Departing Department Stores

The prognosis for Britain’s much-loved department stores looks increasingly bleak. As the impact of e-commerce and superstores’ move into homewares and electronics squeezes ever harder, it’s likely that a significant chain will follow BHS into collapse this year. ParcelHero’s Head of Consumer Research, David Jinks MILT, examines what has happened to the sector,and how the major brands are improving their stores. Plus, we rate their all-important websites.

 

ParcelHero’s Website Ranking: A successful website will prove crucial to the future survival of department stores. Yet while some rival Amazon and ASOS for user experience and delivery options, others fall significantly short. Find out who takes the website honours and which stores face the biggest challenge here.

On February 28, 2018 Bodgers of Ilford closed its doors for the final time after 125 years. It was an emotional event for local shoppers and current and former employees of the much-loved department store. Though it was part of the larger Morleys Store Group, competition from the likes of Amazon and ASOS, together with its close proximity to Westfield, meant it couldn’t continue to be supported.

Bodgers is just one of the latest of a mass extinction event that has hit Britain’s department stores since the arrival of the internet. Its demise follows the spectacular and acrimonious collapse of BHS in 2016: and it will certainly not be the final department store to disappear from the High Street.

In fact, the future is looking so difficult for the sector that it is likely a major department store brand will disappear from the High Street in 2018.

The retail analysts Plimsoll states 57 of Britain’s 191 largest companies in the department stores industry are in danger, with 51 currently running at a loss. With nine out of 10 previously failed department stores given the same danger rating two years prior to their demise, it’s a concerning statistic.

As a further sign of the intense competition within the UK industry, 24 department stores are continuing to sell at a loss for the second year running. These serial loss makers are adding to the congestion in the market, often undercutting the rest of the sector and driving down profit margins across the board.

One glimmer of hope for some department stores is that, according to March’s Office of National Statistics (ONS) figures, in a High Street market where growth fell by 1.2%, department stores showed the only positive growth of any sector: 0.8%, thanks to increasingly successful online sales. In fact, department stores online sales were up 33% year on year; a spectacular growth rate. But, as we will see in our ParcelHero website ratings, not all stores are keeping up with the e-commerce revolution.

Is there any hope?

The other hope for some of the most embattled department stores is that their creditors agree to a Company Voluntary Agreement (CVA). If a limited company is insolvent, it can use a CVA to pay creditors over a fixed period. If creditors agree, its limited company can continue trading.

To get a CVA, a company must be approved by creditors who are owed at least 75% of the debt. Failure to achieve 75% approval is likely to result in voluntary liquidation of a company. And if a company fails to meet its agreed payment schedule, any creditor can apply to wind up the business.

BHS had embarked on a CVA as it struggled to meet its obligations in March 2016. Even though it gained the approval of most creditors, this was not enough to stave of liquidation the following month: something of an ill omen for those stores relying on a CVA as a panacea. However, BHS was burdened with significant pension issues and the CVA process has been a little more positive for some other department stores – helping reduce their huge legacy rents.

But will improved internet sales and CVAs be enough to stave off further casualties in the department store sector? Looking back over the last seven years the runes do not look good.

 

Countdown to crisis

From well-known chains such as Alders, Jacksons, Owen Owen and BHS, to landmark local shops like Bodgers; department stores have crumbled under the weight of the onslaught from firstly, supermarkets diverging into goods such as TVs and homeware; and latterly e-commerce.

A seven-year countdown reveals the disappearance of some major names.

2012:

Allders of Croydon, the third-largest department store in the UK, went into administration in 2012. Once a large chain with 50 stores, the business over expanded just as the impact of e-commerce really began to hit the High Street, and all stores except the flagship Croydon site were sold off or closed in 2005. From then the huge Croydon store operated alone with varying success until going into administration and finally closing in January 2013. Croydon Village Outlet opened in the building in 2013 before it too collapsed a year later.

2013:

Jacksons of Reading, a traditional department store with 60 staff in Reading town centre (‘Jackson’s Corner’) closed two days before Christmas. The store was founded in 1875. According to Retail Research receipts were hand-written, and the old cash-tube system was used for payment, until the end.

2014:

Lewis’s Southport Ltd, trading as Variety Shopping Ltd, was Southport’s newest department store, located in Tulketh Street premises vacated by Waitrose in 2006. It shut its doors in 2014.

2015:

Cumming of Leven, a clothing and small department store chain with 16 stores operating as Cumming of Leven, Sphere and Turrett went into administration in May. There were stores in Glasgow, Arbroath, Leven, Kirkaldy, Dumferminline, Glenrothes and three other Scottish towns. The first store opened in 1879.

