By Dr Amna Khan, senior lecturer in Consumer Behaviour and Retailing at Manchester Metropolitan University
Last month the popular department store John Lewis announced that it will not reopen eight of its stores once the UK’s COVID-19 lockdown restrictions ease. The announcement has put more than 1,000 jobs across the country at risk and means the retail giant has now closed around a third of its stores in less than a year.
Department stores such as John Lewis have been part of the British high street since the 1800s. However, this large format of in-store retailing has had its heyday and, with the closure of Debenhams and some John Lewis stores, there is a question as to whether these stores should be consigned to history or if the brands have simply failed to stay relevant to changing consumer behaviour.
Department stores, like any other type of retail, need to offer a proposition that is of interest to their customers.
In the case of Debenhams, the brand had long-standing issues in its struggle to stay relevant to its customers’ needs.
On the other hand, John Lewis is a traditional heritage British high-street retailer and a trusted, equitable brand.
The company has recognised that the market shifts and evolution in consumer behaviour simply cannot be ignored. If that means the closure of its large heritage-style department stores, then so be it.
The closure of these stores signals key structural changes in the landscape of retailing and John Lewis is implementing a range of strategies to respond to shifting consumer needs. But are they doing enough?
Localism is here to stay
The COVID-19 pandemic is unique in that two of the key factors in the transmission of the virus are large numbers of people and proximity, which have significantly affected brick and mortar retailers.
When stores opened after the first COVID-19 lockdown, consumers heightened concerns about the safety of shopping in-store generally resulted in large numbers staying away from big shopping malls.
This, coupled with the UK government’s guidance to stay at home, led to a rise in localism where consumers’ spending was focussed in local areas instead of large town and city centres.
Many people have discovered that shopping close to their home offers greater convenience and this trend is likely to continue if large-scale remote working continues once the pandemic is over.
As more consumers spend time closer to their homes, brands such as John Lewis have no choice but to reconsider their offer. Their stores need to be where consumers are likely to shop.
Smaller store formats on local high streets is one way to address this and something that large retailers should consider.
As well as helping to service the retailer’s online offer through click and collect, these smaller local stores could offer a selection of local products from local suppliers, putting the community at the heart of its offer.
Furthermore, this will make every store unique to its location and thus less likely to rival the bigger store formats. While the destination used to be the department store, the post-COVID destination is the local high street.
Over the past 12 months online retailers have grown massively, with some witnessing between five and 10 years of growth in the space of a few months.
This trend is likely to continue, with a recent report released by consultancy firm McKinsey & Company indicating half of the people it surveyed intend to continue buying their shopping online after the pandemic.
According to Retail Week, John Lewis “expected 60% to 70% of sales to be made online in the future and half of current customers use a blend of online and bricks-and-mortar shopping”. The multichannel approach is the future, creating touchpoints for consumers to engage with brands.
Online retailing has always been functional, and it is in-store where retailers stimulate consumers senses, creating an atmosphere and ultimately a memorable experience for customers. This is the point of differentiation for the brand. It is not a case of online or in-store – consumers want both.
John Lewis and its traditional competitors are not pure online retailers. Their in-store experience can be their competitive advantage if they connect with consumers.
Appealing to a new generation
To adapt and survive John Lewis needs to connect and engage the younger generation of customers. Younger consumers purchase in a different way to their parents, with a greater awareness but also a desire to be more sustainable.
John Lewis’ introduction of furniture rental services taps into this and aligns its brand values with consumer values. This is one potential way to engage with younger customers but so much more needs to be done.
Retailers such as Selfridges and Harvey Nichols are leading the way, having successfully engaged with a younger audience through brand selection, offering influencer brands, in-store sensory experiences and creating novel and exciting experiences in the form of pop-up shops.
The future of John Lewis will be determined on how well they respond to market changes, engage with consumers, and ultimately build lasting relationships with consumers online and offline.
The department store format can and does work. The success of Selfridges, Harvey Nichols and Fenwick are testaments to that. For other brands such as John Lewis, a focus on fewer stores may well bring dividends, but if they are to succeed in the long-term, they need to engage their target audience.
In-store they can create value and differentiate themselves, but they need to connect locally with consumers, and this will require a fully invested approach in the community, for the community.
While developing online channels that will add value, the key to success is to create a meaningful proposition that taps into consumers values.