Retail dinosaurs go on a revival course

Debenhams and House of Fraser (HoF), and chain stores such as BhS and Littlewoods Chain Stores, are heralding the dawning of yet another new age in retailing.

Department stores became a figure of fun in the Seventies when their old-fashioned ways were lampooned in the BBC series Are You Being Served?

In the days of Grace Brothers, they dominated the high street. Today, they are seen by many shoppers as musty mausoleums where naff products are sold by defensive staff.

But now these “large space” stores – once the dinosaurs of retail – are trying to make a comeback.

It seems old Mr Grace has gone to the sales floor in the sky and been replaced by more forward thinking. Competition has hit the large space retailers hard, reflected in their steady decline over the past 30 years. In today’s climate, they have been forced to rip apart their tired old ways and reinvent themselves.

Growth of shopping malls, retail parks and specialist chains selling clothes, housewares and electrical goods provided stiff competition for department stores in the Eighties and eroded their position. The value of their share of total retail sales declined from 5.5 per cent in 1980 to four per cent in 1993 (Verdict Research).

Stores have been slow to react but now they have realised that certain demographic features of the Nineties could work in their favour and have revised strategies.

Debenhams is targeting young shoppers on lower incomes. HoF is focusing on over-40s by developing an upmarket profile. Among the chains, BhS is pitching at younger families – leaving older women to Littlewoods.

After rationalising product ranges, updating merchandising systems and reducing the number of suppliers, they are now ready to fight back through TV ads.

Debenhams found a saviour in the American John Hoerner, now chief executive of parent company the Burton Group. He decided to act on what consumers were already making clear – that department stores can no longer be “all things to all men”. Debenhams needed to concentrate on certain key areas such as fashion clothing, toys and accessories.

Price discounting followed, and the chain became famed for its Blue Cross days. However, this had the drawback of making it the type of store shoppers went to when they needed a cheap bargain. Debenhams marketing director Judy Lindsay hired ad agency TBWA earlier this year to change that perception. The new ad campaign tries to make the chain into a first-choice “destination store” using the old strapline “The difference is Debenhams”.

The logic is simple. If shoppers head for Debenhams before they go elsewhere, the store will be able to reduce the number of discounted Blue Cross days and improve its margins.

HoF, with 52 stores under 17 different facias, is preparing a TV branding campaign, the first since last year’s stock market flotation. The work will seek to link different brand names under the HoF banner.

HoF and Debenhams are also looking to improve their product offering. “We have narrowed our ranges and are constantly re-evaluating the customer profiles and the product,” says HoF marketing director Meg Gilmore.

HoF is looking to improve its margins by increasing the own-label products it stocks from an average of 11 per cent to about 18 per cent over three years.

But the company disappointed the City when its recent results showed operating profits had fallen from 45m to 43m in 1994. HoF has some way to go in sharpening up its product range. Until then, it is introducing rolling discounts to shift slow selling lines (MW March 31).

New above-the-line work is also expected from the John Lewis Partnership, after it took the unusual step (for a chain that has decried advertising) of appointing Burkitt Edwards Martin for “specific project work” (MW April 21). Details are sketchy, but it understood that John Lewis is considering a branding campaign.

Last year saw the “It’s a happening” ad burst for the new-look BhS stores. Later this year Littlewoods will take to the air with ads for its new clothing brand Berkertex, created by Collett Dickenson Pearce.

The outlook is good, according to City analyst Robert Snaith of SG Strauss Turnbull. He says prevailing economic conditions could work to stores’ advantage as they thrive in a stable environment, where low-inflation helps keep costs down.

The coming year will be decisive. Stores’ attempts to re-establish themselves as destination shops in consumers’ minds requires further tough action on product, customer service and store design. They will also need some sharp, creative TV work to blow “Mr Grace” away forever.