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Department Store Retailing - UK - April 2015

"The main department stores have been among the types of retailers leading the way in both expanding delivery options and click-and-collect as consumers are increasingly looking for the easiest and most convenient way to shop and receive their purchases."
– Tamara Sender, Senior Fashion Analyst

This report covers the following areas:

  • How have department stores performed over the last year?
  • How are department stores competing in a multichannel world?
  • What are the main growth opportunities for department stores?

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What's included

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Table of contents

  1. Introduction

      • Department store definition
        • Sector benchmarks
          • Department stores
            • Mixed goods retailers
              • Statutory revenues versus GTV
                • Financial definitions
                  • Sales per store, sales per sq m
                    • Market shares
                      • Abbreviations
                      • Executive Summary

                          • The market
                            • Figure 1: Best- and worst-case forecast for department store sales, 2009-19
                          • Market factors
                            • Consumer spending
                              • Figure 2: Consumer spending on core department store categories, 2009-14
                            • Foreign visitors
                              • Figure 3: Overseas residents’ visits to the UK, by area of residence, 2013 and 2014
                            • Companies, brands and innovation
                              • Market shares
                                • Figure 4: Top department stores’ market shares, 2013 and 2014
                              • Winners and losers
                                • Figure 5: Major retailers’ annual sales growth (some estimated) versus average segment growth, 2014
                              • Brand research
                                • Figure 6: Attitudes towards and usage of selected brands, November 2014 and February 2015
                              • Major innovations
                                • Space allocation
                                  • Figure 7: Department stores: Summary space allocation, February 2015
                                • Online growth
                                  • The consumer
                                    • Where they shop
                                      • Figure 8: Department stores purchased from in the last six months, in-store and online, February 2015
                                    • What would encourage them to shop more?
                                      • Figure 9: What would encourage consumers to shop more at a department store, February 2015
                                    • Interest in additional services
                                      • Figure 10: Interest in additional services when shopping at department stores, February 2015
                                    • Reasons for shopping at a particular department store
                                      • Figure 11: Reasons for shopping in-store at a particular department store, February 2015
                                    • Shopping in the lead-up to Christmas
                                      • Figure 12: Shopping behaviour at department stores in the lead-up to Christmas, February 2015
                                    • What we think
                                    • Issues and Insights

                                        • How have department stores performed over the last year?
                                          • The facts
                                            • The implications
                                              • How are department stores competing in a multichannel world?
                                                • The facts
                                                  • The implications
                                                    • What are the main growth opportunities for department stores?
                                                      • The facts
                                                        • The implications
                                                        • Trend Application

                                                            • Trend: Experience is All
                                                              • Trend: Access All Areas
                                                                • Trend: Return to the Experts
                                                                • Market Environment

                                                                  • Key points
                                                                    • Foreign visits
                                                                      • Figure 13: Overseas residents’ visits to the UK, by area of residence, 2013 and 2014
                                                                    • Changing population structure
                                                                      • Figure 14: Trends in the age structure of the UK population, 2009-19
                                                                    • Consumer confidence falls during 2014
                                                                      • Figure 15: Financial confidence index, January 2009- January 2015
                                                                    • Closing gap between prices and wages
                                                                      • Figure 16: Retail prices index and average weekly earnings: Annual % change, January 2011-January 2015
                                                                  • Consumer Spending on Department Store Categories

                                                                    • Key points
                                                                      • Core department store categories
                                                                        • Figure 17: Consumer spending on core department store categories, 2009-14
                                                                      • Full spending breakdown
                                                                        • Figure 18: Consumer spending on department store categories (incl. VAT), 2009-14
                                                                    • Strengths and Weaknesses

                                                                      • Strengths
                                                                        • Weaknesses
                                                                        • Who’s Innovating?