2016:

BHS’ long-drawn and very public collapse is well known.

McEwans of Perth, Scotland, an old iconic department store trading since 1868 shut up shop. In view of the fall of McEwans, the town council had to rethink its bid to become one of Europe’s ‘great small cities’ based on its tradition of independent retailers.

Austins of Derry: founded in 1830 and one of the world’s oldest department stores located in a fabulous building, was also put into liquidation with the loss of 53 jobs.

2017:

Beales closed its Bishop Auckland store in January 2017. It was the biggest High Street store in the town, and Bishop Auckland’s only department store. It was formerly a Westgate.

On the 5th January 2017 Fenwick declared that its long-established Leicester store was to close, and it shut its doors in June 2017.

In April 2017 Fenwick also announced the closure of its store in Windsor, and it closed later that year.

In addition, that department store concessions favourite Jaeger went into administration. It had 60 concessions in UK department stores, together with 43 of its own fashion shops. Edinburgh Woollen Mill bought the brand and continued to run reduced in-store concessions and online sales, as well as a handful of Jaeger stores.

2018:

In 2018, the long established Bodgers store closed in February. With the sector increasingly struggling, a significant chain is likely to collapse this year unless the sector improves markedly.

 

The state of the sector

 

Beales

The well-known Beales chain was founded in 1881, its flagship Bournemouth store being a local landmark. It currently has 22 branches.

Problems

Despite being based in the well-heeled town of Bournemouth, the Beales chain has not been feeling the sunshine recently. It was bought by property investor Andrew Perloff for just £1.2million in 2015.

In 2016 The Centre for Retail Research reported Beales had agreed a CVA to reduce rents by at least 30% on 14 stores and would pay rents monthly instead of quarterly on all its stores. Some landlords were asked for reductions as high as 75%. The company claimed it was being held back because of high legacy rents fixed in the pre-recession, pre-internet days when retail was highly profitable. Beales had previously bought a number of high street shops in the last ten years from Vergo Retail, Co-ops, Fenwick, Bentalls and Westgate Stores.

It closed stores in Kings Lynn, Rochdale, Saffron Walden and Winchester in 2016, and in Bishop Auckland in 2017.

Facing up to the realities of retail the chain announced on Facebook it was closing its electrical appliance departments in Bournemouth, Tonbridge, Yeovil and Worthing. It has expanded its homeware section and cut back on items such as fridges and dishwashers as shoppers turn to the internet or discount electrical stores for white goods.

Positives

However, Beales does seem to be fighting the tide successfully in some ways. Its sales rose during the crucial Christmas 2017 trading period, at a time when other department stores saw their figures drop.

The Bournemouth store reported that sales rose 4.2 per cent in the six weeks that ended just after Christmas and that the January sale period also outperformed targets.

And in a fascinating development, in November 2017 Beales opened its first store in Scotland, in the former premises of McEwans of Perth, which had closed a year previously. There is even talk of it reopening its Bishop Auckland store.

Stuart Lyons, the chairman, said at the time of Beales restructuring: “Most of Beales’ stores are profitable, including our flagship stores in Bournemouth and Poole which are unaffected by the proposal.

“However, a minority lose money because leases agreed some years ago are no longer sustainable due to changes in the economy and local conditions. These legacy rents have been dragging the group down. This is a unique opportunity to restore the group to financial health.”

 

Days

If Beales seems optimistic about the future, that’s nothing compared to the up and coming Days chain. It might not be a familiar name on the High Street just yet, but that could be set to change. Days is a brand-new chain of department stores just launching, owned by Edinburgh Woollen Mill Group.

Modestly named after EWM’s owner, Philip Day, the first store opened in spring 2017 in Carmarthen, Wales, on the site of a former BHS store.

Problems

Despite all the initial optimism, Days’ first days have not all been smooth. The next stores were to have followed swiftly on the heels of its Carmarthen store, but a shop in Bedford scheduled for a November 2017 opening has been delayed until summer 2018; which means its opening may coincide with that of Day’s third planned store, in Crawley.

Positives

The business is targeting large towns and cities as part of plans to roll out Days to 50 locations across the UK.

One potential key to success for the new chain is that Edinburgh Woollen Mill has been busy snapping up many failed fashion brands to sell in its new store. The Carmarthen store stocks a total of 18 brands, 11 of which are owned by EWM, including Austin Reed, Peacocks, Jane Norman, Country Casuals and Jaeger.

