What: The Financial Times questions the role of department stores in cities, now that their model seems capitalistically unsustainable

Why it is important:  The situation in the UK, similar to the US, is quite different from the rest of the world, in terms of retail presence per capita. The adjustment move at force on the market is specific in terms of intensity compared to other countries and companies.

After the total closure in the UK of Debenhams (124 stores), the shutdown of 58 John Lewis stores (even though it is the most financially conservative of all UK chains), Jenners in Edinburgh or Rackhams in Birmingham, the question of this format’s relevance is raised, especially when it comes to their relationship with the urban structure.

The FT speculates that, for this retail category, the most prestigious ones will survive, thanks to their destination status, as shown by the recent Selfridges’ unsolicited purchase offer. However, smaller ones or former regional gems will have to be converted; such as Jenners (hotel), Rackhams (mixed use). However, this has a cost which might be a deterrent, explaining why some chains choose to operate until the end rather than questioning in depth their model.

The former CEO of Beales, which collapsed in early 2020, thinks that the department store model still has a role provided it reinvents itself significantly: not more than 3,000 sqm, mainly in concession to be capitalistically sustainable, and with a lower footprint than in the past. The models with 150 stores as Debenhams used to have is gone, according to him.

The UK has been especially affected by both the Brexit and the Covid-19 pandemic, which put a significant strain on a market which was already overcrowded in terms of  retail presence per capita.

Town centre ‘anchor’ department stores cut adrift in pandemic