Department stores ‘risk extinction without radical rethink’

A new report from Forrester has warned that department stores risk being a thing of the past if they do not embrace the future.

The consultancy firm argued that while such retail outlets used to be showcases for brands, now brands can sell directly to consumers now and have less need for showcases that don’t materially enhance the customer’s experience.

Therefore, Forrester analyst and report author George Lawrie suggested that department stores must pivot from sales to service, focusing less on transactions and more on convenience, novelty and entertainment.

John Lewis recently reported underlying profits down by 45 per cent, while Debenhams agreed a £40 million financial lifeline with lenders.

Overall, department stores were the only retailers to show a decrease in both the quantity bought and the amount spent last month - at negative 0.6 per cent for both measures - according to the Office for National Statistics.

The report noted some examples of department stores trying to diversify and drive footfall, including Debenhams’ partnerships with food outlets Nando’s and Crussh, and with collection service Doddle. Meanwhile, John Lewis opened its first click-and-commute store in 2014 to cater to the 48 million annual commuters passing through London’s St. Pancras station.

“Yet many department stores’ digital professionals have much more to learn from speciality store competitors, which think experience-first,” read the report.

To really meet expectations, investment in personalisation across various touchpoints is key, stated Forrester, as customers expect a department store’s systems and associates to recognise them across channels and locations. “Department store technology leaders must invest in an engagement platform to aggregate services and rich media to deliver compelling mobile moments,” it added.

To provide this differentiating, personalised service, digital business professionals must invest in automating routine tasks to release store associates from manual processes, so they can instead provide customer-facing advice and consultative selling, the report explained.

“Department stores need an infrastructure – think bulletproof, secure Wi-Fi that keeps customers and associates connected to their apps and data,” wrote Lawrie. “Infrastructure must also include on-demand network storage and processing capacity to cope with both the frenzy of Black Friday and a low appetite for the burden of fixed infrastructure cost.”

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