 

Debenhams

The well-known department store chain was formed in 1778 by William Clark, who began trading in London as a drapers’ store. In 1813, William Debenham became a partner and the shop’s name changed to Clark & Debenham. Today the business has grown to 178 locations across the UK, Ireland and Denmark

Problems

Even 240 years of history cannot proof a chain against rapid changes in lifestyle and technology. In April 2018 Debenhams announced its pre-tax profits fell 84 per cent in the half year to March 3.

The department store chain said like-for-like sales fell 2.2 per cent in the 26 weeks to March 3 amid “challenging” conditions in the UK market. Bottom line pre-tax profits dropped from £87.8 million to £13.5 million. Revenue fell 1.6 per cent to £1.65 billion, and the retailer cut its interim dividend by 51 per cent to 0.5 pence.

The chain blamed in part the recent weather after the ‘Beast from the East’ forced around 100 of its stores to temporarily close. It had previously guided £55-65 million and made £95.2 million in 2016-2017.

In 2017 the store announced plans to close 11 warehouses and put up to 10 stores under review, plunging at least 220 jobs into uncertainty. In early 2018 it also announced it intended to slash 320 further jobs with a restructuring of its store management roles.

Additionally, back in 2016 Debenhams Retail (Ireland) Ltd, part of the UK’s Debenhams PLC but a separate legal entity, had an interim examiner appointed by Ireland’s High Court to examine its affairs. The company has been loss making since 2007 and the Debenham PLC board ceased supporting its Irish chain in May 2016. The court was told that the only alternative to the interim examiner and protection from its creditors was liquidation. There are 11 Debenhams stores in Ireland with 2,265 employees. Total sales in 2015 were €167 m, 22% below that of 2007.

Happily, the Irish High Court approved a restructuring plan for the Group later in the year. However, after showing a small profit in 2016 after its debts were written off, Debenhams Retail Ireland suffered a €246,000 loss before tax for the 12 months ended September 2nd, 2017.

Positives

There are signs that Debenhams is squaring up to face its future. Its Chief executive Sergio Bucher says: “The market dynamics we have seen have reinforced our view that we need to move even faster to implement the cultural and organisational changes needed to ensure Debenhams is in the best possible shape for today’s fast-changing retail environment.”

Adds Sergio: ‘As part of our Debenhams Redesigned Strategy, we are looking to work with strategic partners that can deliver new and complementary product offers for our customers. ‘

One way in which Debenhams is restructuring is embracing a multi-channel approach. For example, it is using its Westfield White City store to show off furniture from pureplay online retailer Swoon Editions, founded in 2012, which it will also sell online.

Nicki Lynch, chief customer officer at Swoon Editions said: “Our home-obsessed customers are increasingly requesting that they want to see our furniture in real life. In an online-only world it is harder to bring people into your brand in the same way you can with a physical store.”

It is this kind of innovative multi-channel approach to retail that could be key to Debenhams long term survival.

And there’s even some good news for Debenhams Retail (Ireland) Limited as its online trading is improving. While most of the company’s sales are still in-store, it grew its online sales to 14 per cent, from 11 per cent in 2016.

 

Fenwick/ Bentalls

Founded in 1882, Fenwick’s first store was in Newcastle – which is still the home of its flagship store. There are ten stores currently in the chain. In 2001 Fenwick bought the famous Bentalls chain. Most Bentalls’ stores are now closed or Fenwick’s branded.

Problems

2017 was a year of upheaval unparalleled in Fenwick’s history. It saw profits fall as “challenging” conditions in the retail sector sparked big changes in the way the company was run. Operating profit fell 8% to £17.9m in the year to January 27, with turnover also falling slightly to £426.4m.

This year saw former Co-op chief executive Richard Pennycook taking over as chairman – the first non-Fenwick family member to hold that role; while managing director Adam Fenwick also left his post. For the first time in 136 years there is now no member of the Fenwick family on the company’s statutory board as the firm bids to modernise and compete in what it has described as “some of the most volatile and challenging market conditions seen in its 134-year history”.

On the 5th January 2017 it was announced Fenwick’s Leicester store was to close and it shut its doors for the final time in June. In April 2017 Fenwick had also announced the closure of its store in Windsor, which closed later in the year.

In April 2018 the chain announced it was consulting with staff about proposed structural changes, leading to fears jobs could be at risk.

The company announced it wants to “modernise and reorganise the business” and centralise operations – currently each store runs autonomously.

It also announced it will launch a website enabling online shopping for the first time (see our website rating below).

Positives

The company has now announced a £55m investment programme which will see £30m spent on new services and upgrades to its flagship store on Newcastle’s Northumberland Street, plus around £20m on IT upgrades that will finally see the chain have a website selling its full range, offering click-and-collect and showing stock availability.

