2020
9
UK Department Stores Market Report 2020
2020-08-27T16:09:32+01:00
OX988532
2995
123598
[{"name":"Retail","url":"https:\/\/store.mintel.com\/industries\/retail"}]
Report
en_GB
“The department store sector in the UK continued to struggle throughout 2019 and the outbreak of COVID-19 came at a particularly difficult time. Many of the leading department stores were…

UK Department Stores Market Report 2020

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Report Summary

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Department Stores: Incl Impact of COVID-19 – UK market, and the behaviours, preferences and habits of the consumer.

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What are the key challenges facing the industry? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Covered in this report

The UK retail industry had a challenging 2019, with several retailers downsizing or shutting shop completely. This has been exacerbated at the start of 2020 with the outbreak of COVID-19, which has presented huge challenges for department stores across the spectrum, and not just in terms of the immediate impact of the lockdown. Luxury stores, for example, have been worried about the impact a decline in tourism will have throughout 2020. Furthermore, department stores’ reliance on fashion and other discretionary items means that they are predicted to be particularly hard hit by inevitable economic slowdown. The decline in the department store market size is set to drop by a further 28% in 2020 due to COVID-19.

Expert analysis from a specialist in the field

Written by Chana Baram, a leading analyst in the Retail sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

The department store sector in the UK continued to struggle throughout 2019 and the outbreak of COVID-19 came at a particularly difficult time. Many of the leading department stores were in the midst of reviewing store portfolios and making significant strategic changes in order to try to turn things around. For several years there have been question marks around the relevance of department stores on the high street – a broad range of goods can now be bought from online retailers, often conveniently and well-priced. Chana Baram
Retail Analyst

Table of Contents

  1. Overview

    • What you need to know
    • Key issues covered in this report
    • Products covered in this Report
  2. Executive Summary

    • The market
    • The department store sector continues to decline
      • Figure 1: UK department store sector size and forecast (Post-COVID-19 lockdown forecast), 2014-24
    • Footfall across the high street has seen steep declines
      • Figure 2: Year-on-year footfall change, by location, January 2015-February 2020
    • Impact of COVID-19 on department stores
      • Figure 3: Short, Medium and long term impact of COVID-19 on Department Stores, April 2020
    • Companies and brands
    • Major leading players struggle
    • House of Fraser loses market share
      • Figure 4: Leading department stores, estimated market shares, 2017-19
    • Brand research shows that John Lewis is highly regarded
      • Figure 5: Attitudes towards and usage of selected brands, March 2020
    • The consumer
    • Department stores attract two thirds of shoppers
      • Figure 6: Department stores used in the last 12 months, 2018-20
    • Fashion is the most commonly bought category at department stores
      • Figure 7: What consumers bought from department stores in the last 12 months, May 2019 and February 2020
    • Gifting brings shoppers into department stores
      • Figure 8: Reasons given for visiting a department store, February 2020
    • Consumers prefer the ease of online shopping
      • Figure 9: Department store shopper behaviours, February 2020
    • Shoppers are suffering from discount fatigue
      • Figure 10: Consumer attitudes towards department stores, February 2020
    • Department stores are perceived by some as pricey and inconvenient
      • Figure 11: Top reasons given for not purchasing items at department stores, February 2020
    • What we think
  3. The Impact of COVID-19 on Department Stores

