There’s Nothing Wrong With a Good Old Department Store

A giant Christmas tree full of color and light, racks of beautiful dresses, makeup applied amongst a sea of color and mirrors, and many shoes. I was mesmerized by the bustling activity and friendly strangers delivering shoe after shoe for my mother to try on. It was the early 2000s in Hong Kong during the holiday season at Lane Crawford. If someone had told me that my fascination with stores and retail would continue today, I quite honestly would probably have believed them. But, a lot has changed since then. The term ‘department store’ has lost the glamour that younger me once admired.

In the mid 19th century, Crystal Palace opened in Hyde Park in England. It featured 300,000 panes of plate glass and a sizeable varietal display of consumer goods worldwide. Millions of people went to window shops in awe of the products brought to light by the new industrial world. It wasn’t long after that the American famed Macy’s opened in 1902.

A big mogul of the time, Harry Gordon Selfridge, rose in ranks at Marshall Field’s in Chicago. He then brought his expertise over to the UK, where he opened Selfridges, which went beyond stocking shelves and focused on the shopping experience. It was the beginning of fixed prices and the start of the ‘mixed-use retail experience.’ Every department store had unique offerings; restaurants, libraries, reading rooms, child-care services, mailrooms, and more. They were a place to socialize and to be entertained. As the New York Times describes the historic department store collective, “together, they elevated even the most mundane purchase to the level of so-called experience and entertainment, concepts discussed today as a breakthrough in retail thinking.” What department stores once embodied is what the retail industry today is identifying as the future.

There is nothing wrong with department stores. However, there is something wrong with the neglect of the experience.

Research by Retail Dive shows more than 1,000 department stores will close between now and 2023, reducing the total footprint by one-fifth. We got carried away. The amount of revenue a large department store generated at its prime would have been quite incredible for a single store in its time. We got greedy. We built and built, and built some more. Yet while we laid bricks, there were recessions, wars, and then the internet bombarded us. It facilitated online shopping and something that had never yet been possible — the ability to change prices in real-time. A sale was no longer once a year where staff had to run around re-tagging items. Prices dropped in a click, and sales would skyrocket.

Sales in-store then became the only way to compete with online retail. But it took a lot more staffing to launch in-store sales, and ultimately they couldn’t keep up. As the convenience of online shopping sucked away store revenue, it became more and more difficult to recover. So rather than innovate and go after more sales, the stores cut costs. Instantly, lower-quality designs, products, and experiences were evident.

Now, we’re in a “retail apocalypse.” The idea that in-store retail is diminishing negates the fact that we, as people, consume. We want things. However, we are so busy with calling cars on demand, getting groceries delivered within the day, and buying a coffee for pick-up, that the consumption of experiences has fallen to the wayside. Not because we don’t want them, but because there aren’t many out there worth our time.

We, as people, want to consume experiences, but those experiences have to fulfill our ever-changing desires.

This year brick-and-mortar apparel sales will remain flat, as shoppers spend some $73 billion more online for clothes in 2023, or a third of the total, up from 20% today. It’s not climbing, but it also isn’t declining. Retailers are starting to figure out the experiences we’re craving. Macy’s invested in B8ta and bought Story to figure out a new market model, Nordstrom opened its own version of a guide shop and started online pick-up in-stores, and Walmart is on a buying spree of digital brands that are mastering the physical retail experience.

However, there is a vast opportunity to re-invent the department store experience. Both for the consumer and the supplier, brands don’t want to sacrifice their margin by executing a traditional wholesale deal, and consumers no longer go to stores to purchase.

Selfridge was known for creating a department store that went above and beyond to purchase clothing and makeup. It was a destination. It was worth our time. Look around for what people today spend time doing — socializing, eating and drinking, taking photos for social media, streaming entertainment. Trade the child-care center with a playground, the mailroom with interactive photos ops, the sit-down restaurant with a bar, and the lounge with a workspace. Or make it a place people want to be.

There is some evidence of this happening both in existing department stores and new ones such as Forty Five Ten and Neighborhood Goods.

With a little reinvention, department stores will make a comeback. Quite possibly this year. And maybe, just maybe, it will inspire another child to follow the world of retail.

Brands

Whether you’re a department store, mall owner, or simply a stand-alone retail shop — forget selling products and start selling experiences. The digital world might be taking away customer fulfillment, but that doesn’t mean you can’t monetize its facilitation.

Consumers

Buy stuff online. It’s easy and makes sense. But start exploring the retail centers and brands that get you. That understands your desire for entertainment, social media, and human interaction. Trust me, they’re out there, and many more are yet to come.