The company also opened a new store in Colchester and has moved into new premises in Bracknell.

 

Harvey Nichols

Founded in 1831, Harvey Nichols is known for its high-end clientele and stocks luxury brands such as Gucci, Prada, and Chanel. The department store has eight locations across the UK and employs over 1,700 people.

Problems

Harvey Nichols swung to a £6.7 million loss last year as a costly refurbishment of its flagship site hit sales and pushed costs up.

Accounts for Broad Gain (UK), the vehicle which owns Harvey Nichols, blamed the refurbishment of the flagship Knightsbridge store for a 0.6% fall in group turnover to £193 million. The department store spent £10.6 million in the year, most of which went on the refurbishment.

Stacey Cartwright became CEO of Harvey Nichols Group in 2014 and is credited with modernising the retailer and bringing it into the digital age, but she stepped aside to become deputy chairman in September 2017 when the retailer revealed it would appoint two co-chief operating officers, Daniela Rinaldi and Manju Malhotra. In April 2018 she announced she was leaving the company entirely.

Some analysts say the cost of Cartwright’s reforms was too high after the company plunged into the red by ploughing millions into revamping its flagship Knightsbridge store, in its bid to lure from Harrods big-spending tourists attracted by the weaker pound.

As a result of the work, which closed parts of the stores for a period, the company witnessed a loss of £6.7 million compared to a profit of £3 million the previous year.

Harvey Nichols said it is facing “increased competition from retailers that exclusively operate online” and said the current trading environment remains “uncertain.”

Positives

February 2016 saw the launch of Harvey Nichols’ marketplace, which now hosts almost 300 brands offering an extended inventory across womenswear, menswear, accessories, homewares and childrenswear

Since re-opening, the London flagship store’s new ground floor is seeing strong sales growth with the beauty offer significantly out-performing the market rate of growth.

While the UK remains a very important market strategically and commercially for the group, Harvey Nichols says that it will continue to assess opportunities overseas and will be opening a store in Doha, Qatar in 2018, bringing its total international store count to eight. Harvey Nichols has stores in Hong Kong, Dubai, Riyadh, Kuwait, Istanbul and Ankara, which operate under franchise.

 

House of Fraser

House of Fraser was established in Glasgow, Scotland in 1849 as Arthur and Fraser. It currently has 56 stores and two outlets across the United Kingdom and Ireland. Over the years House of Fraser has purchased chains such as the Army & Navy Stores, Barkers of Kensington, Beatties, Dickins & Jones, Jenners, Howells, Kendals, Rackhams, and Binns, and once even owned Harrods of Knightsbridge. The D H Evans Oxford Street store in London was re-branded as House of Fraser in 2001 and became the chain’s flagship store. Currently, House of Fraser’s largest store is located in Birmingham.

On 2nd May 2018, the company announced that it was to be entering into a conditional sale of a controlling stake in the firm from Nanjing Cenbest (a Sanpower Group subsidiary) to Hamley’s owner C. banner, another Chinese firm.

Problems

House of Fraser lost almost £44m in 2017 as sales fell.  Its current majority owner, Nanjing Xinjiekou/Sanpower recently pumped £30 million into House of Fraser and its leader said it is committed to turning the business around, but speculation about a possible CVA emerged when the retailer called in KPMG in April to discuss a restructuring strategy.

House of Fraser announced a string of troubling financial news since the start of 2018, following a 2.8 per cent drop in sales over the vital Christmas period.

In February credit insurers cut ties with the retailer, refusing to cover its suppliers over fears it could go under. This prompted the department store to hire Rothschild to help it restructure its £400 million debt pile.

However, a potential saviour, C. banner, the Chinese company that owns Hamleys, proposes to reverse the stores fortunes. The Chinese group has agreed to take a 51% stake in House of Fraser if the chain pushes through a turnaround plan. A condition of the sale is that the company streamlines its existing store portfolio and costs base. The intention to launch a company voluntary arrangement (CVA) was announced.

The extent of the chain’s financial problems were revealed in a document submitted by C.banner to the Hong Kong Stock Exchange, announcing its proposal to acquire the stake in House of Fraser. C.banner said the loss of £43.9m reversed a pre-tax profit of £1.5m for the previous year, while sales fell 6.3% to £787.8m.

The chain expects to make a formal CVA proposal in June, with a full restructuring in place by early 2019. It is believed up to 30 stores, almost half its UK premises, could be shut down under the radical reform plans.

Nanjing Xinjiekou/Sanpower is to retain a 38 per cent stake in House of Fraser with Mike Ashley (owner of Sports Direct) controlling the remaining 11 per cent. Mike Ashley is reportedly unhappy with a lack of transparency in C. banners’ approach.