                                                                          • Key points
                                                                            • Setting the standard for fragrance retailing
                                                                              • Figure 19: Harrods Salon De Parfums
                                                                            • Selfridges #beautyproject
                                                                              • Figure 20: ‘He She Me’: A display from Selfridges’ Agender department
                                                                            • Social selling strategy
                                                                              • John Lewis invests in technology
                                                                                • Figure 21: Beacon technology: Store staff being alerted of a click-and-collect customer entering the store
                                                                              • Memory mirror
                                                                                • Harrods goes healthy
                                                                                  • Figure 22: Harrods’ Happy New You window display, January 2015
                                                                                • In-store cinema
                                                                                • Sector Size and Forecast

                                                                                  • Key points
                                                                                    • Department store sales grow 2.2% in 2014
                                                                                      • Figure 23: Department store sales. 2010-14
                                                                                    • Market size
                                                                                      • The future
                                                                                        • Figure 24: Best- and worst-case forecast for department store sales, 2009-19
                                                                                      • Forecast
                                                                                        • Figure 25: Best- and worst-case forecast for department store sales (inc VAT), 2009-19
                                                                                    • Space Allocation Summary

                                                                                      • Key points
                                                                                        • Space allocation overview
                                                                                          • Figure 26: Department stores: Summary space allocation, February 2015
                                                                                        • Detailed space allocation
                                                                                          • Figure 27: Department stores: Detailed space allocation, February 2015
                                                                                      • Retail Product Mix

                                                                                        • Key points
                                                                                            • Figure 28: Estimated space allocation of broad department stores product categories, 2013/14
                                                                                            • Figure 29: Leading department stores: Estimated sales by broad product category, 2013/14
                                                                                            • Figure 30: Leading department stores: Estimated share of sales by broad product category, 2013/14
                                                                                            • Figure 31: Leading department stores, estimated sales density by product, 2013/14
                                                                                        • Leading Retailers

                                                                                          • Key points
                                                                                            • High-end department stores outperform
                                                                                              • Figure 32: Annual segment growth: Mid-market versus high-end, 2011-14
                                                                                              • Figure 33: Major retailers’ annual sales growth (some estimated) versus average segment growth, 2014
                                                                                            • Consolidated sales versus gross transactional values
                                                                                              • Leading retailers by sales
                                                                                                • Figure 34: Leading department stores: Net revenues, 2010-14
                                                                                              • Store numbers
                                                                                                • Figure 35: Leading department stores: Outlet numbers, 2010-14
                                                                                              • Sales per store
                                                                                                • Figure 36: Leading department stores: Annual sales per outlet, 2010-14
                                                                                              • Total sales area
                                                                                                • Figure 37: Leading department stores: Total sales area, 2010-14
                                                                                              • Sales densities
                                                                                                • Figure 38: Leading department stores: Annual sales per sq m, 2010-14
                                                                                              • Operating profits and margins
                                                                                                • Figure 39: Leading department stores: Operating profits, 2010-14
                                                                                                • Figure 40: Leading department stores: Operating margins, 2010-14
                                                                                            • Market Shares

                                                                                              • Key points
                                                                                                • M&S loses share, while John Lewis gains
                                                                                                  • Figure 41: Top department stores’ market shares, 2013 and 2014
                                                                                                  • Figure 42: Leading department stores’ market shares, 2010-14
                                                                                              • Online

                                                                                                • Key points
                                                                                                  • Online sector sales grow 14%
                                                                                                    • Figure 43: Estimated online sales by department stores (incl. VAT), 2012-14
                                                                                                  • Key category sales online
                                                                                                    • Figure 44: Online as a proportion of spending on selected categories, 2014 and 2015
                                                                                                  • John Lewis reaches £1.2 billion online sales
                                                                                                    • Figure 45: Leading department stores’ online sales (excl. VAT), 2012-14
                                                                                                    • Figure 46: Leading department stores’ online sales as % of their total sales, 2012-14
                                                                                                  • Online market shares
                                                                                                    • Figure 47: Leading department stores’ shares of all online sales, 2012-14
                                                                                                  • Most popular sites by visitor numbers
                                                                                                    • Figure 48: Leading department stores’ online visitor data, March 2015
                                                                                                  • Visits to websites by age
                                                                                                    • Figure 49: Proportion of visits to department store websites, by age, 1 February- 28 February 2015
                                                                                                • Brand Communication and Promotion

                                                                                                  • Key points
                                                                                                    • Leading department stores’ advertising spend
                                                                                                      • Figure 50: Leading department store retailers’ main media advertising spend, 2011-14
                                                                                                    • Press advertising is favoured
                                                                                                      • Figure 51: Leading department store retailers’ main media advertising spend, by media type, 2014
                                                                                                      • Figure 52: Leading department store retailers’ main media advertising spend, by media type, 2014
                                                                                                    • Campaign highlights in 2014
                                                                                                    • Brand Research – Department Stores

