US department stores launch counter-attack

By Lauren Foster
As consumers demand better value and a more interesting and stimulating experience while shopping, department stores face a clear choice: adapt or die.

`My concern is that they will become retail museums` says Britt Breemer, chairman of America`s Research Group. `The bottom line is that they have to admit they are in trouble and figure out some way to reinvent themselves`.

This may help to explain why four times as many households visit discount stores as department stores.

Department stores face mounting competition from speciality retailers and discounters, such as Wal-Mart and Target. Their steady loss of market share may be partly because the concept was born in a different era,a time when, for families, a trip to the stores combined shopping with entertainment.

What is needed, say retail experts,is a new approach. A typical example of this approach working is seen at Selfridges. This UK group has recast itself from a `sleepy 1970s-style department store` into a retailing experience fit for the 21st century, says Wendy Liebmann, President of WSL Strategic Retail.

One of the main changes is that more floor space is rented to vendors, in what is sometimes referred to as the showcase business model: vendors design their own booths and are encouraged to be creative.

The Selfridges model, says Peter Williams, CEO of Selfridges, is about creating an experience that is `new interesting and different` where it is not just the product that is different. He says the problem with US department stores is that they all look the same.

Arnold Aronson, a management consultant, believes Selfridges could be a prototype for failing US department stores: `It has brought back excitement and novelty and is really seducing customers by developing the right merchandise, in the right quantities at the right time`.

Federated, which owns Macy`s and Bloomingdale`s, appears to be moving in the right direction. Forty-two stores are being upgraded with the latest components of its `reinvent` strategy, including enhanced fitting rooms, convenient price-check devices, comfortable lounge areas, computer kiosks and shopping carts.

The challenge department stores face is how to develop in a sector that is, essentially, not growing. But if they adapt, many industry observers believe they will survive. `The department store is not dead, it will live on`, said Robert Tamilia, Professor of Marketing at the University of Quebec. `But it will not be the same animal it was before.`

From The Financial Times

4Match these people to their views.

· Britt Breemer

· Arnold Aronson

· Wendy Leibmann

· Peter Williams

· Robert Tamilia

Deparment stores need to recognise their problems and have to change

Selfridges has changed into an up-to-date store

American department stores are not different enough from each other

Selfridge`s new approach works

This is not the end of department stores but in the future they will be different

 

 

5What changes have taken place at:
1) Selfridges?
2) Macy`s?
3) Bloomingdale`s?