The transaction is also subject to both bondholder and shareholder approvals, and the CVA will, of course, need 75% creditors approval.

In May the British Property Federation hit out at House of Fraser over the proposed CVA. It criticised the “insensitive” way in which the retailer had handled the process. The BPF’s director of real estate policy Ian Fletcher said the retailer had not followed “best practice” after failing to discuss plans with landlords beforehand.

Fletcher hinted that, as a result, landlords could vote against the CVA when it is formally launched next month, or vote in favour of it “grudgingly”.

Positives

How the CVA will prosper will be learned in June. House of Fraser chairman Frank Slevin said the latest developments for the business would help secure its long-term future and that C. banner’s investment was a “vote of confidence”. House of Fraser will become “more stable” after completing its restructuring plan and able to “take advantage of its well-known brand to capture growth potential”.

As part of the transaction, C. banner will subscribe for new shares in the company, providing vital capital to accelerate the retailer’s transformation plans.

And in the vital field of e-commerce and store restructuring there will be an increasingly tight focus. Says Slevin: ‘We need to go further and faster if we are to confront the seismic shifts in the retail industry. There is a need to create a leaner business that better serves the rapidly changing behaviours of a customer base which increasingly shops channel agnostically. House of Fraser’s future will depend on creating the right portfolio of stores that are the right size and in the right location.”

He added: “We also know that if we are to deliver a sustainable, long-term business then we need to make difficult decisions about our underperforming legacy stores.”

 

John Lewis

The first John Lewis store was opened in 1864 in Oxford Street, London. The chain’s slogan, “Never Knowingly Undersold” has been in use since 1925. The chain is owned by the John Lewis Partnership, which was created by Spedan Lewis, son of the founder, John Lewis, in 1929.

There are 50 stores throughout England, Scotland and Wales, including 12 At Home stores, and flexible format stores in Exeter and York. The first John Lewis concession opened in New South Wales, Australia in November 2016.

Problems

This March John Lewis Partnership (JLP) cut its annual staff bonus to the lowest level in 64 years after profit plunged at the group, which owns Waitrose and a chain of department stores. The company said its 85,000 partners would share a £74m bonus, equivalent to 5% of annual pay.

Profit fell 77% to £103.9m in the year to the end of January. Much of this collapse in profits was the result of one-off charges to cover redundancy and restructuring costs.

But excluding those one-off costs, profit was still down 22% to £289m. Waitrose’s results were impacted by tough competition and the fall in the value of the pound.

The John Lewis Partnership has slowed expansion, cut jobs and closed some Waitrose stores. Only one Waitrose supermarket and two department stores will open throughout 2018, as the group invests more in existing outlets.

Sir Charlie Mayfield, the chairman of JLP, said 2017 had been a “challenging year”.

Positives

Looking at John Lewis department stores’ results separated from Waitrose, sales at the department store chain rose just over 2% to £4.84bn. Fashion, beauty and electrical goods sold well. Operating profit before one-off costs increased by 4.5% to nearly £255m.

John Lewis has continued to open stores, including in Oxford and in the extension of the Westfield shopping centre in west London.

The JLP’s Chairman says John Lewis now employs nearly 3,000 fewer people and he expected more jobs to go, but the group is investing more to improve the experience for shoppers. Says Mr Mayfield: “This is no time for a defensive crunch. Our whole game plan is to step up to this challenge and we’ll be stepping up the pace of innovation. It’s the only way to win in this market.”

Ideas include training shop staff to promote the department stores through their personal Twitter and Instagram feeds, bringing in dozens more designers and technologists to grow own-label clothing and home ranges, and expanding a handyman service to London.

John Lewis’ new Westfield store could point to the future. It features the retailer’s first Style Studio, where customers can be advised, either one-to-one or in a group, by one of five personal assistants. The retailer is also launching a new app-based service to enable shoppers to keep in touch with their own personal stylist. The store also has a Discovery Room where shoppers can learn new skills from expert staff on subjects from how to hang a picture to how to make a house a smart home.

Staff have been trained at the National Theatre to engage with customers and provide outstanding customer service, while stylists have been trained at the London College of Style and by former Vogue fashion director Lucinda Chambers.

 

Marks & Spencer

Marks & Spencer (M&S) was founded in 1884 by Michael Marks and Thomas Spencer in Leeds. M&S currently has 979 stores across the U.K. including 615 that only sell food products. It is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.

