Department Store Retailing in the UK | Verdict Channel Report
Report description
Despite the challenging economic climate, the UK department store market achieved growth of 13.2% between 2007 and 2012 – outperforming overall retail. While the channel has shown some resilience, it has needed high levels of discounting to remain competitive and attract shoppers from specialists in the various sectors in which it operates.
- Benchmark your performance against your rivals using our market shares and major competitors analysis.
- Gain insight into the current state of play in UK department store retailing using our market size analysis.
- Use our market forecast analysis to help shape your business plan out to 2017.
- Update yourself on current industry trends and inform your future business decisions using our trends analysis and recommendations.
Premium department stores Harrods and Selfridges performed strongly in 2011/12, with Harrods’ sales (excluding concession sales) increasing 11.2% to £651.7m in the year to the end of January 2012 and Selfridges breaking the £1bn barrier in the same period.
While department stores’ share of the clothing & footwear market has decreased from 17.7% to 17.5% in the five year period to 2012, the category has increased in importance for the channel, with product mix growing by 2.0 percentage points to 58.0% and sales growing by almost £1.4bn.
We forecast the online channel to generate almost 9% of department store sales in 2012 and to grow to 13.7% by 2017, as retailers continue to enhance their multichannel propositions and as more smaller players introduce e-commerce to their offers.
- Who are the top performing department stores in terms of UK turnover, profitability and market share?
- Which retail sectors are growing and require more focus, and which, if any, are declining in popularity?
- Who are my key customers, and how can I broaden my appeal to attract underserved demographics?
- How can I improve engagement with consumers and reach out to the local communities in the regions in which I operate?
- How can I strengthen my online proposition and make it stand out from the competition?
Table of contents
OUTLOOK
•Introduction
•Differentiation and addressing customers’ needs are essential for growth
(Untitled sub-section)
RECOMMENDATIONS
•Introduction
Optimise online channels
Consumer engagement
Target underserved demographics
Sector opportunities
International expansion
MARKET SIZE
•Introduction
•Market definition and methodology
•Department store expenditure trends
Department store sales growth dropped to 2.3% in 2012 – falling 0.2 percentage points on the year
M&S hindered overall market growth in 2012
?Department store channel continues to outperform total retail and non-food sectors
?Share of non-food expenditure continues to grow
•Home-related sectors suffer due to subdued housing market
?Clothing & footwear remains at the heart of a department store’s offer
?Improving fashionability boosts homewares sales but share declines
?Health & beauty remains resilient
?Department stores become a star performer in a declining electricals market
?Department stores achieve furniture & floorcoverings growth despite challenging UK housing market
•Department store space growth returned in 2012
?Space growth evaded market in 2011 as weaker players left the market but rebounds in 2012
?Debenhams plans to increase UK footprint …
?…and so does John Lewis
?Store refurbishments still key
?Investment in multichannel remains a priority – reducing the need to open new space
MARKET FORECAST
•Introduction
•Department store expenditure trends
?2012–17 expenditure growth to be lower than 2007–12
?Expansion will provide a boost for the channel
?Department stores must encourage spending without discounting
?Deflationary trend will continue…
?…driven by electricals
?Department store market will outpace total retail growth until 2014
•Expenditure breakdown
?Premium market will continue to exceed value and midmarket growth between 2012 and 2017
•Sector forecasts
?Department stores must exploit differing opportunities by sector
?Clothing & footwear will continue to have most impact on the channel despite share stagnating
?Investment in home-related categories should be delayed
MARKET SHARES
•Introduction
•John Lewis makes further ground on Marks & Spencer
?Premium stores have grown share since 2008 in economic downturn
