Those in the retail sector have recently noticed a shift in the way consumers shop, moving away from traditional Department Stores and instead focusing on smaller spaces. This is a growing trend around the world, causing House of Fraser to close 31 shops and Debenhams to shut many of its stores, as well. Yet this is just a sampling of those affected in the UK. While this is certainly a dramatic change in the way consumers used to shop, we do understand the shift, at least to some extent.

No Innovation

One of the major factors is the simple lack of innovation in most Department stores. While they make minor changes to displays and selection, they have not invested the time and money in upgrading product ranges, online offerings, and shop floors. Consumer standards have increased with the advent of online shopping and the availability of products from around the world. The internet has also reduced the usefulness of department stores’ ability to offer numerous products and brands in a single spot. Unfortunately for department stores, they have not found other ways to stand out from online retailers with this change.

The lack of innovation also applies to the actual products being sold in stores. Some of the department stores facing the biggest challenges have been unable to keep up with fashion trends or those in other segments. Simply put, they do not have the right stock on hand.

Excessive Discounting

Since people are growing less interested in shopping at department stores, these retailers have felt a need to offer discounts. While those can bring in more consumers, they also hurt profits, making it a somewhat complicated tactic. This is combined with the fact that retailers then compete to see who can offer the lowest price and attract consumers. During this competition, the profit margin slowly decreases, leaving retailers with less money to spend on making innovations.

Difficult Layouts

The layouts of department stores are also a deciding factor in consumers’ preference to avoid these retailers. With such large spaces and a vast range of products, it can be intimidating to navigate the stores. Instead of walking endlessly in search of a specific product, consumers would rather go to a smaller store where they can find the item quickly. The best way to make the layouts less confusing is to downsize, but this is easier said than done. Many retailers have extremely long leases that last several decades. In the meantime, the store has to stay in an aging space that may not even include a centralized escalator.

Sources:
https://www.bbc.com/news/business-44358704
https://www.theguardian.com/business/2018/jun/22/the-death-of-the-department-store-a-place-out-of-time

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