Problems

In 2016 well-publicised falls in profits led the group to announce it would close 30 stores and convert 45 more to food only stores as part of its restructuring to reduce the space dedicated to clothing.

In May 2018 chief executive Steve Rowe said around 100 UK stores in all were in the firing line as part of a wider shakeup designed to end a long-running slump in clothing sales and devote more space to its food business. 20 stores have already been closed since the start of the shake up, including Bournemouth town centre’s well-known premises.

The retailer is also looking to relocate underperforming stores. Overall, the changes will mean a reduction of 10% in the floorspace devoted to racks of skirts, jumpers and trousers, with the plan expected to cost £150m over three years.

The turnaround plan outlined by Rowe also included the closure of 53 loss-making overseas stores in 10 countries. They included 10 stores in China, seven in France and others in Belgium and Hungary, resulting in 2,100 job losses.

In May 2018 M&S reported its annual pre-tax profits fell by almost two-thirds, from £176.4m to £66.8m as sales of food, clothing and homeware all declined. The expense of closing stores and revamping the business cost M&S £321m in the 12 months to March.

On an adjusted basis, pre-tax profit fell 5.4 per cent year-on-year from £613.8 million to £580.9 million.

As well as taking a hard look at its physical stores Rowe criticized the performance of its website. He admitted that its online performance was behind some competitors and added: “Our product pages need to download quicker than they are if they are to be the best in class and our search needs to be made easier.”

One final concern for M&S is that its food retail division, once the star of the business, slumped during 2017. M&S’s food business, which is focused at the premium end of the market, reported four straight quarters of like-for-like sales decline.  It is now re-positioning its food offer and slowing down openings of standalone Simply Food stores.

Positives

M&S launched a restructuring of its supply chain to reduce costs in April 2018. It announced that its Hardwick distribution will close, and that DHL has been appointed to run the new M&S South East distribution centre at Welham Green, Hertfordshire.

The moves are the latest in the M&S five-year transformation programme intended to make M&S a faster, more commercial retailer. The changes include creating a single-tier Clothing & Home logistics network. The new single-tier network will enable M&S to move products from suppliers to stores faster and at lower cost. This will be achieved by moving to a smaller network of large DCs, strategically placed across the UK.

Tackling the fall in food sales, in March 2018 M&S hired Stuart Machin, who took the new title of food managing director. Machin is a retail industry heavyweight and previously group CEO of Steinhoff UK.

Steve Rowe says he wants to make the store ‘special again’, which means modernizing its store offering. One piece of good news in May’s annual results was that for the first time in seven years, it had gained customers in womenswear.  And crucially it is concentrating harder on its e-commerce sales. In the medium term, M&S wants to generate a third of Clothing & Home sales online.

 

The collapse of BHS in 2016 created shockwaves that are still rippling through the industry. Surviving department store chains must embrace multi-platform sales or another significant chain could join BHS in liquidation this year.
The collapse of BHS in 2016 created shockwaves that are still rippling through the industry. Surviving department store chains must embrace multi-platform sales or another significant chain could join BHS in liquidation this year.

 

Department Stores’ Website Ranking

ParcelHero has combed each department stores’ web site to see who is leading the charge to a truly multiplatform approach to sales, and which stores are lagging behind.

It’s clear some sites are nearly as smooth as Amazon or ASOS, while others still lack integration and attractive delivery options.

Criteria:

For Range/ease of use ParcelHero looked to see if the sites were attractive and easy to navigate and purchase from – and if they offered a completely seamless experience. In 2018 it should be as smooth to order a sofa as a shirt from a department store web site – with no noticeable transitions. Redirecting to a “White Label” site for white goods or furniture is a major drawback.

For delivery options ParcelHero looked for a maximum charge of £50 before orders are free: anything over £50 is disappointing. Under £50 we looked for a £3.50 maximum charge and £6 for next day deliveries. We also scored more for speed of standard deliveries (3-5 days maximum) and for useful options such as same day/ named day etc. One key strength of department stores is their High Street locations; therefore we expect free click & collect in store to capitalise on physical stores and entice customers in.

 

Beales

https://www.beales.co.uk/

Range/ease of use:

+ Clean modern design, easy to use.

Some drop down menu options (eg Technology Gifts under Gifts tab) come up with the message ’We can’t find products matching the selection’.

3/5

Delivery options:

Free delivery only on orders over £75.

+£3.50 charge for orders under £75.

Standard delivery within 7 days.

No clear click & collect options when ordering clothing etc.

3/5

ParcelHero score: 6/10

 

Days

https://www.ewm.co.uk/store-finder/index/storeDetail/id/478/

Days doesn’t have its own website yet, instead some of its range is available through the Edinburgh Woollen Mill web site.