    • Short, medium and long-term impact on the industry
      • Figure 12: Short, Medium and long term impact of COVID-19 on Department Stores, April 2020
    • Opportunities and Threats
    • COVID-19 hastens department store closures
    • Focus on community and personalisation
      • Figure 13: John Lewis has been providing care packages to key workers in the UK to show support, April 2020
    • Digital innovations will grow in importance
      • Figure 14: John Lewis – virtual home design service, April 2020
    • Impact on the department store sector
    • COVID-19 set to cause steep declines for department stores
      • Figure 15: UK department store sector size and forecast (Post-COVID-19 lockdown forecast), 2014-24
    • Shifting consumer behaviours
    • During lockdown there has been an almost total reliance on online shopping for non-foods…
      • Figure 16: People who said they have increased the amount of shopping done online as a result of COVID-19, 28th February 2020-16th April 2020
    • …but a lack of spending on discretionary items
      • Figure 17: Changes in shopping habits since the outbreak of COVID-19 between 23rd April – 30th April 2020
    • Almost half of shoppers expect to spend less on fashion items
      • Figure 18: Expected spending patterns due to COVID-19, 23rd-30th April 2020
    • Key consumer segments
    • Lack of tourism due to COVID-19 will impact high-end department stores
      • Figure 19: Country or region of origin of non-UK-resident purchasers of high-end products, 2019
    • ABs are slightly less concerned about changes to their lifestyle
      • Figure 20: Worries about how COVID-19 will impact lifestyles, by socioeconomic group, 23rd-30th April 2020
    • Women are more likely to have cut back on non-essential spending
      • Figure 21: Expected changes in shopping for fashion items since the outbreak of COVID-19, by gender, 23rd – 20th April 2020
    • How a COVID-19 recession will reshape the department store sector
    • Unemployment will impact discretionary spend
    • Marketing and sales activities will need to be pitched appropriately
    • A recession could see a dip in conspicuous consumption
    • Increased discounting
    • Dealing with excess stock
    • COVID-19: Market context
  4. Issues and Insights

    • COVID-19 predicted to hugely disrupt the department store sector
    • The facts
    • The implications
      • Figure 22: Expected spending patterns due to COVID-19, 23rd-30th April 2020
    • Is online shopping the new ‘department store’?
    • The facts
    • The implications
  5. The Market – What You Need to Know

    • Department stores continue to experience declines
    • COVID-19 set to have a big impact on the market
    • Key department store categories expected to grow
    • Lack of tourism in 2020 to impact high-end department stores
    • Consumer uncertainty over Brexit eases up
    • Footfall has been steadily declining
  6. Market Size and Forecast

    • The decline is predicted to continue for department stores
      • Figure 23: UK department store sector size and forecast (Pre-COVID-19 lockdown forecast), 2014-24
      • Figure 24: UK department store sector size and forecast, at constant and current prices (Pre-COVID-19 lockdown forecast), 2014-24
    • Impact of COVID-19
      • Figure 25: UK department store sector size and forecast (Post-COVID-19 lockdown forecast), 2014-24
      • Figure 26: UK department store sector size and forecast, at constant and current prices (Post-COVID-19 lockdown forecast), 2014-24
    • Forecast methodology
  7. Consumer Spending

    • Spending has grown in the key categories
    • Fashion sales slow
    • Opportunities in prestige beauty
      • Figure 27: Consumer spending on the core department store categories, 2015-19
  8. Market Drivers

    • Inbound tourism rose in 2019…
      • Figure 28: Number of inbound tourists and tourist expenditure in the UK, 2009-19
    • …but COVID-19 will hamper department store sales
      • Figure 29: Country or region of origin of non-UK-resident purchasers of high-end products, 2019
    • Consumer uncertainty over Brexit lessens
      • Figure 30: Consumer sentiment towards Brexit, February 2020
    • Footfall continues to decline…
      • Figure 31: Year-on-year footfall change, by location, January 2015-February 2020
    • …as extreme weather conditions affect the high street
    • Online continues to grow
      • Figure 32: Internet sales as a proportion of total retail sales, 2009-19
  9. Companies and Brands – What You Need to Know

    • Major leading players struggle
    • House of Fraser loses market share
    • John Lewis has the most established online presence
    • Department stores get more experiential
    • Advertising spend was down nearly 30% in 2019
  10. Leading Players

