’t be replicated online. The Multiplex might seem like a new kind of retail space, where powerful experiences, bespoke services and unique products come together, but these are the same basic principles of the first department stores, just adapted to changing consumer habits. Thus, as it becomes easier for brands to directly communicate with consumers, both through the web and also through brand stores, it’s time to radically rethink how physical department stores can become relevant again and only those willing to recognise the need to adapt and transform in order to maintain their relevance will continue to thrive. SCN