                                                                                                        • What you need to know
                                                                                                          • Brand map
                                                                                                            • Figure 53: Attitudes towards and usage of selected brands, November 2014 and February 2015
                                                                                                          • Key brand metrics
                                                                                                            • Figure 54: Key metrics for selected brands, November 2014 and February 2015
                                                                                                          • Brand attitudes: House of Fraser most likely to attract customers on price
                                                                                                            • Figure 55: Attitudes, by brand, November 2014 and February 2015
                                                                                                          • Brand personality: Harrods’ unique proposition is considered an exclusive one
                                                                                                            • Figure 56: Brand personality – macro image, November 2014 and February 2015
                                                                                                          • Selfridges and John Lewis most likely to be seen as fashionable
                                                                                                            • Figure 57: Brand personality – micro image, November 2014 and February 2015
                                                                                                          • Brand analysis
                                                                                                            • John Lewis combines style with customer service and trust
                                                                                                              • Figure 58: User profile of John Lewis, November 2014
                                                                                                            • Marks & Spencer has greater accessibility than other department stores
                                                                                                              • Figure 59: User profile of Marks & Spencer, November 2014
                                                                                                            • Selfridges has a vibrant sense of innovation
                                                                                                              • Figure 60: User profile of Selfridges, February 2015
                                                                                                            • House of Fraser most likely to be associated with value
                                                                                                              • Figure 61: User profile of House of Fraser, February 2015
                                                                                                            • Harrods benefits from very unique brand image
                                                                                                              • Figure 62: User profile of Harrods, February 2015
                                                                                                            • Debenhams may be a choice of convenience
                                                                                                              • Figure 63: User profile of Debenhams, November 2014
                                                                                                          • The Consumer – Where They Shop

                                                                                                            • Key points
                                                                                                              • What we asked
                                                                                                                • M&S leads but with an ageing customer
                                                                                                                  • Figure 64: Department stores purchased from in the last six months, whether in-store or online, February 2015*
                                                                                                                • John Lewis grows in popularity among men
                                                                                                                  • Debenhams is biased towards women
                                                                                                                    • Where consumers purchase – online/in-store split
                                                                                                                      • Figure 65: Department stores purchased from in the last six months, in-store and online, February 2015
                                                                                                                    • Purchasing online by demographic group
                                                                                                                      • Figure 66: Department stores purchased from in the last six months, online, by gender, age and socio-economic group, February 2015
                                                                                                                    • House of Fraser
                                                                                                                      • High-end and luxury department stores
                                                                                                                        • Where consumers browse
                                                                                                                          • Figure 67: Department stores where consumers have browsed in the last six months, either in-store or online, February 2015
                                                                                                                        • Most shop at one department store only
                                                                                                                          • Figure 68: Repertoire of department stores purchased from in-store in the last six months, February 2015
                                                                                                                      • The Consumer – What Would Encourage Them to Shop More at Department Stores?

                                                                                                                        • Key points
                                                                                                                          • What we asked
                                                                                                                            • Demand for more retailers to offer price matching
                                                                                                                              • Figure 69: What would encourage consumers to shop more at a department store, February 2015
                                                                                                                            • Women continue to want generous loyalty schemes
                                                                                                                                • Figure 70: What would encourage consumers to shop more at a department store, by age, February 2015
                                                                                                                              • Women want clothes that flatter
                                                                                                                                • Young want updated clothes ranges
                                                                                                                                  • More payment options
                                                                                                                                    • Figure 71: What would encourage consumers to shop more at a department store, by age, February 2015
                                                                                                                                  • Young keen on virtual fittings rooms
                                                                                                                                    • Mobile apps
                                                                                                                                      • Delivery versus click-and-collect
                                                                                                                                      • The Consumer – Interest in Additional Services

                                                                                                                                        • Key points
                                                                                                                                          • What we asked
                                                                                                                                              • Figure 72: Interest in additional services when shopping at department stores, February 2015
                                                                                                                                              • Figure 73: Interest in additional services when shopping at department stores, by gender, February 2015
                                                                                                                                            • Focusing on new beauty treatments
                                                                                                                                              • Interest in opticians and other services
                                                                                                                                              • The Consumer – Reasons for Shopping In-Store and Online at a Particular Department Store

