What: In her weekly newsletter, the founder of MBS, a headhunting group, reflects on the role of department stores today

Why it is important: They need to prioritize experience over anything else in order to resist the luxury groups’ increasing power.

The relevance of UK department stores in a post-COVID, digitally competitive environment is notable despite the decline of many major online multibrand retailers. These stores, historical pillars of luxury retail, continue to adapt to shifting cultural, political, and technological landscapes, as exemplified by prominent names like Fortnum & Mason, established in 1707, and others like Harrods and Selfridges which opened in the 19th and early 20th centuries, respectively.

Department stores must now focus on innovation and experiential retail to remain destinations of choice. Selfridges, for instance, emphasizes creating engaging experiences such as Sportopia, an in-store festival featuring interactive sports activities. This shift towards experiential retail is echoed by former executives of Saks and Harrods, emphasizing the transformation of these spaces from mere shopping locations to centers of discovery and engagement.

Moreover, the role of physical elements like store windows remains significant, evolving to complement online engagements that extend the stores' reach and influence. However, department stores face growing competition not only from online platforms but also from luxury brands that are enhancing their direct-to-consumer capabilities, as demonstrated by Kering’s strategic real estate investments.

Despite challenges, the narrative surrounding department stores remains one of evolution and adaptation, crucial for their survival and continued relevance in the luxury retail sector. The future, while uncertain, still holds potential for innovation within this traditional retail format.

Department stores: a destination for the ages