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Introduction

*The IADS had the occasion to travel to Finland, Sweden and Norway to visit Stockmann, NK and Steen & Strom respectively. All those three venerable companies, true institutions in their countries, have started a transformational post-pandemic journey in order to become destinations again in their respective cities.

At a moment when tourism is starting again and the three countries seem relatively immune to the difficulties created by the war in Ukraine, we review where they stand, their innovations worth noting and why their transformation is far more than just a revamp or a digital reset: for at least two of the three companies, they are challenging their own business model to the point of admittedly literally learning a new job.

Let’s embark north of the 60th parallel to see what is going on!

This first part is dedicated to Stockmann in Finland.*

Company history: a former real estate magnate turned tenant of its own previous properties

A former member of IADS (1950 – 2020), Stockmann was founded in 1862 in Helsinki by Georg Franz Stockmann and is credited for having introduced revolving doors, soda fountains and escalators in Finland. The company grew to the point of adding, aside from a significant store fleet in Finland, stores in Tallinn (Estonia), Riga (Latvia), and 4 stores in Moscow and one in St Petersburg at the peak of its history. However, business was challenging, and Stockmann separated its retail operations from real estate in 2014 and started selling under a lease-back scheme its assets in 2015. Divestment in Moscow was achieved in 2016 (operations started there in 1989) and in St Petersburg in 2019. Difficulties accelerated during the Covid-19 pandemic, forcing the company to apply for corporate restructuring in 2020, to sell off Tallinn and Riga properties in 2021, and the Helsinki flagship property in Q1 2022 for €400m.

Today, the company operates 5 stores in Finland in addition to Riga and Tallinn, all of them under a lease agreement in buildings that used to be the company’s properties. Stockmann conglomerate also owns and operates Lindex, a Swedish fashion chain representing 475 stores in 16 countries, which has fared so far much better than the department store division.

For the department store division, full-year sales in 2021 represented €291m (of which €226m was achieved in Finland, growing +3%, the rest being achieved in the Baltic states), with an operating result of €11.6m vs. a loss of €-48.2m in 2020 during the pandemic. Q1 2022 grew +27% vs. 2021 to €196m and operating profits to €9.8m from a loss of €-27.6m in the same period last year.

A new CEO, Mr Jari Latvanen, joined the company in August 2019 with the mission to help the company to exit the difficult situation at the time. After an all-time-low in 2020 leading to the near bankruptcy of the company, the sale of the property helped the company clear off debts in a record time and revert to a near-healthy situation, in spite of a new customer structure (in 2019, 20% of the business was done with Chinese and Russian customers, two groups which have both totally disappeared and replaced by locals).

Visiting the Helsinki flagship, the largest department store in the Nordic countries

The historical store spans over 50,000 sqm and 8 floors. Due to the fact that it is constituted of two different buildings, navigation can be somehow tricky as there are intermediary floors on the ground floor, and +1, +2 and +3 levels. As a consequence, for some categories such as women’s and men’s fashion, the offer is fragmented in different spaces, making product discovery difficult.

The basement is at the same time a service area, a recreational space and an event zone:

• A pharmacy is accessible from the parking space before entering the store,
• A deli, several restaurants and a bar are available. One of the restaurants is managed by a local chef offering set menus for lunch, helping business customers to come back into the store after having lost the habit during the pandemic (stores were never forced to close in Finland, Sweden or Norway, however the stay-at-home instructions and remote working were implemented),
• The event space, for instance used for Christmas, was used at the time of visit for “Stocklet”, a smart way to liquidate stocks while avoiding cluttering the regular selling areas. It is all about efficiency: products are gathered by size and customers are invited to hunt for a good deal (no inspirational trick here).

The ground floor is dedicated to cosmetics and accessories in addition to a small flower stand.

• For the cosmetics, the usual international suspects are all present, in the spectacular atrium (all brands have their own concept) and also includes related products (Dyson) and services (hair bar, nail bar). It is notable to remark that local brands are also present in abundance and a lot of space is dedicated to them.
• The women’s accessories zone is the most appealing one in the store (and most differentiated), as it has been refurbished very recently. All windows have been open and let natural light come in, with plants and trees giving a feeling of nature (they are changed according to the season), and low rise furniture giving full sight of the space. International brand names are cleverly mentioned on the floorplan, but this can be somehow deceptive as in reality, the products are simply put on small tables just like any other generic area, while one would have expected to find a shop in shop (the only shop-in-shop on this floor so far is Longchamp with its own cash desk, the rest is operated in wholesale. Overall, 5% of the business is made in concessions, with Dior Cosmétiques, Longchamp, Hugo Boss and the brands on the 6th floor).

The first floor is dedicated to men’s fashion on several sub-levels, including some kind of mezzanine. This is not helping to embrace the whole offer at once. According to the CEO himself, the men’s business has considerably evolved and it is now almost impossible to find a formal offer in the store, as Finns (known to be extremely formal) are not looking for these products anymore.

