question time


are various retailers testing varying formats on a temporary basis, at low risk, to see how they trade. With landlords keen to fill empty units, even for a short period, now could be an interesting time to at least explore the opportunity. However, a final word of


warning for all department store retailers: know what you have before you go off elsewhere. What might be your perceived strength may not be in another trading environment. Do your research first, fully understand what you consider your strengths against your competitors and importantly, against consumers perceptions and expectations. I like what John Lewis are doing, they will bring their ‘at home’ products to a greater number of consumers, and, consumers, because of the John Lewis legend will I am sure respond most favourably, I expect them to be successful, but they have a format and a formula that is both renowned and respected, as well as profitable. I guess the question is, do you?


MIKE PRETIOUS LECTURER IN MARKETING AND


RETAILING AT QUEEN MARGARET UNIVERSITY, EDINBURGH


Opening smaller stores with edited ranges of products is a way for retailers to stretch their brands, and a number of prominent companies have experimented with different formats. Debenhams now has 18 ‘Desire’ stores, located on high streets and in retail parks, largely selling women’s fashion and cosmetics. John Lewis plans to develop up to 50 ‘at home’ stores, capitalising on its market strength in home furnishings and electrical goods. Marks and Spencer has made significant strides with its ‘Simply Food’ business, despite having closed some under-performing units last year. Tesco and Asda have both trialled stores that focus on their non-food offers, with varying degrees of success. There are a number of reasons


why retailers, and particularly department stores, choose to expand in this way. In part it is simply opportunistic, perceiving a niche where a particular element of the company’s product offer is especially strong and moving to exploit this. Sophisticated product analysis offers scope to concentrate on fast moving


“


Retailers must work hard to ensure that customers receive a consistent experience and that their existing success and reputation is only enhanced by introducing smaller format stores.


“ Tim Ogle


out of town, do not open frequently, particularly in the middle of a recession. Thus the readier availability of smaller shops dictates the mode of expansion for retailers in some circumstances. A good example of a department store seizing an opportunity in this way has been the opening of several targeted units by Harrods at Heathrow Airport, capturing travellers in an environment where they are highly susceptible to making discretionary purchases. The biggest danger faced by


retailers in extending their brand footprint is if they move into product lines that their core customers don’t associate with them. Marks and Spencer’s ill-fated ‘Lifestore’ venture, adjacent to the MetroCentre in Gateshead, was a classic case study of a retailer attempting to extend its brand too far up-market. Department store closures more generally, especially those of provincial independents, have been largely due to a failure to understand the changing


10 Department Store Buyer


business or extending the franchise is the aim, positioning the offer appropriately in the market is absolutely critical.


TIM OGLE CEO, RETAIL EYES


With so much unoccupied retail space there is a great lure for large department stores to snap up positions on high streets and shopping centres around the UK. Small format stores are a great way of reaching out to more customers and can be used as a springboard to drive footfall to the larger stores. However, these retailers should take a moment to consider their ability to deliver the same experience received by their customers in their larger stores. The arrival of well-respected department store brands will undoubtedly generate an atmosphere of excitement and expectation. Retailers must work


high-margin lines rather than stock slower selling, more basic ranges. An important consideration too is the cost and difficulty of opening a large store; premises of the right scale rarely become available on traditional high streets, and shopping malls, whether based in a city centre or


nature of the consumer and to read the way that different product categories have become polarised on the price spectrum. At one extreme, luxury goods are resistant to recessionary pressures, at the other, shoppers are driven to search for value for money. Whether maintaining an existing


hard to ensure that customers receive a consistent experience and that their existing success and reputation is only enhanced by introducing smaller format stores. As multi channel/format retailing


has increased one of the biggest challenges retailers face is maintaining consistent customer experiences. This has been most apparent in internet retailing where, in the rush to have online stores, many retailers overlooked the users’ experience and found themselves providing a poorer service compared to their bricks and mortar brothers. This left customers with negative feelings for the brand and tarnishing their reputation, something that retailers considering launching city-centre style formats of their stores must keep in mind. Retailers must also decide if their smaller shops are to be scaled down replicas of their existing stores or more specialised, such as ‘John Lewis at Home’, where customers will expect higher levels of staff knowledge. The larger stores will need to act as a showcase for these smaller shops and highlight the added value the store can bring. If the retailer decides to operate a scaled down version of their stores, they must avoid the temptation of solely using the format as an advert for the larger shops. Smaller stores won’t carry the same depth of ranges and must ensure they have communication processes in place with their large counterparts to help bring product to the store or for the customer to have the option to be able to reserve a product in a bigger store. By default, the brand will be touching more customers, which can have both positive and negative effects to a brand’s reputation. It will be vital for these retailers to keep their finger on the pulse of the customers in the smaller formats. Ongoing customer feedback should be sought and shared between both large and small format stores. Regardless of the size or focus of the store, customer experience must remain paramount to ensure longevity in these new formats. ■


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