                                                                                                                                                • Key points
                                                                                                                                                  • What we asked
                                                                                                                                                      • Figure 74: Reasons for shopping in-store at a particular department store, February 2015
                                                                                                                                                    • Reasons for shopping at particular department stores
                                                                                                                                                      • Figure 75: John Lewis: Reasons for shopping in-store at a particular department store relative to department store average, February 2015
                                                                                                                                                      • Figure 76: M&S: Reasons for shopping in-store at a particular department store relative to department store average, February 2015
                                                                                                                                                      • Figure 77: House of Fraser: Reasons for shopping in-store at a particular department store relative to department store average, February 2015
                                                                                                                                                      • Figure 78: Debenhams: Reasons for shopping in-store at a particular department store relative to department store average, February 2015
                                                                                                                                                    • Reasons for shopping online at a particular department store
                                                                                                                                                      • What we asked
                                                                                                                                                          • Figure 79: Reasons for shopping online at a particular department store, February 2015
                                                                                                                                                      • The Consumer – Shopping at a Department Store in the Lead-up to Christmas

                                                                                                                                                        • Key points
                                                                                                                                                          • What we asked
                                                                                                                                                            • A promotional Christmas 2014
                                                                                                                                                              • Figure 80: Shopping behaviour at department stores in the lead-up to Christmas, February 2015
                                                                                                                                                            • Black Friday hype
                                                                                                                                                              • An online Christmas
                                                                                                                                                              • Debenhams

                                                                                                                                                                  • What we think
                                                                                                                                                                    • Becoming less promotionally driven
                                                                                                                                                                      • Catching up on multichannel
                                                                                                                                                                        • Looking internationally for growth…
                                                                                                                                                                          • …as UK reaches saturation
                                                                                                                                                                            • Company background
                                                                                                                                                                              • Company performance
                                                                                                                                                                                  • Figure 81: Debenhams: Group financial performance, 2009/10-2013/14
                                                                                                                                                                                • Latest financial results – 19 weeks to 10 January 2015
                                                                                                                                                                                  • Figure 82: Debenhams: Outlet data, 2009/10-2013/14
                                                                                                                                                                                • Retail offering
                                                                                                                                                                                • Fenwick

                                                                                                                                                                                    • What we think
                                                                                                                                                                                      • Company background
                                                                                                                                                                                        • Company performance
                                                                                                                                                                                          • Figure 83: Fenwick Ltd: Group financial performance, 2009/10-2014/15
                                                                                                                                                                                          • Figure 84: Fenwick Ltd: Outlet data, 2009/10-2014/15
                                                                                                                                                                                        • Retail offering
                                                                                                                                                                                        • Harrods

                                                                                                                                                                                            • What we think
                                                                                                                                                                                              • Company background
                                                                                                                                                                                                • Company performance
                                                                                                                                                                                                  • Figure 85: Harrods Ltd: Group financial performance, 2009/10-2014/15
                                                                                                                                                                                                  • Figure 86: Harrods Ltd: Outlet data, 2009/10-2014/15
                                                                                                                                                                                                • Retail offering
                                                                                                                                                                                                • Harvey Nichols UK

                                                                                                                                                                                                    • What we think
                                                                                                                                                                                                      • All change in the management team
                                                                                                                                                                                                        • Focusing on overseas development
                                                                                                                                                                                                          • Strengthening the e-commerce offer
                                                                                                                                                                                                            • Company background
                                                                                                                                                                                                              • Company performance
                                                                                                                                                                                                                • Figure 87: Harvey Nichols UK: Group financial performance, 2009/10-2014/15
                                                                                                                                                                                                                • Figure 88: Harvey Nichols UK: Outlet data, 2009/10-2014/15
                                                                                                                                                                                                              • Retail offering
                                                                                                                                                                                                              • House of Fraser

                                                                                                                                                                                                                  • What we think
                                                                                                                                                                                                                    • A new phase
                                                                                                                                                                                                                      • Strong performance as multichannel, own-brands and innovation fuels growth…
                                                                                                                                                                                                                        • …but still making a loss
                                                                                                                                                                                                                          • Company background
                                                                                                                                                                                                                            • Company performance
                                                                                                                                                                                                                                • Figure 89: House of Fraser: Financial performance, 2009/10-2014/15
                                                                                                                                                                                                                              • Stores
                                                                                                                                                                                                                                • Figure 90: House of Fraser: Outlet data, 2010/11-2014/15
                                                                                                                                                                                                                              • Retail offering
                                                                                                                                                                                                                              • John Lewis

