But last week, Selfridges’ owners, the Weston family, appointed Credit Suisse to oversee an auction of their European department store assets, including Selfridges’ four stores in the UK, Brown Thomas and Arnotts in Ireland and De Bijenkorf in the Netherlands, at a starting price of £4 billion (AU$7.56 billion), The Guardian reported.
So what went wrong? According to some retail experts, it’s more a matter of what went right.
A successful strategy — impossible to execute
To a far greater extent than most other department stores, Selfridges has embraced an experiential retail strategy that many industry leaders see as key to the sector’s survival.
Its investment in highly creative and constantly changing store concepts and brand collaborations has enabled it to buck the industry trend and drive foot traffic in an era of online shopping, helping it earn the title of Best Department Store in the World four times between 2010 and 2018 at the Global Department Store Summit.
But with the UK in lockdown for more than 12 of the last 18 months, this strategy has become all but impossible to execute.
“The key challenge for retail is to maintain foot traffic, achieved in many leading department stores such as Selfridges in the UK, KaDeWe in Berlin, and La Rinascente in Italy, through a combination of a truly compelling and cutting-edge product offering, combined with clever and engaging brand marketing,” Richard Umbers, the former CEO of Australian department store chain Myer, told Inside Retail.
“However, in the past year due to Covid, customers have preferred to stay at home, and tourist traffic has drastically reduced, such that even with significant investment in online, these brands have suffered.”
Shift to digital
“It’s been a difficult 18-month period for the UK retail industry, not least for department stores whose significant overheads have been challenged by Covid-fuelled growth in e-commerce and a shift in customer spend to digital pureplays,” Bradley Grinlinton, head of retail and consumer products at global digital consultancy Publicis Sapient, told Inside Retail.
Selfridges doesn’t separate out its online sales, but in its most recent trading update, it noted that it has continued to invest across all customer digital channels, including digital stock systems. And Selfridges Group managing director Anne Pitcher said the company was “pleased with the growth in digital” in 2020.
But while the retailer operates a global e-commerce site and ships to over 130 countries around the world, its point of difference is clearly its department stores, which feature multiple restaurants, including a rooftop eatery by Dior, a cinema, numerous beauty and personal shopping services and even a skatepark.
Umbers sees room to improve the way Selfridges’ digital and physical stores work together.
“The future lies in an omnichannel reinvention of the brand and developing an ecosystem of engaging services and goods online and offline – both as compelling destinations in their own right, but acting in mutual support of each other,” he said.
Who will buy Selfridges?
The question now is who will buy Selfridges? The Guardian reported that interested parties may potentially include Thailand’s Central Retail group, which owns La Rinascente in Italy, Illum in Denmark and KaDeWe in Berlin; HBC, the owner of Saks Fifth Avenue in the US; Hong Kong’s The Lane Crawford Joyce Group; Chinese-state backed businesses; and the Qatar Investment Authority, which own Harrods.
Not on the list are any pureplay retailers, such as British fast fashion giant Boohoo, which was snapped up the Debenhams brand in January of this year, or Australian homewares brand Canningvale, which resurrected Robinsons Singapore as an online-only marketplace in June.
They are part of a broader trend of digital-native businesses buying historic bricks-and-mortar retailers, not necessarily for their physical store networks, but their customer databases and strong name ID.
“Most of these purchases appear to be opportunistic buys, with online retailers able to pick up household names at bargain rates due to Covid-19, and in doing so, drive short-term uplift to their market caps,” Grinlinton said.
“There’s certainly a case to be made for the prime real estate of flagship stores that come as part of [some of] these deals — especially given the continued demand for click-and-collect offerings — but it’s yet to be seen how serious online retailers are in setting up shop in bricks-and-mortar.”
Whoever ultimately buys Selfridges, if anyone buys it — the Weston family could still decide not to sell — Umbers offered this advice: “A new owner will need innovation, creativity and a long-term vision, both to see out the crisis and to maintain the unique positioning and magnetic appeal of one of the world’s leading department stores.”