    • Note on department store sales
    • Major players struggle with slowing sales
    • All change at John Lewis
    • Debenhams and House of Fraser continue to struggle post-administration
      • Figure 33: Leading department stores, net sales, 2015-19
    • Store closures continue…
      • Figure 34: Leading department stores, outlet numbers, 2015-19
    • …leading some to see an increase in sales per outlet
      • Figure 35: Leading department stores, estimated sales per outlet, 2015-19
    • Profits at the major department stores are shrinking
      • Figure 36: Leading department stores, operating profits, 2015-19
      • Figure 37: Leading department stores, operating margins, 2015-19
  11. Market Share

    • House of Fraser rapidly losing market share
      • Figure 38: Leading department stores, estimated market shares, 2017-19
      • Figure 39: Leading department stores, market shares, 2015-19
  12. Online

    • Struggling department stores suffer with slowing online sales
      • Figure 40: Select leading department stores, estimated online revenues, 2015-19
    • Online share for top department stores grows
      • Figure 41: Estimated online share of select leading department stores’ total revenues, 2015-19
      • Figure 42: Estimated online department store market size, 2015-19
    • Online becomes more important for department stores
    • Note on methodology
  13. Launch Activity and Innovation

    • Department stores enter rental territory
    • Selfridges hosts Hurr Collective pop-up
      • Figure 43: Hurr’s pop-up in Selfridges, 2020
    • Liberty teams up with My Wardrobe HQ
      • Figure 44: My Wardrobe HQ space in Liberty, 2020
    • Luxury department stores offer second-hand options
    • Selfridges opens Vestiaire concession
      • Figure 45: Vestiaire’s permanent Selfridges concession, 2019
    • Harrods and NSPCC team up for the second time
      • Figure 46: Inside Harrods latest Re-Told charity shop, April 2019
    • Selfridges launches pre-loved childrenswear pop-up
    • Depop pop-up opens in August 2019
      • Figure 47: Depop pop-up shop, 2019
    • L’Agence and Fenty pop-ups in October 2019
    • Selfridges teams up with Instagram
      • Figure 48: Selfridges Instagram pop-up, 2019
    • Highsnobiety launches The Co. Lab in partnership with Selfridges
    • Department stores bet on beauty
    • Harrods to open line of beauty stores
    • Dazed opens beauty pop-up in Selfridges
      • Figure 49: Dazed Beauty Space pop-up, 2020
    • John Lewis unveils beauty counter for men
    • UK department stores venture abroad
    • Fortnum & Mason opens in Hong Kong
      • Figure 50: Fortnum & Mason’s Hong Kong store, 2019
    • Harrods to open in Shanghai
    • Department stores revamp floors
    • John Lewis invests in menswear
      • Figure 51: Inside John Lewis’ Speak Easy area, 2019
    • Selfridges opens new accessories hall in Trafford Centre
      • Figure 52: Selfridges new accessory hall in Manchester’s Trafford Centre, 2019
    • Harrods continues its major revamp
      • Figure 53: Harrods’ new dining hall, 2019
      • Figure 54: Harrods’ new beauty hall, 2019
    • Department stores get more experiential
    • John Lewis launches most experiential store yet
    • Selfridges opens permanent cinema
      • Figure 55: The cinema at Selfridges, Oxford Street, London
    • House of Fraser opens gaming arena
      • Figure 56: Belong’s Oxford Street arena in House of Fraser, 2019
    • Alternative reality experiences
    • John Lewis uses virtual app for furniture
      • Figure 57: John Lewis’ AR furniture app in use, 2020
    • Harvey Nichols launches VR circus
    • M&S to combine food hall and clothing store
  14. Advertising and Marketing Activity