•Winners and losers
?John Lewis gains at expense of Marks & Spencer
MAJOR COMPETITORS
•Introduction
•Marks & Spencer’s dominance continues
•Space growth
?Expansion takes back seat in 2011/12 for most retailers
?House of Fraser only major to both open stores and improve sales densities
?Liberty sales density boosted by expansion
SECTOR TRENDS
•Target underserved demographics
?55–64s have seen a marked drop-off, but remain the core customer group
?Male shopper numbers dwindle, but opportunities remain
?Though penetration has increased, 16–24s remain underserved
?Families key growth area
?Childcare services allow parents to shop more easily
•Consumer engagement
?Social media allows for greater consumer engagement than ever before
?Reach out to the local community
?Flexible format stores allow retailers to adapt to local markets
•Multichannel
?Online sales to account for 13.7% of UK department store market by 2017
?Consumers want to receive their purchases on their terms, not the retailer’s
?M-commerce will account for 22.4% of all online retail sales by 2017
?Smaller retailers should test the online waters first
•Retailers ramp up international expansion plans due to limited UK growth opportunities
?Overseas opportunities remain compelling
?E-commerce should be the first port of call for widening international reach
?Acquisitions should be considered to expedite market entry
?Acquisition targets should complement the existing business
?Department stores should look to Latin America for acquisition opportunities
?One size fits all approach does not work for department stores
?Department stores must tailor their offer to new markets
APPENDIX
•Definitions
?Abbreviations
•Methodology
•Further reading
•Ask the analyst
•Disclaimer
TABLES
•Table: Department store market definition and methodology 2013
•Table: Department store expenditure sources of growth (including M&S) 2002–12
•Table: Department store expenditure sources of growth (excluding M&S) 2002 – 12
•Table: Department store sales mix by product sector 2007 and 2012
•Table: Department store share of overall sector sales 2007 and 2012
•Table: Department stores, space and sales density 2002–12
•Table: Department store expenditure sources of growth forecast (including M&S) 2012–17e
•Table: Department store sales mix by product sectors 2012 and 2017e
•Table: Department store share of overall sector sales 2012 and 2017e
•Table: Department store retailers market shares 2008–13e
•Table: Major competitors key operating statistics 2011/12
•Table: Major competitors store portfolios 2011/12
FIGURES
•Figure: Department store expenditure and y-o-y change 2002 – 12
•Figure: Y-o-y change in department store sales incl and excl John Lewis 2002–12
•Figure: Department store inflation/deflation trend (including M&S) 2002–12
•Figure: Y-o-y change in department store sales incl and excl M&S 2002–12
•Figure: Department store sales change % vs total retail and non-food retail 2002–12
•Figure: Department store market shares of retail and non-food sales (incl M&S) 2007–12
•Figure: Department store sales mix by product sector 2012
•Figure: Department store expenditure (including M&S) forecast at current prices 2012–17e
•Figure: Department store deflation trend (including M&S) 2012–17e
•Figure: Sector annual average inflation/deflation rates 2012–17e
•Figure: Department store sales change % vs total retail and non-food retail 2012–17e
•Figure: Department store expenditure breakdown 2007, 2012 and 2017e
•Figure: Department stores’ strategies for success for each sector 2012–17
•Figure: UK department stores Top 10 market shares 2013e
•Figure: Winners and losers 2013
•Figure: Department store Top 10 market shares % 2013e on 2008
•Figure: Department store market share percentage point change 2013e on 2008
•Figure: Department store Top 10 y-o-y change in sales and space % 2011/12 on 2010/11
•Figure: Department stores Top 10 y-o-y change in sales density % 2011/12 on 2010/11
•Figure: Department stores Top 10 y-o-y changes in sales density £/sq ft 2011/12 on 2010/11
•Figure: Underserved demographics 2013
•Figure: Visitor shares by demographic 2011 and 2012
•Figure: Murdock barbershop in Liberty, London 2013
•Figure: The Hive lock-in at Rackhams, Shrewsbury 2012
•Figure: IKEA Småland crèche service 2013
•Figure: Customer engagement 2013
•Figure: Selected department store social media fans/follower numbers (000s) 2012
