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Stores fight for exclusivity

This week, Selfridges launched the first phase of its 25,000 sq ft £10m-plus Womens Designer Galleries.

Unprecedented fitting room space, digital interaction units, natural lighting and a ceiling stripped back to reveal the building’s original 1909 architecture aim to set a benchmark in department store luxury.

Far from thwarting development, the slowdown in consumer spending is forcing the department store sector to give customers more reason to visit. Making stores a destination via exclusivity is the order of the day.

Eight of 19 labels are new to the department, while 17, including Rick Owens and Comme des Garçons have created exclusive pieces.

Down to experience

Sebastian Manes, Selfridges’ womenswear buying director, says: “Everything we do is about creating experience. If you create an extraordinary experience, customers will be loyal. It has to be about retail theatre, but practicality as well.”

This “practicality” is the mix of high and lower-end labels now in Selfridges. Manes dismisses criticism that bringing in value names such as Primark has been to the detriment of its luxury reputation. Exclusivity is not, and should not, be confined to designer brands, he asserts.

He says: “It’s amazing that we have H&M on the ground floor. It’s the only [H&M] concession in the world. It’s the same customer, but a different moment of life. Sometimes you want three or four pairs of flip-flops and sometimes you want to feel fabulous and glamorous. The philosophy is to be accessible.”

Selfridges now aims to double turnover in the renovated womenswear space, and also launched the women’s Shoe Galleries last year. Harrods followed suit with its art deco-themed Shoe Salon, and also earned kudos for becoming Tom Ford’s first UK outlet.

According to Maureen Hinton, lead analyst at Verdict, exclusivity is an important strategy in creating a point of difference for department stores. “They’ve often carried the same brands that don’t do anything to make them a destination. They need to stock exclusive brands or develop their own.”

Exclusivity, particularly when combined with strong British heritage, looks set to benefit department stores looking to cash in on the influx of tourists for the Olympics this year. Chinese shoppers helped propel Harrods over the £1bn sales mark for Christmas trading in 2010, shelling out £3,500 on average during visits.

According to Manes, being a domestic destination store in the Olympic year will attract tourists.

On the tourist trail

Liberty, another store with tourist appeal, has been quietly building on its ‘national treasure’ heritage. Last December, the Regent Street store took on a new head of sourcing and production to up UK manufacturing for its own brand, Liberty London.

Verdict predicts that highlighting ranges made in the UK and collaborating with British design icons will build momentum and increase appeal to tourists from overseas as well as the domestic market.

Meanwhile, John Lewis looks set to prosper from an improved clothing and brand offer. However, Verdict expects department stores with less global status, such as Debenhams and House of Fraser, to find it tougher to draw in tourists. Analyst Honor Westnedge says: “They’ll need to work hard on their window displays and in-store visual merchandising.”

House of Fraser has followed this direction, securing a deal with Mary Portas for its Mary & House of Fraser concept, which is strong on visual merchandising.

Debenhams has been championing its UK design roster, taking on bridalwear designer Jenny Packham to build its occasionwear profile earlier this month. Designers at Debenhams now accounts for 20% of the retailer’s total turnover.

Being an exclusive stockist for overseas brands is another route to growing market share. Last month, Debenhams announced it would relaunch men’s heritage sailing brand Nautica in the UK.

Suzanne Harlow, director of trading at Debenhams, says: “It’s a strategy of growing importance as trading continues to be challenging.”

While exclusivity may help create department stores as a destination, customers want to be able to get a range of brands under one roof. Striking the balance is key.

Slice of the market

  • Department store sector has declined 3% year on year
  • Womenswear across this sector was down 2% year on year
  • In terms of value, womenswear category for the sector was worth £859m for the six months to December 25, 2011
  • 25 to 34-year-olds are still the key drivers of growth, spending about £80 each in the six months

Source: Kantar, for six months to December 25, 2011

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