    • Advertising spend down nearly 30% in the last year
      • Figure 58: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, 2015-19
    • Marks & Spencer remains the sector’s biggest spender
      • Figure 59: Recorded above-the-line, online display and direct mail total advertising expenditure, by selected leading UK department stores, 2015-19
    • TV is the primary source of department store advertising
      • Figure 60: Recorded above-the-line, online display and direct mail total advertising expenditure by selected leading UK department stores, by media type, 2019
      • Figure 61: Recorded above-the-line, online display and direct mail total advertising expenditure of selected leading UK department stores, by media type, 2019
    • Key campaigns
    • Christmas advertising is the highlight of the year
    • John Lewis shelves first spring campaign due to COVID-19
    • M&S revamps ‘This is Not Just’ food marketing campaign after 12-year absence
    • Debenhams’ £3 million male-focused campaign
    • Harvey Nichols parts ways with creative agency
    • Nielsen Ad Intel coverage
  15. Space Allocation Summary

    • Space allocation summary
      • Figure 62: Department stores: Summary of estimated in-store space allocation, March 2020
    • Detailed space allocation estimates
    • M&S revamping childrenswear department and introducing urban farming in stores
    • New toy emporium and permanent cinema at Selfridges’ flagship London store
      • Figure 63: The cinema at Selfridges, Oxford Street, London
    • John Lewis’ new experiential concept shop to attract footfall and increase dwell time
    • Struggling Fenwick turns floor space into offices
    • New-style House of Fraser being rolled out
      • Figure 64: Department stores: Detailed space allocation estimates, March 2020
  16. Brand Research

    • Brand map
      • Figure 65: Attitudes towards and usage of selected brands, March 2020
    • Key brand metrics
      • Figure 66: Key metrics for selected brands, March 2020
    • Brand attitudes: John Lewis highly rated for customer service
      • Figure 67: Attitudes, by brand, March 2020
    • Brand personality: Debenhams seen as accessible
      • Figure 68: Brand personality – macro image, March 2020
    • House of Fraser perceived as impersonal
      • Figure 69: Brand personality – micro image, March 2020
    • Brand analysis
    • John Lewis is the favourite brand
      • Figure 70: User profile of John Lewis, March 2020
    • Debenhams has high levels of usage, but is not rated for its experience
      • Figure 71: User profile of Debenhams, March 2020
    • Fenwick lacks differentiation
      • Figure 72: User profile of Fenwick, March 2020
    • Harvey Nichols worth paying more for
      • Figure 73: User profile of Harvey Nichols, March 2020
    • House of Fraser perceived as boring
      • Figure 74: User profile of House of Fraser, March 2020
  17. The Consumer – What You Need to Know

    • Department stores attract two thirds of shoppers
    • Fashion is the most commonly bought category at department stores
    • Gifting brings shoppers into department stores
    • Consumers are turning to online shopping
    • Shoppers are suffering from discount fatigue
  18. Where They Shop

    • Department stores continue to attract two thirds of shoppers
      • Figure 75: Department stores used in the last 12 months, 2018-20
    • In-store shopping more popular than online
      • Figure 76: Department stores used in-store and online in the last 12 months, February 2020
    • Department stores appeal to those with higher socio-economic status
      • Figure 77: How consumers shopped with department stores in the last 12 months, by socio-economic status, February 2020
    • Most shop across just one or two different stores
      • Figure 78: Repertoire of department stores used in the last 12 months, February 2020
  19. What They Buy

    • Eight in 10 made a fashion purchase
      • Figure 79: What consumers bought from department stores in the last 12 months, May 2019 and February 2020
    • Older shoppers are more likely to buy clothing at department stores
      • Figure 80: What consumers bought from department stores in the last 12 months, by age, February 2020
    • Two thirds bought more than one type of item
      • Figure 81: Repertoire of how many items consumers bought from department stores in the last 12 months, February 2020
  20. Reasons for Visiting Department Stores

    • Three quarters visited a department store…
      • Figure 82: Visits to department stores, February 2020
    • …with young people most likely to visit
      • Figure 83: Visits to department stores, by age, February 2020
    • Over two in five visited for gift ideas
      • Figure 84: Reasons given for visiting a department store, February 2020
    • Men aged 25-44 visit to use leisure facilities
      • Figure 85: Consumers who visited a department store to use the leisure facilities, by gender and age, February 2020
  21. Behaviours of Department Store Shoppers