•Figure: Marks & Spencer Thanks a Million pledge 2012
•Figure: Debenhams head of lingerie’s Facebook Q&A 2012
•Figure: House of Fraser student-focused Facebook campaign 2012
•Figure: JC Penney Holiday Boutique tie-up with Midtown Girl 2012
•Figure: Macy’s online catalogue 2012
•Figure: John Lewis Made in UK initiative 2012
•Figure: Marks & Spencer Big Beach Clean-up 2012
•Figure: John Lewis Exeter flexible format store 2013
•Figure: John Lewis At Home fascia 2013
•Figure: Harvey Nichols Beauty Bazaar fascia 2013
•Figure: Online sales mix of UK department store market 2008, 2012 and 2017e
•Figure: Houseoffraser.com click & collect store Aberdeen 2013
•Figure: Amazon locker service 2013
•Figure: Marks & Spencer desktop site versus mobile optimised site 2012
•Figure: House of Fraser and John Lewis iPhone apps 2012
•Figure: Attractive markets for entry 2012–17
•Figure: Marks & Spencer’s German local website 2013
•Figure: Selfridges international shipping policy 2013
•Introduction
•Differentiation and addressing customers’ needs are essential for growth
(Untitled sub-section)
RECOMMENDATIONS
•Introduction
Optimise online channels
Consumer engagement
Target underserved demographics
Sector opportunities
International expansion
MARKET SIZE
•Introduction
•Market definition and methodology
•Department store expenditure trends
Department store sales growth dropped to 2.3% in 2012 – falling 0.2 percentage points on the year
M&S hindered overall market growth in 2012
?Department store channel continues to outperform total retail and non-food sectors
?Share of non-food expenditure continues to grow
•Home-related sectors suffer due to subdued housing market
?Clothing & footwear remains at the heart of a department store’s offer
?Improving fashionability boosts homewares sales but share declines
?Health & beauty remains resilient
?Department stores become a star performer in a declining electricals market
?Department stores achieve furniture & floorcoverings growth despite challenging UK housing market
•Department store space growth returned in 2012
?Space growth evaded market in 2011 as weaker players left the market but rebounds in 2012
?Debenhams plans to increase UK footprint …
?…and so does John Lewis
?Store refurbishments still key
?Investment in multichannel remains a priority – reducing the need to open new space
MARKET FORECAST
•Introduction
•Department store expenditure trends
?2012–17 expenditure growth to be lower than 2007–12
?Expansion will provide a boost for the channel
?Department stores must encourage spending without discounting
?Deflationary trend will continue…
?…driven by electricals
?Department store market will outpace total retail growth until 2014
•Expenditure breakdown
?Premium market will continue to exceed value and midmarket growth between 2012 and 2017
•Sector forecasts
?Department stores must exploit differing opportunities by sector
?Clothing & footwear will continue to have most impact on the channel despite share stagnating
?Investment in home-related categories should be delayed
MARKET SHARES
•Introduction
•John Lewis makes further ground on Marks & Spencer
?Premium stores have grown share since 2008 in economic downturn
•Winners and losers
?John Lewis gains at expense of Marks & Spencer
MAJOR COMPETITORS
•Introduction
•Marks & Spencer’s dominance continues
•Space growth
?Expansion takes back seat in 2011/12 for most retailers
?House of Fraser only major to both open stores and improve sales densities
?Liberty sales density boosted by expansion
SECTOR TRENDS
•Target underserved demographics
?55–64s have seen a marked drop-off, but remain the core customer group
?Male shopper numbers dwindle, but opportunities remain
?Though penetration has increased, 16–24s remain underserved
?Families key growth area
?Childcare services allow parents to shop more easily
•Consumer engagement
?Social media allows for greater consumer engagement than ever before
?Reach out to the local community
?Flexible format stores allow retailers to adapt to local markets
•Multichannel
?Online sales to account for 13.7% of UK department store market by 2017
?Consumers want to receive their purchases on their terms, not the retailer’s
?M-commerce will account for 22.4% of all online retail sales by 2017
?Smaller retailers should test the online waters first
