The Future of the Department Store – Part 1

Ian Dallimore

In Business, Design Posted


For most, ‘experience’ is the buzz word in Retail today. You ask anyone on the street, and they will probably tell you that the department store is no longer relevant because it has been left behind, because it no longer offers a good experience. But is this the real reason the modern department store is declining so quickly? Or is it all part of a bigger change affecting all multi-brand retail models? Now the dust has begun to settle on yet another lousy quarter for large format retailers, we’ve taken a step back, to see if anything be done to save this once stalwart of the high street.


The very first department store was conceived at 89 Pall Mall, in St James’, London as Harding, Howell & Co’s Grand Fashionable Magazine. Opened in 1796, it was split into four departments, offering Furs & Fans, Haberdashery, Jewellery & Clocks, and Millinery. It became a hive of social activity and a place where unchaperoned women could congregate without their male counterparts. These newly affluent women were the reason for its success. The early department stores, such as John Lewis in London, were founded by drapers who understood the tastes and buying power of this new generation of affluent women.

Into the 19th Century, the department store then adopted the aesthetic we have become familiar with today with the opening of The Great Exhibition in 1851. In 1909 Selfridges was opened, along with its restaurants, a roof garden, reading and writing rooms, reception areas for foreign visitors and more importantly, a band of knowledgeable sales assistants – carefully read in the art of the sale – who served as guides to this huge new emporium of fine quality goods.

Over 150 years after its creation, recent news has not favoured the department store. Following the collapse of BHS two years ago, closing a total of 160 stores nationwide. House of Fraser, (last summer) followed with as many as 31, only to be bought out of administration in August by Mike Ashley’s Sports Direct business. Debenhams, next announced financial turmoil, having closed, or soon set to close 50 UK stores. Mark’s & Spencer’s meanwhile, are set to close 100 stores by 2022 [BBC], 21 of which have already shut their doors across the UK. In Australia, Target is set to close 20+% of its stores; a value, big box retailer not winning the war on international home soil.


One obvious challenger – as most mainstream news journals have latched onto – is Amazon; The evil kingpin of the online shopping gang. But while the department store is undeniably failing to compete with online channels, in the US, budget retailers with absolutely no online sales presence such as Marshalls, are thriving through clever tactics, encouraging a bargain-hunt style atmosphere. So, it’s clear that online isn’t solely to blame.

What’s more, department stores have had the same opportunities to build an online presence as their brand competitors, but ‘almost 2 in 5 (37%) 18-24-year old’s think the online department store shopping experience isn’t very good and 64% of the same age group believe there to be a wider choice going directly to brands rather than visiting department stores.’ [Opinium, June 2019]

Then there’s the growing influence of the more discerning and sophisticated younger shoppers; Gen X and the Millennial, who choose brand differentiation over retailer in search of something in return for their purchasing prowess. This could be empathy, access, lifestyle, ethical satisfaction or through other unique in-store experiences not available elsewhere. This is true in particular of the concession, and more specifically still, of the beauty and perfumery concession. These are losing out to specialist stores and brands who can offer something different, targeted to specific consumers, while providing a self-guided shopping experience.

A more relevant question might not be directed at the demise of the department store at all, but at retail in general, and at the way society or technology is influencing the way we shop. It might sound something like, ‘How can retailers adapt to changing values?’.

It’s true that consumers of today are evolving – quickly. The largest proportion of consumers worldwide are now made up of digital natives in the Millennial and Gen-Z [stylus]. This growing consumer influence is more demanding, more empowered and better informed than ever before, scrutinising brand competition for cost and convenience. They’ll aspirationally browse a self-made myriad of platforms, both online and in-store and are quickly becoming less receptive to traditional forms of messaging.

We all know online channels offer far more choice and better prices, so we actively engage in ferocious price wars between online competition. And so, their bricks and mortar cousins simply can’t compete, and while margins buckle under the pressure in the race to discount lower, they must now offer something others don’t, or can’t…


Dedicated brand flagships and specialist stores have adapted to this. They now encourage and embrace new consumer demands in their increasingly fragmented and non-linear purchase process. They are more sensitive to their individual customer demographic; they are experimental too. Take Nike, whose newest Shanghai store – supposedly positioned above flagship level – has been branded their first ‘House of Innovation’. Spanning 4 floors, it offers a peek behind the closed doors of Nike’s front line of latest innovation and design. This is supported by personalised and digitally connected shopping journeys and ‘city-exclusive’ products and collectables not available anywhere else.

Department stores on the other hand, offer very little brand access, no demographically targeted identity, and no innovation; They have nothing unique to offer and so they rarely truly engage shoppers. They have lost their reputation for fashion too with big names pulling out, otherwise they remain largely unchanged for 50 years or more. Now more than ever, they must differentiate in a way other retailers can’t, they must build a unique in-store experience and adapt to changing consumer values.

