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Glory & fall (& renaissance) of the Luxury Department Store

Updated: Mar 29, 2021

The origins

According to the Sybarite report, a department store is "a cohesive space with a high-end, multi-brand offering across multiple product categories, housed under one roof.

When you look at them more closely, most prestigious names have always been strongly connected to a place (London, Paris, Berlin, Moscow, New York...) and a time. They also usually share the following characteristics:

- a remarkable architecture, signed by renowned architect – either witness of its times or a disruptive and innovative take on a specific era

- the best location(s) in any major city in the world

- a long history & legacy … with innovation and reinvention at heart

- a strong connection with design, fashion and luxury in general

- a deep connection to their city – a showcase of the local “art-de-vivre”

- International reputation & fame

and most of all, they all sell all the most sought after products and brands.


The Glorious decades

Since the first Department Stores were created - for most of them, in the 19th century except for the extraordinary London institution that is Fortnum & Masons which I think was created much earlier than that, in the early 1700's - they have changed the way consumers shop and generally speaking shaped 20th century’s global culture.


For decades if not centuries, the department store was synonymous with convenience. It was a unique, new way of shopping; a destination truly; a place of great service, of exclusive experience; an elitist and luxurious place where you could find the most sought-after brands and designers, In a recent post I shared a great book I recommended to read when one wants to understand what true luxury & tailor-made customer experience is ("I'll drink to that" by Betty Halbreich). That woman spent nearly forty years as the legendary personal shopper at Bergdorf Goodman, where she worked with socialites, stars, and ordinary women off the street. An icon. More than just stores, those places progressively became cultural anchors, witnesses of their times. Just think about Emile Zola and the fascinating "Au Bonheur des Dames" (written c1882) or Balzac and his "Cesar Birotteau" novel.


The fall

However, at the beginning of the 21st century, those institutions whose positioning and unique proposition had always been about service and convenience, began to be challenged by online stores & e-commerce platforms (source : 2018 Luxury Goods Worldwide Market Study, Fall–Winter - Bain & Company). Those iconic places had aged a little bit, still offered an old-school kind of shopping experience. What had been considered as an exclusive & luxury experience was now seen as an elitist & intimidating experience, at times when, from the comfort of their homes, customers could find the exact same products & offers. The department stores had to reinvent themselves once again, and reposition their offer and the experience they would propose to customers.


A deep reinvention for a possible "renaissance"

2018 marked a turning point in the fate of those retailers.

To be more exact, 2018 showed a bifurcation between the struggling accessible segment and the recovering high-end segment able to go through deep renovation. Those who understood that quite quickly (and got the funds to initiate a deep repositioning) saw their sales rise massively in a very short time.


Example of La Rinascente Torino:

In Turin, between 2018 & 2019, Rinascente invested €33 million to buy the building and double the branch's retail area from 3,500 to 7,500 square metres plus an extra €20 million to renovate it entirely + called on several renowned interior designers and architects, each taking care of a section on one or more floors. In the newly renovated areas sales rose by 70%. In Roma, the newly renovated (end of 2017) flagship store in via del Tritone recorded, in its second year of trading, a +20% rise in sales. (Source : Rinascente general manager Pierluigi Cocchini for FashionNetwork.com).

Credit : La Rinascente


Example of Harvey Nichols:

Mid 2018 Harvey Nichols launched a new womenswear international designer floor in its flagship Knightsbridge store. The company also carried out refurbishment of its menswear department, beauty floor and designer accessories hall. The result: +9 percent in revenues to 229 million pounds (286.5 million dollars) for the year ending in march 2019 (Source : Fashionunited UK).


Over the last 3 years (with the exception of 2020 in the context of the pandemic - which paused the openings & physical-based shopping experience - a lot of them embarked on ambitious renovation projects - not only giving drastic facelifts to their brick-and-mortar spaces, but also re-evaluating their purpose and relationships with their clientele.


Le Bon Marche, Paris : renovated (2014-2018) / new “3.0 Shopping” concept (curated exhibitions)

Galeries Lafayette, Paris : renovated (2011-2012) / opening of new concept on Champs Elysees (2019) / More openings to come in China

Neiman Marcus, New York : opened new concept at Hudson Yards bringing together luxury fashion retailers, art galleries, hotels & wellness

Harvey Nichols, London : renovated (2014-2018)

Alster Haus, Hamburg : renovated

Rinascente, Italy : renovated its italian flagships

Fortnum & Mason : opened first store outside the UK in Hong Kong in 2019 – thanks to popularity amongst Chinese customers;

Palacio de Hierro, Mexico : reopened in 2018 after renovation ($300M investment)

Credit : Fortnum & Mason


So, what is the future of the Luxury department stores?

I see 5 key trends / evolutions


1 - From retail to hospitality

More and more of those luxury locations & retailers will include a bar, restaurant, cafe, or any other concept allowing customers to stop, relax and enjoy their time in the department store.

Credit : Louis Vuitton - Cafe V, in Louis Vuitton's Ginza Namiki Store #LVGinza (https://eu.louisvuitton.com/eng-e1/magazine/articles/le-cafe-v)


2 - Experience / entertainment

New concepts will diversify into new categories and complementing a traditional luxury apparel and accessories offer, with more service-driven or cultural experiences, ranging from art to beauty, wellness, food, and beverage…If designed well, department stores should be the only place you would want to go to shop, meet friends, eat and drink – or simply pass the time. A real destination for entertainment.


3 - Global to local


4 - Purpose, Culture & Emotion


5 - and most of all, an omnichannel approach

Online shopping has accelerated tremendously in 2020 and with the uncertain return to physical stores (or at least, the uncertainty on when it is going to happen) department stores will be no exception and will have to build an online strategy (and already are). With the role played by physical stores evolving, retailers need to find ways and reasons for shoppers to come back to stores.


Sources & Additional reading:

https://www.bbc.com/culture/bespoke/story/20150326-a-history-of-the-department-store/index.html

Post-pandemic playbook: Reviving US department stores | Vogue Business


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