•Retailers ramp up international expansion plans due to limited UK growth opportunities
?Overseas opportunities remain compelling
?E-commerce should be the first port of call for widening international reach
?Acquisitions should be considered to expedite market entry
?Acquisition targets should complement the existing business
?Department stores should look to Latin America for acquisition opportunities
?One size fits all approach does not work for department stores
?Department stores must tailor their offer to new markets
APPENDIX
•Definitions
?Abbreviations
•Methodology
•Further reading
•Ask the analyst
•Disclaimer
TABLES
•Table: Department store market definition and methodology 2013
•Table: Department store expenditure sources of growth (including M&S) 2002–12
•Table: Department store expenditure sources of growth (excluding M&S) 2002 – 12
•Table: Department store sales mix by product sector 2007 and 2012
•Table: Department store share of overall sector sales 2007 and 2012
•Table: Department stores, space and sales density 2002–12
•Table: Department store expenditure sources of growth forecast (including M&S) 2012–17e
•Table: Department store sales mix by product sectors 2012 and 2017e
•Table: Department store share of overall sector sales 2012 and 2017e
•Table: Department store retailers market shares 2008–13e
•Table: Major competitors key operating statistics 2011/12
•Table: Major competitors store portfolios 2011/12
FIGURES
•Figure: Department store expenditure and y-o-y change 2002 – 12
•Figure: Y-o-y change in department store sales incl and excl John Lewis 2002–12
•Figure: Department store inflation/deflation trend (including M&S) 2002–12
•Figure: Y-o-y change in department store sales incl and excl M&S 2002–12
•Figure: Department store sales change % vs total retail and non-food retail 2002–12
•Figure: Department store market shares of retail and non-food sales (incl M&S) 2007–12
•Figure: Department store sales mix by product sector 2012
•Figure: Department store expenditure (including M&S) forecast at current prices 2012–17e
•Figure: Department store deflation trend (including M&S) 2012–17e
•Figure: Sector annual average inflation/deflation rates 2012–17e
•Figure: Department store sales change % vs total retail and non-food retail 2012–17e
•Figure: Department store expenditure breakdown 2007, 2012 and 2017e
•Figure: Department stores’ strategies for success for each sector 2012–17
•Figure: UK department stores Top 10 market shares 2013e
•Figure: Winners and losers 2013
•Figure: Department store Top 10 market shares % 2013e on 2008
•Figure: Department store market share percentage point change 2013e on 2008
•Figure: Department store Top 10 y-o-y change in sales and space % 2011/12 on 2010/11
•Figure: Department stores Top 10 y-o-y change in sales density % 2011/12 on 2010/11
•Figure: Department stores Top 10 y-o-y changes in sales density £/sq ft 2011/12 on 2010/11
•Figure: Underserved demographics 2013
•Figure: Visitor shares by demographic 2011 and 2012
•Figure: Murdock barbershop in Liberty, London 2013
•Figure: The Hive lock-in at Rackhams, Shrewsbury 2012
•Figure: IKEA Småland crèche service 2013
•Figure: Customer engagement 2013
•Figure: Selected department store social media fans/follower numbers (000s) 2012
•Figure: Marks & Spencer Thanks a Million pledge 2012
•Figure: Debenhams head of lingerie’s Facebook Q&A 2012
•Figure: House of Fraser student-focused Facebook campaign 2012
•Figure: JC Penney Holiday Boutique tie-up with Midtown Girl 2012
•Figure: Macy’s online catalogue 2012
•Figure: John Lewis Made in UK initiative 2012
•Figure: Marks & Spencer Big Beach Clean-up 2012
•Figure: John Lewis Exeter flexible format store 2013
•Figure: John Lewis At Home fascia 2013
•Figure: Harvey Nichols Beauty Bazaar fascia 2013
•Figure: Online sales mix of UK department store market 2008, 2012 and 2017e
•Figure: Houseoffraser.com click & collect store Aberdeen 2013
•Figure: Amazon locker service 2013
•Figure: Marks & Spencer desktop site versus mobile optimised site 2012
•Figure: House of Fraser and John Lewis iPhone apps 2012
•Figure: Attractive markets for entry 2012–17
•Figure: Marks & Spencer’s German local website 2013
•Figure: Selfridges international shipping policy 2013
Related research categories
By sector: Retail, Department store (in Retail)
By market: United Kingdom (in Europe)
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