A night-time view of Harrods.

LONDON — British luxury retailers Harrods, Selfridges and Liberty London were among the top contenders in a new department store ranking by GlobalData and Sybarite, the London-based architectural firm that specializes in retail spaces.

The report, which took into account sales per square foot, largely credits the department stores’ ongoing investments to revitalize their shop floors and tap into new categories to engage the consumer, for their success.

Harrods, which came first in the rankings, has embarked on a $260 million investment to expand its Watch room and Salon des Parfums, relaunched its wine and spirits room and last year opened a new Wellness Center that offers customers a whole set of new luxury experiences, from cryotherapy to body contouring.

Liberty London, which came third, has also been revamping its men’s department and staying focused on establishing its authority around craft, with a new Paper Room stocking its famous stationery.

“Rather than being a one-stop shop for luxury, Liberty focuses on a very tight edit of things that cannot be found anywhere else. In that respect, it’s punching above its weight by being able to attract such high sales figures, and that really speaks to the tightness of its offer,” said Lucie Greene, worldwide director of the Innovation Group.

The report further highlights Selfridges, in fifth place, and the $395 million refurbishment of its Oxford Street store which is also used as a platform to create “socially driven, state-of-the-art experiences.”

Le Bon Marché in Paris and SKP in Beijing also feature in the report, in second and fourth places, respectively.

New Eyewear Destination - Selfridges, London 2018

Inside the new eyewear destination at Selfridges London.  Mark Cocksedge

Looking at the changes in the retail scene, the report points to “a change in focus from sales per square foot to inspiration or experience per square foot,” as customers become less brand loyal and measure luxury by the emotional impact a store or brand experience can offer.

It’s why department stores have been rethinking their purpose and diversifying into new categories, from fitness, health and well-being to culture, art and co-working. Hudson’s Bay is already spearheading a partnership with WeWork, Selfridges has been injecting art into the store as part of a partnership with the Yorkshire Sculpture Park, while Gucci is paying homage to antique stores in its Florence museum.

Health and well-being is another area of focus. GlobalData foresees that the category will reach $833 billion in consumer spending by 2020, so stores will need to expand their product offer to encompass this growing space but also ensure that they “augment a sense of well-being through architecture and design.” Stella McCartney, whose new retail stores offer air-purifying plants as well as meditation soundtracks inside changing rooms, is said to be paving the way in this space.

There’s also a renewed focus on optimizing VIP services and moving away from traditional buys. As the notion of the department store as a one-stop shop is being replaced by online platforms, physical retailers need to “rethink their propositions” and invest in “service-driven experiences and Instagram-worthy products” that will enable a sense of discovery.

The Selfridges Designer Street Room in London.

The Selfridges Designer Street Room in London.  Manu Valcarce/WWD

“While online retail offers hyper-convenience, department stores are responding by offering the exact opposite; slowing down the visitor by encouraging a more creative or contemplative shopping journey,” says the report, citing the artistic retail concepts of Gentle Monster, as an example of experiential retail done well. “They must engage themselves in a way that transcends the transaction, blurring the lines between retail, hospitality and lifestyle.”

Despite the struggles faced by the department store sector as a whole, there is still room for growth, according to GlobalData, and luxury department stores, in particular— which are seen as “genuine tourist attractions” — are at an advantage.

The sector is forecast to grow 33.9 percent to $656 billion between 2017 and 2022, a growth mainly driven by China and its rising middle class. Consumer spending at department stores across Asia is set to increase 58.4 percent between 2017 and 2022. Chinese travelers are also expected to be the main drivers of the spending growth in European luxury department stores; the rate will rise 9.8 percent over the same time period, slowed down by Brexit and the Eurozone crisis.

The U.S. is the only region expected to see a decline of 8.1 percent in department store spending, as specialty stores and online players are claiming bigger stakes in the market.

 

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