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QUESTION TIME


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This month’s question:Should department stores be investing more in luxury brands?


Last year saw many companies post disappointing trading figures but there is one group, which appears to be recession proof, reporting strong sales and increased profits – the luxury brands. The luxury sector has not suffered in the same way as others have, mostly thanks to an influx of sales from emerging markets in Asia. The economic climate has resulted in polarization of the market. Consumers either have the financial stability to continue buying high-end products or are trading down and buying low- end products. Luxury brands can attract wealthy consumers but may alienate shoppers on a budget. With high end brands riding high on sales from these markets, while other sectors flounder, we ask: should department stores be investing more in luxury brands?


GRAHAM HOYLE Managing Partner of Retail Performance Improvement


Let's start at the very beginning: department stores should be true to their trading strategy and deliver the right products to their target consumers in an engaging manner. No department store operator illustrates this better than John Lewis, who despite all the doom and gloom of the retail world, posted a double digit year on year growth in the week that I write this article. No one would, I think, argue that John Lewis is in the business of selling luxury goods, although to some consumers maybe John Lewis are towards the luxury end of things! The point is that John Lewis have a clear strategy and continue to invest in delivering products that meet and exceed their customers' expectations. They know their customers well and they know how to maintain a strong and healthy business through continual improvement. It may be argued that the


economic climate is polarising retail; certainly at extreme ends pound-shops in all their various formats are trading well, and, yes, luxury brands continue to outperform the whole retail sector by a significant factor. Which of course could lead the question to be rewritten; "should department stores look to take advantage of polarisation"? After all, not all department stores are positioned, or located, to take best advantage of high-end products being introduced into their stores. It may also not necessarily serve their trading strategy. Selfridges in The Trafford Centre, Manchester, for instance, introduced Primark Menswear


10 | Department Store News | DepartmentRetailer.co.uk


into their store last autumn, widening their appeal and delivering a new set of customers to the store, who, along with buying from the Primark section also bought merchandise from across other instore departments. So, to answer the question


more directly; some department stores who are positioned and located to take advantage of investing in high-end brands that their customers will engage with and buy, should consider how they can embrace the current luxury brand trend and increase their appeal and sales. Equally, for those department stores which it would be madness to introduce such brands, based on their positioning in the lower end product sector, should possibly consider more value-retailers as part of their overall offer. I would love to see a Poundland in one or two department stores I know, the effect upon footfall and resultant sales would be just as phenomenal as putting Mulberry or Burberry into some other high-end stores I know too. The maxim has to be 'horses


for courses'! In these difficult times department stores should not unnecessarily gamble and go and reinvent themselves and morph into something that alienates it's target customers. Stick to what you know. But, do it so much better, which means positively looking for brands and products that increase, improve, broaden and consolidate your authoritativeness and appeal in your particular marketplace. There is no doubt that luxury


brands have a certain cache today, attracting the wealthy and 'new rich' alike. I enjoy watching the ease with which these customers shop and spend. However, one of the key elements of their


enjoyment is the store's own brand and positioning. The fascia and the bag colour are just as important. These high-end department stores have spent years and millions getting it right in every detail. It would be totally wrong not to recognise these facts. Equally, it would be wrong not to say that; whoever and wherever your store, today, in these tough times, investing in improving your product offer is key, whether you run high-end or low-end stores.


HENRI DAVIS Independent Retail Advisor


It is certainly true that luxury brands seem to be performing strongly when compared to other sectors of the retail market and to stock them may seem an easy way to drive sales growth through your business but there are many issues that need to be considered before you pursue the idea further. Luxury brands are desirable


because they are elitist and aspirational, they say something about you either that you have money, good taste or both. People want to own a branded product because having it sends out signals subtle or overt about your wealth and status. Luxury brands maintain their


appeal by limiting their availability to retailers and consumers. For retailers this is done by buy-in and tie-in packages and the levels of support and servicing they have to offer the brand to retain access to them. For consumers this is by price and by limiting availability. Which brands are right for you


as a retailer to stock depends on your position within the retail market place and what customers expect from you, it may be that as a retailer you occupy a more mid to


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