Despite the alarming news of department store locations shutting up shop, 85% of UK adults agreed they still prefer to buy products in store.
While traditional department stores may have been late to the digital party, the picture is not bleak at all. Some retailers are now taking innovative strides to move with the times… so there is hope for the future!
In this report, we use our software to deep dive into US and UK department stores’ online strategies. But before we bust out the juicy data points, how are these retail giants evolving to continue winning over customers?
The store of the future
While we aren’t talking robots for sales associates yet (although retailers are predicted to spend $7.3 bn on AI by 2022), technology will play an important role in the future performance of traditional department stores. And so will humans. The businesses that stay relevant are those understanding the importance of bridging unique and personalized shopping experiences with digital conveniences. 53% of millennials don’t think store associates have the technology they need to provide great customer service; for example, mobile devices for looking up customer profiles and recommending products. But new technologies are helping retailers turn the tide.
Neiman Marcus is merging the digital and the physical experience with the majority of in store sales coming via the app SalesFloor. This lets 275 sales associates across the country digitally build tailored mood boards for customers to shop. The company has also launched a digital stylist service where customers can FaceTime a consultant, as well as SocialShop, a feature for Neiman Marcus staff to share Instagram posts with their customers, who can then buy the product online and tag the associate.
The competitive edge that bricks and mortar has over online shopping is the ability to delight customers with an immersive experience. By investing in experiential retail, British department store Harrods’ reported a boost in sales by 6.8%. In 2018, Selfridges and Liberty also recorded increases of 11.5% and 8.1% respectively.
Selfridges’ The Corner Shop is a well-executed example of how to dovetail the growing experience economy in store. The 2017 pop up featured luxury labels, and an immersive art campaign, State of the Arts, which briefly turned the retailer into a public art gallery.
The disruption of Instagram
Social media is not only influencing what we wear but how we shop. In the same time it takes to like an Instagram post, we can buy a whole outfit (almost) as fast. The new Checkout feature lets users instantly shop product from the platform. That’s seamless retail at its finest. It’s now crucial for businesses to create engaging content on social media to generate revenue. But are department stores on board? Our data revealed that selected shoppable products on Nordstrom’s Instagram sold through the majority of SKUs in less than two weeks since posted. These insights can help marketing teams determine if a competitor’s post was successful in driving sales for the advertised styles, shaping upcoming product selection and content for future social campaigns.
The power of private labels
While not as compelling as an immersive art gallery, the humble private label continues to command attention. Private labels give retailers greater control over discounts and create exclusivity for the customer. They are a continued focus for department store strategies and generate a higher margin than branded product.
While House of Fraser is moving away from private labels altogether, Bloomingdale’s has increased new product under womenswear private brand, AQUA, by 93% YoY. Last year, when John Lewis went through a rebrand adding “& Partners” to its name, it launched its largest own-brand label to date in the process.
While private labels are helpful in this space, are they successful? Own brands currently make up 10% of products retailing at JL&P, compared to 9% for the same period last year. While it may seem small, this increase after the rebrand paid off! Recent reports state JL&P saw a 10% YoY increase in sales over the Easter period with the help of sales from own brands, Kin and Modern Rarity increasing 23% and 22% respectively.
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As customers have become more fickle with their loyalty to brands, department stores need to keep evaluating the mix of branded and private labels to ensure customer needs are met. And private labels need to continue to evolve to be competitive.
When we look at pricing, 50% of JL&P’s own brand outerwear sits between £100 and £150, higher than Debenhams who are pricing 60% of its own brand outerwear under £100. By using EDITED data to go even further into these price points, we can determine the types of products being offered. Puffy gilets are sitting at the lowest interval, priced higher at John Lewis due to technical fabrications, while suiting is at the exit price points.
Brands looking to launch private labels need quick visibility of the price points being operated in by competitors and how they evolve over time. We know you don’t have time to trawl through thousands of products online, trying to spot a gap in the market.
So to ease the stress, chat to us to see how you can make your private label pricing easier.
Got EDITED access? Read more about department store rebranding in our analyst report here.
Research and data by Kayla Marci, Market Analyst