Range/ease of use:

+ Main EWM site is easy to navigate and intuitive

Only products available from EWM shown: no Days range products such as lighting, Jaeger dresses etc.

1/5

Delivery options:

+Free delivery only on orders over £50.

+Standard delivery by Yodel 3-5 days.

+Express delivery within 48 hours £4.99 by Yodel.

+Free click & Collect

£3.99 delivery charge for orders under £50.

4/5

ParcelHero score 5/10

 

Debenhams

https://www.debenhams.com/

Range/ease of use:

+ Easy to use. Attractive site for clothing etc purchases.

Large electricals etc are on a ‘white label’ site branded Debenhams Plus but operated by Buy it Direct (Buy it direct formerly ran BHS’ white label electrical site).

Debenhams plus site not integrated with the Debenhams account card:

3/5

Delivery options:

+Free delivery only on orders over £45.

+Standard delivery within 5 days.

+Next day delivery £3.99.

+£3.49 charge for orders under £45.

Click and collect free only for orders over £20.

4/5

ParcelHero score: 7/10

 

Fenwick

https://www.fenwick.co.uk/

Range/ease of use:

+ Very attractive design with interesting blogs.

Astonishingly, purchases are not possible through the site. It simply details products available in stores:

1/5

Delivery options:

Different stores offer different delivery options within a local radius, not bookable on site:

1/5

ParcelHero score: 2/10

*Under its latest plans Fenwick intends to launch a full e-commerce site later this year.

 

Harvey Nichols

https://www.harveynichols.com/

Range/ease of use:

+User friendly clean design.

A number of products such as some phone cases and coffee grinders are delivered direct from ‘brand partners’ and don’t qualify for integrated gift wrapping and full delivery options:

3/5

Delivery options:

No free standard deliveries!

Standard deliveries cost £6.

+Standard delivery within 3 days.

Next day deliveries £10.

+ Click and collect free

+ Some free wrapping and message options

3/5

ParcelHero score: 6/10

 

House of Fraser

https://www.houseoffraser.co.uk/

Range/ease of use:

+ User-friendly modern design.

Ordering furniture such as dining tables and sofas switches to ‘white label’ A. Share & Sons site – best known for their ScS branded stores.

Items placed in main site ‘bag’ do not appear in A. Share & Sons site ‘basket’.

3/5

Delivery options:

+Free delivery only on orders over £50.

+Standard delivery within 3-5days.

£3.95 charge for orders under £50.

+Next day delivery £6.

Click and collect free only for orders over £30.

+ Same evening deliveries £8

4/5

ParcelHero score: 7/10

 

John Lewis

https://www.johnlewis.com/

Range/ease of use:

+Contemporary user-friendly design.

+Integrated site enables ordering of all store products, including large items such as fridges, sofas etc.

+Approved suppliers’ orders (eg sofas) ordering and deliveries also integrated.

5/5

Delivery options:

+Free delivery only on orders over £50.

+ Standard delivery within 3-5days.

+ £3.50 charge for orders under £50.

Next day £6.95.

+ Named day +2 and 4-hour slots available for extra charge.

Click & collect also includes Waitrose stores but free only for orders over £30.

4/5

ParcelHero score: 9/10

 

 

Marks & Spencer

http://www.marksandspencer.com/

(excluding food/flowers)

Range/ease of use:

+Attractive user-friendly design.

+ Integrated site enables seamless ordering of sofas etc.

+ We like the fact the site emphasises strong delivery options in its ‘why shop with us’ home page banner.

5/5

Delivery options:

+Free delivery on orders over £50.

+Standard delivery within 3-5 days.

+ £3.50 charge for orders under £50.

+Next day £3.99.

+ Click & collect free

5/5

ParcelHero score: 10/10

 

Verdict: M&S was the only store to score all the points available. It’s an easy to use site and its delivery options are well-priced.  John Lewis offered a wider range of delivery choice functionality; but charging for in-store click & collect orders up to £30 negates the value of having brick and mortar stores, and so it fell a point short.

At the other end of the table, Fenwick can’t be too soon in introducing a website consumers can actually buy items on! Beales need to look at their click & collect offering and functionality a little more, and Harvey Nicks need to think again about being the only major department store not to offer free deliveries at all on most items!

