As House of Fraser announces store closures, are we witnessing the death of the department store?

Today, it was announced that House of Fraser is closing 31 stores – which will affect 6,000 jobs – in a bid to save the department store from bankruptcy.

Meanwhile, competitor Debenhams is also planning several closures in the wake of plunging profits.

But are the Brit staples only postponing the inevitable fate endured by BHS?

We take a deep dive into the high street to try and garner a greater understanding as to why we’re turning our backs on the real deal.

Why is House of Fraser shutting down 31 of its stores?

House of Fraser noted a 2.7 percent soar in sales for the six-week stint between November 21 2017 and New Year’s Eve 2018 in comparison to the previous year.

However, this surprising growth was largely down to Internet orders as opposed to customers visiting the stores – these figures plummeted to 0.9 percent.

And a lack of customer interest over the Christmas period is a cause for concern, as department stores traditionally tend to thrive under festive spending habits.

“Department stores do well over Christmas because you can buy presents for all the family under one roof,” CEO Nigel Oddy said. “Before the internet, there were department stores as we stock all the brands. There is something about the heritage of visiting a department store for Christmas and we have attractions like Santa’s grottos that you don’t have online.”

But as a consequence to national living wage increases and the pressure of paying rising rental costs, there is mounting pressure on the high street.

In a further nudge towards the company’s Jenga-like stability, chief executive Nigel Oddy resigned back in September after almost a decade at the company and eventually stepped down in April.

Yahoo UK‘s finance editor, Sajid Shaikh, said: “This is grim news for the British high street and it follows a pattern. The likes of Amazon are putting once rock-steady retail giants under immense pressure. M&S and Debenhams have already announced store closures and job cuts – M&S is to close over 100 stores and Debenhams is struggling to make profits.”

“House of Fraser held on until it could but today its boss confessed they are facing an ‘existential threat’. This is akin to saying the brand would collapse if it doesn’t cut cost of running retail locations. Also, big online and smaller retail presence is the smarter to way to sell – and survive for House of Fraser.”

Why has the nation fallen out of love with department stores?

The high street is not on trend anymore

It’s interesting to note that over the Christmas period, House of Fraser’s most popular sector was its beauty department. With an increased demand for contouring kits and Insta-worthy brows, it’s undoubtedly a profitable business.

But the department store sells a large majority of products which are available to shop elsewhere on the high street – at potentially lower prices – and they can also be purchased online from the likes of retailers, Beauty Bay and Feel Unique, without even having to leave our desks.

In terms of fashion, the department store is struggling to compete. John Lewis may have experienced an overall decline in sales last year but up until May 2018, the high street staple saw a 2.7 percent growth in women’s accessories while its own-brand fashion line rose by 7 percent.

To stand a chance, House of Fraser needs to up its sartorial game.

Our shopping habits have changed

According to the Office for National Statistics, the number of people in work increased between December 2017 to March 2018. While research conducted by the TUC revealed that the amount of free overtime employees contributed last year is worth over £31 billion.

And with increasing numbers of us skipping our lunch breaks and staying late at the office, there’s no room left for in-store browsing. Ultimately, we’re an on-the-go generation and don’t have the time (or patience) for queues.

And fashion brands such as Missguided have hopped onto the back of the trend by introducing affordable see-now-buy-now pieces.

Most recently, the label announced its partnership with ‘Love Island‘ in a bid to cash in on the ITV2 craze. Viewers can shop the islander’s looks as it happens through the app without having to move from the sofa.

In comparison, House of Fraser’s maze-like stores suddenly seem like a mountainous task, as opposed to a pleasurable experience from the comfort of your own bed.

The rise of the influencer

According to the Business of Fashion, the brand-influencer partnership has gone mainstream. Recent stats indicate that 78 percent of brands used influencer marketing campaigns throughout 2017 (up from 65 percent last year) and over 1.5 billion was spent in the process.

And it’s a booming business, as nearly half of labels love to work with micro-influencers – those with between 10,000 and 100,000 followers – in a bid to reach unsuspecting social-media-users-turned-customers.

Unsurprisingly, Instagram steals the top spot with 36 percent of shoppers labelling it their favourite platform with many shopping through like the likes of Instagram Stories.

Take Mango for instance, its millennial-friendly social media campaign ‘#MangoGirls’ sees a range of influencers – we’re looking at Lucy Williams and Pernille Teisbaek – donning the Spanish label’s latest looks. Within minutes, the outfits garner sell-out status.

The era of ‘fast fashion’

There’s no denying the fact that many a millennial has turned their back on the high street in favour of their laptop/smart phone/anything within reaching distance.

According to recent figures, those aged between 22 to 37 now make 54 percent of their purchases online and it is estimated that by 2040, 95 percent of purchases will be facilitated by eCommerce.

David Mills, development controller at John E Fells & Sons Ltd, told Yahoo Style UK: “High street brands need to take today’s House of Fraser announcement as an urgent wake-up call. The retail landscape as we know it is changing at an exponential rate.”

“The shift in consumer buying behaviour towards shopping online cannot be ignored. With a single click of a finger or even a voice command with the help of Alexa, the ease of purchasing has never been made more convenient. To compete, the high street needs to be more proactive in effectively pairing online services with their in-store amenities, and championing customer service at a bespoke level.”

Though it’s not merely online competition which House of Fraser needs to compete with, as stores such as Zara have introduced digital technology into their shops.

Last month, the Inditex giant re-opened its impressive Stratford hub with two online order collection points which can handle 2,400 orders simultaneously. In addition to this, there’s also a self-checkout area which enables customers to pay using their smart phones.

Meanwhile, interactive mirrors throughout the store are equipped with RFID (radio frequency identification) that detects a garment that you’re holding and makes outfit suggestions.

Pablo Isla, Inditex Chairman and CEO announced: “In recent years we have invested in both the most advanced technology and optimised our stores for this aim. “Our business model combines stores and digital seamlessly, and we are ready for the opportunities that this brings with current and new customers.”

Just yesterday, Inditex was named the second most profitable fashion empire behind Christian Dior in the 16th annual Forbes Global 2000 list. The Spanish retailer – which is behind Zara, Bershka and Massimo Dutti – noted a 9 percent climb in sales to an impressive £22 billion last year.

Amancio Oretaga – who founded the company back in 1975 – is currently the sixth wealthiest person in the world with a net worth of £52 billion.

What does the public think?

In response to the news that House of Fraser is planning a series of store closures, we asked shoppers if they still hit the high street and there was an overwhelming love for the real deal.

Blogger Jo Middleton wrote, “I love a trip to John Lewis and I quite often buy stuff in Debenhams too, especially bras.”

While shopper Roz Try-Hane from London argued: “Nothing can replace being able to touch and try things in. I’m sad House of Fraser on Oxford Street will close.”

Others are keen to see the high street step it up a notch.

When asked if she still shops in department stores journalist, Allie Abgarian, told Yahoo Style UK: “Not much anymore, but I think they still have an important place on the market. Although, having said that, many of them need to seriously consider upgrading their marketing strategy and develop the brand – adapt it to the new consumer.”

What do you think? Have your say over on our Twitter page @YahooStyleUK.

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