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Last Updated: Tuesday, 15 January 2008, 00:27 GMT
The secret of department store success
By Simon Atkinson
Business reporter, BBC News

House of Fraser
House of Fraser has hailed its more "premium products".
Many UK department stores are enjoying something of a renaissance despite the general worries about consumer spending. How are they doing it?

On the face of it, UK department stores have not changed much in recent years.

There is the familiar scene that greets you at the entrance: a sea of perfume counters staffed by friendly ladies easing awkward gentlemen through the latest offerings from Chanel, Givenchy and Jade Goody.

And then you have the menswear department - with the rows of cufflink-and-tie sets and at least one well-groomed sales assistant brandishing a tape measure.

Visiting a department store is becoming more of a leisure experience
Maureen Hinton
Retail analyst, Verdict

Up a couple of levels you find the home section, with a feel that is undeniably homely: all lights, pastel bed linen and picture frames.

But look more closely and something has changed from just a couple of years ago.

In fashion

In the past, the fortunes of department stores have moved up and down as much the escalators connecting ladies fashion to sports equipment.

A business which does not invest in its environment is going to struggle
Matt Chambers
Brand director, House of Fraser

But judging by Christmas sales figures, they are firmly back in vogue with customers when other prominent retailers, such as Marks & Spencer and Next are looking to batten down the hatches.

At House of Fraser, bought in 2006 by Icelandic investors Baugar, like-for-like sales were up by 2.4% in the five weeks to 3 January.

And Selfridges - which has outlets in Birmingham and Manchester as well as London, saw sales climb by about 9%.

Inside Selfridges
Selfridges has raised the bar for department stores, analysts say

Meanwhile John Lewis - which was last week was voted the UK's favourite retailer - reported an 6.2% rise in same store takings during the five weeks to 5 January.

This included a 4.6% rise during the first week of its end-of-year sales.

And while there are still a few heavily discounted Santa Claus cookie jars and 'make your own festive biscuit' sets on display in its flagship store on London's Oxford Street, they are rapidly giving way to Easter decorations.


Analysts estimate that growth in the sector will more than double in the next five years - after a period which has seen less successful chains being snapped up by their bigger rivals or, as happened with Allders, fading away.

"The market was having a particularly tough time up until a couple of years ago," says Verdict Research retail analyst Maureen Hinton.

Harvey Nichols and Selfridges have done quite a bit to reinvigorate the general feel of department stores
Maureen Hinton
Retail Analyst,Verdict

She likened the staid feel that some stores had at that time to the Grace Brothers department store in TV comedy Are You Being Served.

"The word for them was unfashionable, but the likes of Harvey Nichols and Selfridges have done quite a bit to reinvigorate the general feel of department stores, to make them much more hip and the place to go."

She points to consolidation in the sector and efforts to improve outlets by the big players as they compete for the customer's cash.

Premium brands

House of Fraser is one of those trying to make itself more desirable - its efforts intensifying since Baugar's 351m takeover.

Refurbishing 15 of its 59 stores has already helped sales it says, with the remainder to be refitted within three years.

"Customers have so much choice in where they shop and a business which does not invest in its environment is going to struggle," says brand manager Matt Chambers.

"Flagship stores and city centre stores are of course very important but what we are going to do is invest in the entire estate."

House of Fraser has also increased the number of brands it offers - an extra 500 in the past six months alone - many of them more upmarket products than it had previously sold.

However it stresses that the often-cheaper private label (or own-brand) goods still have a place.

"Under the new management we have deliberately begun to offer more premium products," says Mr Chambers, "without forgetting we have a very wide customer base."

Local management, which best know their customers and catchment areas, influence heavily what is stocked in each store, he adds.

"We are very clear that what is a premium product in Cwmbran is not the same as what is considered premium in Glasgow."

Online goals

John Lewis
John Lewis has extended its brand online.

Most observers agree that the ability of department stores to pull such a range of products "under one roof" is key to the success of a department store.

"When you compare moving from shop to shop with what we offer: so many brands in one store, in the warm with friendly staff and great service, we think that is a real competitive advantage," says Mr Chambers.

And being able to offer that range is something which also comes in to its own through online shopping.

House of Fraser's fully-functioning website is just in its infancy, though the firm says it is happy how its first Christmas went.

And while there are no figures to digest. it will be hoping to replicate the success of John Lewis. which in Christmas week saw online sales up by 67.5%.

"The internet is a key attraction, especially for John Lewis," Ms Hinton said.

"They have only 26 stores but a reputation which spreads much wider and their online presence allows them to capitalise on that.

"People appear to be coming to the stores after looking at something on the website, or buying something online after seeing it in store, so the two really complement one another."

Supermarket battles

It is not just technology which is helping department stores win back fans, with the stores also give credit to their staff in helping to build an aspirational environment.

Selfridges talks of offering good service on a day-to-day basis, while House of Fraser says that staff have been empowered by relationship between local stores and head office.

And at John Lewis, staff have a stake in the business and are involved in some of the decision making at a local level.

The big supermarkets now really are a department store of sorts
Maureen Hinton
Retail Analyst,Verdict

In Glasgow, for example, workers on a steering committee agreed to extend Christmas trading hours by 15.5 hours from 2006 - helping bring about a 3.8% rise in sales.

Back in John Lewis on Oxford Street, and uniformed waiters lay table at the third floor brassiere and bistro - its menu a far cry from the hot chocolate and a scone that used to be the staple in such shops.

"Visiting a department store is becoming more of a leisure experience," Ms Hinton said.

"You can go for lunch or have a drink. It's not just about going shopping which perhaps enables them to differentiate themselves from the big supermarkets which really have become a department store of sorts.

"They sell electricals, music and clothes as well as food, but they are still more functional than department stores which are pushing themselves on the more indulgent end of the market."

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