Department Stores of the Future

How do you look at the future of the department store business model?

Debenhams, House of Fraser, they're all large spaced retailers and they're all recognized in fact they got too much space in different ways and John Lewis have completely stopped their store program, they have got stores now that if they could they would dispose of. They all recognize they've got too much space, that's the first thing.

Debenhams, House of Fraser, they're all large spaced retailers and they're all recognized in fact they got too much space in different ways and John Lewis have completely stopped their store program, they have got stores now that if they could they would dispose of. They all recognize they've got too much space, that's the first thing.

How much overcapacity is there in the UK?

The excess space is in secondary or tertiary markets. They're markets where you will not have the foothold to be able to justify having that space. In the end department stores will be advanced into bigger markets, bigger conovations whether they're not fought for if you can't justify it otherwise. That's why it seems to be how House of Fraser are now to announce their closures. We'll see what Debenhams does with their 50. 50, by the way, is nowhere near enough, they have 170 I would suggest that no more than 80 stores is the right number for Debenhams.

At the maximum, absolutely the maximum because you spend £50 to £60 a square foot just refurbishing and they can't afford it, they absolutely can't afford it. There's a lot of extra space, that needs to be addressed and then how do you leverage the space that you have in the markets that you're doing business with to drive customers into their stores. The best example I've found is Selfridges is a classic case study of how you create experiential retailing, I know it's a cliché but it's absolutely true. That's the role of a department store is for people to come into experience, to services and make shopping easy. If you want to buy something, well you can come and have a look, we'll deliver it the way you want, where you want when you want. We'll not be the cheapest but we'll be the best value-added retailer. You'll spend half the day there, you'll go and eat, you'll go and watch demonstrations, and the whole thing around it being an experience is the only chance department stores have to survive. The fact that there is one retailer who is already doing that, and I think Harvey Nichols is also doing relatively good jobs on doing that. Harvey Nichols' Knightsbridge store is trading particularly well after they changed that.

Is it unique to the higher end of the market?

Yes, to a degree higher end. What they are doing is if you look at Harvey Nichols first floor, they've reduced their stock density by 60%. They've created inspirational displays. Customers are responding. Their conversion rates have gone through the roof.