    • Online shopping is hampering the progress of department stores
      • Figure 86: Department store shopper behaviours, February 2020
    • Men find it easier to shop online but could be swayed by exclusive items
      • Figure 87: Department store shopping behaviours, by gender, February 2020
    • Younger generations want experiences
      • Figure 88: Behaviours towards shopping in a department store that has a selection of extra services, by generation, February 2020
  22. Attitudes towards Department Stores

    • Consumers are suffering from discount fatigue
      • Figure 89: Consumer attitudes towards department stores, February 2020
    • Shoppers across the board go to department stores to find unique items
      • Figure 90: People who agree that the main reason to visit a department store is to buy items that can’t be bought elsewhere, by gender and age, February 2020
    • Store closures put off consumers
  23. Reasons for Not Using Department Stores

    • Department stores viewed as pricey and inconvenient
      • Figure 91: Top reasons given for not purchasing items at department stores, February 2020
    • People in small towns opt for more convenient options
      • Figure 92: People who have not shopped at a department store as there are more convenient places for them to shop, by location, February 2020
  24. Debenhams

    • What we think
    • COVID-19 threatens the future of the business
    • Online lifeline?
    • A need to focus on the UK
    • Where now?
    • Company background
    • Company performance
      • Figure 93: Debenhams: Group financial performance, 2013/14-2017/18
      • Figure 94: Debenhams: Outlet data, 2013/14-2017/18
    • Retail offering
  25. House of Fraser

    • What we think
    • COVID-19 threats
    • COVID-19 opportunities
    • A strategy of elevation
    • Matching costs to revenues
    • Further store closures inevitable
    • Company background
    • Company performance
      • Figure 95: House of Fraser Plc: Group financial performance, 2014/15-2018/19
      • Figure 96: House of Fraser Plc: Outlet data, 2014/15-2018/19
    • Retail offering
  26. John Lewis & Partners

    • What we think
    • Merger of John Lewis & Partners and Waitrose & Partners head office functions brings challenges and opportunities
    • Experiential concept shop showcases services and experiences across fashion, beauty, cookery, gadgets, gardening and home interiors
    • Own-brand fashion investment
    • Capitalising on male interest in beauty products
    • Expanding click-and-collect and home delivery options
    • Try before you buy augmented reality experience making online purchasing easier
    • Rewarding customers’ ethical behaviour
    • Extending into the home improvements market
    • Temporarily closes its stores during COVID-19 crisis
    • Company background
    • Company performance
      • Figure 97: John Lewis & Partners Plc (department store): Group financial performance, 2015/16-2019/20
      • Figure 98: John Lewis & Partners Plc (department store): Outlet data, 2015/16-2019/20
    • Retail offering
  27. Marks & Spencer

    • What we think
    • COVID-19 threats
    • COVID-19 opportunities
    • Online ramping up
    • Store portfolio is being cut back
    • A conscious shift towards food
    • Company background
    • Company performance
      • Figure 99: Marks & Spencer: Group financial performance, 2014/15-2018/19
      • Figure 100: Marks & Spencer: Outlet data, 2014/15-2018/19
    • Retail offering
  28. Appendix – Data Sources, Abbreviations and Supporting Information

    • Abbreviations
    • Consumer research methodology
  29. Appendix – Market Size and Forecast

    • Forecast methodology
    • Best- and worst-case forecast prior to the COVID-19 lockdown
      • Figure 101: UK department store sector size and forecast, best- and worst-case forecast (pre-COVID-19 lockdown), 2019-24

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This market report provides in-depth analysis and insight supported by a range of data. At the same time, introductory and top-level content is provided to give you an overview of the issues covered.

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