The second floor is dedicated to women’s fashion and is better lit, more engaging and spacious than the men’s section. All brands are displayed with their own concepts on murals, which makes them more outstanding. 3 elements were worth being noted:

• Fitting rooms are surprisingly uninviting. At the time of the visit (morning), a rack with unsold items was displayed in front of them, not precisely an encouragement to buy, in addition to the cabins themselves, which are rather disconnected from the overall feeling of the floor,
• Customers also have the occasion to shop in dedicated lounges, which have been recently opened along with the revamping of the private shopping activity. Such spaces are significantly more attractive.
• On the side, a “Relove” café has been open, astutely mixing racks of second-hand items with a café, giving a charming boudoir feeling to the space, which was crowded (unlike the rest of the floor) at the time of the visit.

The third floor is dedicated to contemporary fashion, sportswear and, curiously, lingerie, which is displayed just near men’s garments and women’s sportswear coats and shoes. Lingerie space execution is poor.

The fourth floor is dedicated to home accessories including the Casa Stockmann private label. Overall, private labels cover home and fashion RTW and accessories. For fashion, private labels (an activity which is made easier for Stockmann thanks to Lindex production capabilities) represent 15% of the business, including at the same time an inspirational offer and lines designed to complete missing prices and functions.

The fifth floor mixes Stockmann’s own operations with kids RTW, sneakers and toys (the space is supposed to be redesigned in the coming months), spaces leased to Halti, a Finnish outdoor brand, and Isku, a furniture brand. Transitions from space to space are abrupt. Recycling spaces (garments, electronics) are available on this floor only, which is not particularly handy.

The sixth and seventh floors are hybrid spaces:

• On the sixth floor, customers can find every service they might need: a bridal salon, a hairdresser, a perfume shop (not clear if operated by Stockmann or not), a medical and dental clinic, a dry cleaner, and a Solaris optical shop. This zone is not as appealing as the rest of the store and looks like a mall more than a part of the department store. Last but not least, a lounge is available, closed at the time of the visit and looking like an old-fashion gentlemen’s smoking lounge.
• The seventh floor is dedicated to services, but is not accessible from all lifts or staircases. There, customers can come to pick up products or have their purchases delivered through partners, but the overall feeling is that the zone is not inviting and a significant amount of space is empty. A champagne bar and a terrace complete the floor.

What to remember?

The store is getting ready for tourists to come back: it is clear that the Helsinki store is good at addressing tourists, information is provided in English (including promotional audio messages), in a clear way, and a strong push is set on local brands. However, the consequences of the Covid times were still felt at the time of the visit, with the tourist information desk on the ground floor only open from noon to 6 pm, and some specific cash desks curiously closed (such as the one near the flower stand). In addition, salespersons are still managing sales through central cash desks (no mobile payment) which, given the structure of the store, can be troublesome if someone has to go a few steps up or down to pay.

A smart approach to second-hand and outlet: the “Relove” café is a clever move: Stockmann teams up with local socialites and influencers to sell their wardrobe, creating a one-of-a-kind effect designed to attract a younger crowd to the store. It works, as there is a significantly different demographic in the Relove space compared to the rest of the Women’s fashion floor. Also, the way the outlet is presented, in the basement, helps to keep the display coherence and cleanliness in the rest of the store.

In spite of uninviting dedicated spaces, it is all about superior customer service: with the exception of the private shopping lounges, the customer service physical spaces are disappointing in the store (a feat that the CEO is aware of). However, Stockmann has implemented a new tool to cater for the needs of its Mystockmann loyal customers (1.3m out of a total of 5.5m Finnish citizens, with an active rate of 50%, generating 73% of the business) to replace the Net Promoter Score: the Emotional Value Index (EVI), which has been co-developed with a local Finnish start-up. This system gathers in real-time actual wordings from customers, evaluates their satisfaction, and gives the tools for the relevant teams to address their issues or receive their congratulations.

Conclusion

*Where is Stockmann going? Even though renting its store locations could be dangerous, this option allowed them to recuperate from a very difficult financial situation. The changes in the store feeling, customer approach and online services are truly perceptible and make a real difference from what the store used to be in the past (the accessories zone on the ground floor, now well-lit, is inviting and open on the outside, but was in the past used to sell rugs, for instance).

The IADS only visited the Helsinki store and it seems that it is getting more and more well-equipped and ready to welcome customers in large quantities, be them tourists (increasingly growing) or local customers, who have already increased their average shopping basket, just like in the rest of Northern Europe. We only wonder if operating a store fleet of 5 stores in Finland and 2 overseas is still relevant as it might not allow the company to fully focus on becoming a destination name in three capital cities, at a moment when competing companies from other countries in the same zone, such as NK and Steen&Strom, are also reconsidering their strategy and revamping their offer, taking a more luxurious and international fashion way than what Stockmann seems to be doing at the time.*

Credits: IADS (Selvane Mohandas du Ménil)