                                                                                                                                                                                                                                  • What we think
                                                                                                                                                                                                                                    • One of retail’s winners
                                                                                                                                                                                                                                      • Innovative, especially in omni-channel
                                                                                                                                                                                                                                        • Strong store presence with pipeline of stores
                                                                                                                                                                                                                                          • Well placed for future growth
                                                                                                                                                                                                                                            • Company background
                                                                                                                                                                                                                                              • Company performance
                                                                                                                                                                                                                                                  • Figure 91: John Lewis: Department store financial performance, 2009/10-2014/15
                                                                                                                                                                                                                                                • First half and Christmas 2014/15
                                                                                                                                                                                                                                                  • Figure 92: John Lewis: department stores outlet data, 2009/10-2014/15
                                                                                                                                                                                                                                                • Retail offering
                                                                                                                                                                                                                                                • Marks & Spencer

                                                                                                                                                                                                                                                    • What we think
                                                                                                                                                                                                                                                      • Divergent performance from two distinct halves
                                                                                                                                                                                                                                                        • Womenswear is the key
                                                                                                                                                                                                                                                          • Online also a problem
                                                                                                                                                                                                                                                            • Keeping things in perspective
                                                                                                                                                                                                                                                              • Company background
                                                                                                                                                                                                                                                                • Company performance
                                                                                                                                                                                                                                                                    • Figure 93: Marks & Spencer: Group financial performance, 2009/10-2014/15
                                                                                                                                                                                                                                                                    • Figure 94: Marks & Spencer: Group sales breakdown, 2013/14
                                                                                                                                                                                                                                                                  • Q3 2014/15
                                                                                                                                                                                                                                                                    • Figure 95: Marks & Spencer: Outlet data, 2009/10-2013/14
                                                                                                                                                                                                                                                                    • Figure 96: Marks & Spencer store portfolio, March 2014
                                                                                                                                                                                                                                                                  • Retail offering
                                                                                                                                                                                                                                                                  • Selfridges Retail

                                                                                                                                                                                                                                                                      • What we think
                                                                                                                                                                                                                                                                        • Rapid online growth
                                                                                                                                                                                                                                                                          • Company background
                                                                                                                                                                                                                                                                            • Company performance
                                                                                                                                                                                                                                                                              • Figure 97: Selfridges Retail Ltd: Group financial performance, 2009/10-2014/15
                                                                                                                                                                                                                                                                              • Figure 98: Selfridges Retail Ltd: Outlet data, 2009/10-2014/15
                                                                                                                                                                                                                                                                            • Retail offering
                                                                                                                                                                                                                                                                            • Appendix – Market Size and Forecast

                                                                                                                                                                                                                                                                                • Figure 99: Best- and worst-case forecast for department store sales, 2014-19

                                                                                                                                                                                                                                                                            Companies Covered

                                                                                                                                                                                                                                                                            • Beale Plc
                                                                                                                                                                                                                                                                            • Debenhams UK
                                                                                                                                                                                                                                                                            • Fenwick Ltd
                                                                                                                                                                                                                                                                            • Fortnum & Mason Plc
                                                                                                                                                                                                                                                                            • Harrods Group Total
                                                                                                                                                                                                                                                                            • Harvey Nichols UK
                                                                                                                                                                                                                                                                            • House of Fraser Plc
                                                                                                                                                                                                                                                                            • John Lewis Plc (department store)
                                                                                                                                                                                                                                                                            • Liberty Retail Plc
                                                                                                                                                                                                                                                                            • Marks & Spencer
                                                                                                                                                                                                                                                                            • Morleys Stores Ltd
                                                                                                                                                                                                                                                                            • Oldrid & Co Ltd
                                                                                                                                                                                                                                                                            • Selfridges Retail Ltd
                                                                                                                                                                                                                                                                            • W Boyes & Co Ltd

                                                                                                                                                                                                                                                                            Department Store Retailing - UK - April 2015

                                                                                                                                                                                                                                                                            £1,995.00 (Excl.Tax)