A department store will generally have more space than the average specialist store, it can be a place for dining, events, shopping experiences, art, spa sessions, learning to fly a plane.. why not? (We know what you’re thinking – check out our post on merchandising – ‘It’s what you don’t sell, that makes you successful’). So long as the greater retail experience supports the stores’ proposition to a targeted demographic, to build an empathetic identity and to generate market differentiation.

Take for example, community hubs like Deus Ex-Machina. A mixed-use retail development – food, convenience and specialty mixed into one, all targeted at a specific demographic. The environment is cool, the product unexpected and you can eat there – but it’s great, award-winning food. Drop that in key cities around the world and you start to see travelling Millennial’s visiting these stores while abroad. They become tourist destinations in their own right, listed in Time Out’s 10 must see attraction in Milan, and Tokyo, and Bali.

But now there’s a new buzz word on the block; Emotion. It’s not just about creating an engaging, seamless and memorable experience in the path to purchase. It’s about doing all that and providing an experience that encourages loyalty too. In the not too distant future, when drones are delivering our purchases in 1-hour delivery slots, there will likely no longer be any reason to trek to the shops to pick something up. The only reasons to visit the high street will be for the customer service, the sociability, the personalised style advice, or for the human touchpoint in an otherwise frictionless journey; The emotion.

After all, if you could buy your coffee on an app and delivered hot by a drone in 10 minutes flat, you would probably still go into your local cafe for your morning Flat White. You would go to chat to the barista that knows your usual, because of the human interaction. The only difference between how that service commonly exists in that of a department store today, and in that of the model store, is in the way it is presented. The best stores remove the pain points first, often largely around transaction or time, before layering back in and integrating the emotion central to the brand experience.


Retail is becoming less focused on supporting purchases, and more focused towards helping shoppers fulfil goals and aspiration. Take Dalziel & Pow’s Mama’s and Papa’s store design which is targeted solely at expectant Millennials. The Store layout is organised into shopping ‘worlds’ based around new parents’ key shopping missions. The whole approach is instinctual and seamless, but sympathetic and humanistic. A home section provides a comfortable domestic environment for new mothers to meet locally in support. It encapsulates an innate understanding of the demographic.

Rapha, a premium cycling brand, catering initially for a London cycling demographic with admittedly money to burn, first opened its Clubhouse in Soho, West Central London in 2012, way ahead of its time. But cyclist flocked in their droves. Why, because community. (And also because it’s very cool). It opened its doors not only to those with the money to spend on its premium priced ‘performance road-wear’, ‘accessories’, and ‘publications’, but to all London cycling folk. To those who wanted a coffee and to delve into the ice cool culture that they exude, or those who dropped by to fix a puncture for the measly price of brand exposure. Now, 6 years on, it’s far more than that, it’s live racing, exclusive exhibitions, panel discussions, workshop, Clubhouse cafe, and group rides. Its coffee culture meets cycling, with the added possibility of rubbing shoulders with some of the biggest names in the sport; It’s an elite club but it’s accessible to all.


With brands building more and more confidence, consumers are left wondering what role a concession based retailer plays. What is their authority in the market?

The department store must adapt to focus on personalised, customer-centric experiences and it must find a new USP. It must exude confidence, adopting clear differentiation and running with it. It must be a leader in curated fashion once more and lead from the front. It should also use space to its advantage and take creative risks in order to spark continued interest.

Each day, younger generations, (Millenials, Gen X) hold a greater influence on the future of retail. Therefore we must look to the trends and demands of these generations in order to understand the future of retail. Shops must engage and entertain on a much more humanistic and individual level.

Reading up on the history of the department store, and how its popularity in the early 1800’s was largely down to the ability of its early pioneers to understand the wants and needs of its shoppers. We can’t help thinking that they’ve lost touch along the way. Mr Harry Gordon Selfridge did much to make the department store a destination rather than a big and comprehensively stocked city shop. It now feels like we must revisit his approach, to encourage visitation not through convenience, but for pleasure.

By Ian Dallimore
Senior Interior Designer at Prospace Australia

Drawing on his global experience in Europe, Asia and more recently in Australia and New Zealand, Ian’s approach to design is first and foremost anchored in the Brands goals. Passionate about how brands are perceived in a physical space, his approach is efficient and refined, while always trying to push the boundaries of what is possible.

Based on the ground in the UK, Ian has lead the design of projects in both Australia, Asia and Europe working closely with our teams in China and Australia, as well as the UK. Ian’s continued commitment to delivery definitely crosses borders!