In August, Macy’s announced that it is shutting another 100 stores. In the same month, BHS closed its last store after 88 years of trading. Though the likes of House of Fraser and Debenhams look in much better shape than this, there is no doubt that they, as well as all other department stores, are facing some major challenges. And the biggest of these is e-commerce. So what does the future hold for the department store? 

All brick-and-mortar stores face the threat of online disruption. Still, for department stores, this problem is particularly worrisome. Prior to the internet, department stores were able to offer consumers a wide and varied range of products and brands under one roof. But today no physical store can compete with Amazon in terms of product range.

Other retailers have focussed on creating unique instore experiences to entice customers. Think, for example, of Lush, with its friendly staff and distinct aromas. Or Ikea, where families go for the play area and food as much as for the furniture. But recreating these experiences is difficult for department stores, who need to please the diverse range of brands they house and where floor space is hard to come by.

To compete, then, department stores need to look elsewhere. One promising option is for stores to buy small, exclusive brands that they can control. These brands, though successful in their own right, should only be available through the brands’ store, website and app, and the department store. By moving away from selling big brands whose products are available everywhere, department stores will be able to create intrigue around their offerings and appeal to millennials and Gen Z consumers.

Stocking such exclusive, small brands will help department stores to stop being viewed as out-of-date warehouses, and rather as stores at the very forefront of fashion and design. In other words, department stores should move away from tying their own brands to the brands of already successful companies, and create new brands which are known for the interesting products they sell – not the famous ones.

Of course, this would mark a significant departure from the department store business model. However, unless you are Harrods (a tourist attraction in its own right), it may be the department stores’ best chance of success.

What do you think? Should department stores move toward this or a similar model? Or is there another way for them to survive?

Email me your thoughts.