‘Fortnum & Mason opens second UK store in 307 years,’ was the title of the recent press release in my inbox. Opening two stores in your home market in the time it took the pilgrims to establish Plymouth and America to become what it is today seems a tad under-ambitious; but perhaps they were just trying to get it right. Nonetheless it got me thinking about whether the rich history and legacy of department stores still matters today.
Selfridges, Harrods, Le Bon Marché, Macy’s New York; visiting these stalwarts of the category, many housed in buildings designed when the consideration of grandeur was still part of inspiring product purchases, masks the diminishing reality of the segment: shrinking share of the consumer’s wallet and the inability to rely on economies of scale to be price competitive. So that leaves them in an operational pickle: after they’ve reduced their footprint, cut costs and, with it, service — what’s next?
Department stores once made retail interesting, and were, as Dr. Robert Tamilia at the University of Quebec put it, “marketing’s answer to the industrial revolution.” He’s not far off when you consider the impact they’ve had across many aspects of society and retail we take for granted today. Their sheer size changed building technology and architecture, and were precursors for skyscrapers and shopping malls; they democ- ratized consumption and furthered gender equality by providing jobs for women; they fueled the develop-ment of mass-production technologies; and hosted some of the world’s first radio broadcasts. This was the forum that introduced the very notion of customer service: gift-wrapping, restaurants, home delivery, even funeral services.
Harry Gordon Selfridge once said, “entertainment, customer service, and value for money: the first will get them in, while the second and third will keep them there.” How many department store executives still think this way? Not many, and it shows. In an interview with an HR executive at UK retailer House of Fraser it was explained that 20 years ago the gap between the floor staff and the customer was much narrower. That was a time when staff could relate more and better understand the products they were selling. Today, in many cases, salespeople can’t afford the products they sell and their attitudes towards a career in retail has changed, and I’d dare say the real attitude of many retail executives is that sales employees are expendable; they’re going to leave anyway so why bother investing?
Department stores used to stand for something. They used to dream big dreams and do big things. Macy’s introduced the department-store Santa in the 1860s that led to generations of children’s sentimental memories. When Harrods introduced the ‘moving staircase’ in 1898, they needed to provide cognac and smelling salts for those who found the experience too moving (sorry!).
Not Losing Sight of the Past
Well it seems this notion isn’t entirely dead, and if you’re seeking inspiration, look no further than the modern owner of Selfridges. To quote Alannah Weston, scion of the Weston family that owns it and the store’s Creative Director, “It takes confidence to think of the store as a dwelling space and not a shed full of product that people are forced through. To thrive, stores need to be much more than simply a space to buy stuff. They need to tap customers at a deeper level — the level of ideas and dreams.”
I can’t recall a memorable online purchase experience, but I’ll never forget the first time I visited Alannah’s store. Selfridges is located in London’s retail heart on Oxford Street. Opened in 1909 by American Harry Gordon Selfridge, it attracted 90,000 people its first day. I was there one morning before the store opened and the visual spectacle was like a magical kingdom of retail. The department heads came onto the floor in a phalanx, then split apart to begin tweaking their environments. They obsessed over the detail. These were people who clearly saw the store as a stage; who understood that to lose the illusion is to lose the audience.
What they get better than most is that as a retailer, retailing should be a major part of the appeal. That getting shoppers off the couch means delivering value through the creation of a live experience — that thing online can’t compete with. And it’s working; in the last four years they’ve set new records for sales and profitability despite being based in a country that continues to lurch from one near-recession to the next. And they are enjoying their second year rated as the number-one department store in the world by the Intercontinental Group of Department stores. Interestingly when you research their history, you see their founder set out to make this a reality and the new owners are merely carrying on the tradition.
Sometimes What’s Old is New Again
Another example of history informing the way forward is reflected in the strug-gling department store Marks & Spencer, a chain that’s been acutely attuned to its role within wider British society with a legacy for supporting small producers, and being committed to shopper satisfaction with core principles expressed simply as ‘Quality, Value, Service, Innovation and Trust.’
Despite a challenging economic climate that’s contributed to eight straight quarters of decline in the fashion categories of its business and overall declines in profitability, the retailer is committed to sticking with what they refer to as Plan A, a CSR platform considered to be the most comprehensive of any major retailer anywhere in the world.
The program was created in 2007 after then -chief executive Sir Stuart Rose decided his business should re-think its leadership position around social responsibility, believing a sustainable business could be a profitable one, and also because “there’s no Plan B for our planet.”
Starting with a 100-point, five-year plan, estimated at the time to cost $350 million to implement, Plan A has since expanded to include programs that cover everything from the working conditions of factories that supply the company through to emissions, recycling, facilities management, and even a program called Schwop that encourages customers to donate used clothing to benefit local charities.
While the company is clearly hitting high notes in performance and accolades — it’s delivered on 139 of its now 180 commitments and earned more than 150 sustainability awards — a compelling aspect of Marks & Spencer’s strategy comes from the fact that Plan A isn’t just about delivering value through its own operations, but instead looks to deliver results by recruiting the help of everyone connected to the business, both customers and suppliers alike. And it’s working: the net benefit of Plan A to the business is up 29% year on year and is credited with adding almost $210 million for reinvestment in the last 12-months alone.
The Secret Weapon Can’t Be Found on a Spreadsheet
There’s a point in business when you can’t cut any more, where there’s no silver bullet to devastate the competition, when acquisitions are about buying revenue and profit rather than creating it. I’d argue the time to revisit history matters more now than it ever has. Using history as part of your strategy is a common practice in the branding game, but it’s not just about creating the ingredients for an ad agency brief. In the storied history of department stores, we find what is the soul of retailing — the excitement of acquiring new things; offering authentic service; developing meaningful customer relationships; creating spectacle and memorable experiences — and customer loyalty along with all of it.
Would Rowland Macy, Harry Selfridge, or Richard Warren Sears recognize the stores they created today? They set out with courage, vision, and endeavor to create the retail foundations that informed the industry. As I take my family to see the Christmas windows at Harrods, and wait in line to visit Santa at Selfridges, I’ll be reminded again that I never rush to do the same at my local shopping mall or when I’m shopping on Amazon. Consumer desires haven’t really changed, so perhaps it’s time to get back to the values that started it all.