 

LINKS

https://www.plimsoll.co.uk/market-reports/department_stores

www.retailresearch.org/whosegonebust.php

https://www.independent.co.uk/news/business/news/beales-asks-landlords-for-70-per-cent-rent-cut-a6918391.html

https://www.drapersonline.com/news/exclusive-days-department-store-to-launch-in-crawley/7027144.article

https://www.irishtimes.com/business/retail-and-services/debenhams-ireland-returns-to-red-1.3468216

https://www.retailgazette.co.uk/blog/2018/04/debenhams-reports-52-plunge-profit/?utm_source=Retail+Gazette+Subscribers&utm_campaign=c0105f9c1f-EMAIL_CAMPAIGN_2018_04_19&utm_medium=email&utm_term=0_d23e2768b6-c0105f9c1f-60762149

https://internetretailing.net/themes/john-lewis-debenhams-and-hampm-on-their-stores-at-westfield-london

Debenhams shares plunge 18% after disappointing Christmas prompts profit warning

https://www.retailgazette.co.uk/blog/2018/02/320-jobs-slashed-debenhams-amid-cost-cutting-drive/?utm_source=Retail+Gazette+Subscribers&utm_campaign=38a685a12b-EMAIL_CAMPAIGN_2018_02_08&utm_medium=email&utm_term=0_d23e2768b6-38a685a12b-60762149

https://www.retailgazette.co.uk/blog/2018/01/debenhams-issues-profit-warning-disappointing-christmas/?utm_source=Retail+Gazette+Subscribers&utm_campaign=1c86d8bf48-EMAIL_CAMPAIGN_2018_01_04&utm_medium=email&utm_term=0_d23e2768b6-1c86d8bf48-60762149

https://www.chroniclelive.co.uk/business/business-news/profits-fall-fenwick-retail-chain-13836456

https://www.directcommercemagazine.com/news/ecommercechannel/fenwick-prepares-for-radical-change

http://uk.businessinsider.com/harvey-nichols-2017-accounts-revenue-profits-loss-2017-12

https://fashionunited.uk/news/business/harvey-nichols-swings-to-losses-posts-flat-revenue-growth/2017121927329

https://www.standard.co.uk/business/harvey-nichols-stacey-cartwright-to-leave-after-shakeup-a3797571.html

http://www.bbc.co.uk/news/business-44068513

https://www.directcommercemagazine.com/news/international/future-clarified-for-house-of-fraser

https://www.retailgazette.co.uk/blog/2018/05/house-fraser-cva-confirmed-hamleys-owner-buys-stake/?utm_source=Retail+Gazette+Subscribers&utm_campaign=1dfdf1f86e-EMAIL_CAMPAIGN_2018_04_13&utm_medium=email&utm_term=0_d23e2768b6-1dfdf1f86e-60762149

https://www.retail-week.com/department-stores/house-of-fraser-slammed-by-property-body-over-cva-plan/7029005.article?mkt_tok=eyJpIjoiTnpjelpqSm1ZemMyTVRkaSIsInQiOiJlK095cWo0VjE1RTNmbTdCYWhyQk1NNkNRRVNFS0ltRHhZTVhzbXdTSHRCSU5PUDN3eXNGY0hYZDJjZnM3Y1BLbEFOREVyMjdlM0t4SHM1ZGNucU5kVDl4XC9CMEV1M0pydFZKb2FPUWdOVlRYYWtlRmFGZDBzUGNqTWZUT05QWncifQ==&authent=1

https://www.theguardian.com/business/2018/mar/08/john-lewis-cuts-staff-bonuses-as-profits-dive-77-percent-weaker-pound-waitrose

http://www.proactiveinvestors.co.uk/companies/market_reports/186872/ms-to-announce-further-store-closures-at-first-half-results-as-clothing-division-struggles-persist-186872.html

https://www.theguardian.com/business/2016/nov/08/m-and-s-marks-spencer-close-80-stores-major-overhaul

https://corporate.marksandspencer.com/media/press-releases/2018/m-and-s-clothing-and-home-logistics-changes

https://www.theguardian.com/business/live/2018/jan/11/christmas-tesco-marks-and-spencer-john-lewis-retail-stock-markets?page=with:block-5a570f4be4b043ead794ccea#block-5a570f4be4b043ead794ccea

https://www.independent.co.uk/news/business/news/marks-and-spencer-latest-results-profit-fall-chief-financial-officer-step-down-a8043171.html

https://www.retailgazette.co.uk/blog/2018/01/ms-reveals-mixed-christmas-trading-results/

http://www.bbc.co.uk/news/uk-england-tyne-43911706

https://www.retailgazette.co.uk/blog/2018/05/house-fraser-cva-axe-almost-half-stores/

https://www.retailgazette.co.uk/blog/2018/05/ms-to-further-radicalise-store-closure-scheme/

http://www.bbc.co.uk/news/business-44221475

 

 

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