What: BoF Case Study looks at Selfridges’ strategy as well as the challenges the department store currently faces to adapt its model to a radically changed fashion market.

Why is it important: Selfridges’ bet on experiential retail seems to have succeeded and translated into sales: revenues doubled to GBP 853 million (USD 1.2 billion) in 10 years before the Covid-19 pandemic hit, reflecting a CAGR of 7.5%.

A sharper luxury focus

It’s now clear that concession models can lower inventory risk and be more productive than wholesale. But importantly, Selfridges has interspersed its own wholesale buys as well as experiential elements, like a luxury florist or cinema. This, as well as the fact that concessions are placed in the middle of the store, and not simply lined up on the perimeter, makes shopping at Selfridges feel like a unique and engaging experience.

As Selfridges ramped up its focus on luxury it staged spectacular exhibitions to offer a more democratic posture than nearby Bond Street and rival Harrods. Selfridges’ open floor plan and broad range of price points across its wholesale buys and restaurants make a wider range of people comfortable wandering amid intimidating luxury brands. Selfridges has been able to invest large sums in shifting its stores upmarket partly because, rather than putting resources into expanding its network by adding new locations, Selfridges has stuck with just four stores.

At a time when luxury was becoming a more important part of its business, Selfridges kept up with high spending international clients’ demands for multilingual staff, foreign payment options and a comfortable lounge to provide services to tax-free shoppers.

Novelty and discovery

The company continued to invest in merchandising and marketing for its multibrand  departments, which it mobilised with store-wide thematic activations. The store also made space for its luxury tenants to stage buzzy pop-ups in sync with its themes, helping to stimulate clients with curation and discovery. In a general way, Selfridges managed to create appealing multibrand spaces offering an important counterweight to its concessions.

Selfridges has managed to use its wholesale buy to provide a sense of discovery for fashion-savvy consumers. For instance, rather than letting suiting and shirting dominate its menswear floor, a streetwear department with a fast-changing line-up of skater-approved brands surrounds a functioning skate bowl where visitors can reserve a slot.

In one of its boldest moves to promote discovery, in 2017 Selfridges reclaimed control of a prime space it had formerly leased to Louis Vuitton. The retailer turned the space into an ever-changing “Corner Shop” dedicated to housing special activations and accompanying capsule collections. Activations housed in the space have alternated between installations from contemporary artists or small designer labels, and pop-ups from major brands. This year’s “Good Nature” scheme maintains the focus on outdoors and the environment.

A social hub

For years, consumer interest has shifted from “stuff” to experiences like travel and dining, especially among Millennials for whom collecting memories to post online is as meaningful

as collecting goods. The main accessories hall in the Oxford Street flagship features a florist,

a champagne bar and a gallery for contemporary art. In the alley behind the store, Selfridges has installed a temporary SoulCycle gym. Next door, there’s a three-screen cinema.

The store’s food and beverage offering also plays a key role: Selfridges has allocated about 10% of the floor space in its Oxford Street flagship to fixed “social spaces” and Oxford Street store has 15 permanent bars and restaurants. The square footage dedicated to experiences is rarely as profitable as a luxury brand concession. But Selfridges looks at the productivity of the store in its entirety, the space given to restaurants and experiences having a halo effect on the entire store.

From internationals to locals 

The retailer’s ability to rebound in 2021 will depend significantly on how much it can pivot to

getting local clients to spend after years of investing in its international business. During Selfridges’ “Project Earth” scheme last year, a focus on nature and sustainability appealed to local clients’ growing interest in outdoor sports and activities, as well as reaching shoppers

who are increasingly concerned about fashion’s environmental impact and labour practices. During the scheme, the store launched a programme for buying and reselling second-hand fashion as well as a rental service.

Its latest activation, “Garden Centre,” features actual plants, gardening supplies and a resident gardener available in-store (and via video chat) to advise clients, as well as gardening-inspired pieces from Ganni and Prada. But perhaps the most symbolic pivot from international shoppers to locals is Selfridges’ recent transformation of its large VAT-refund lounge into a wedding venue to capture the boom in marriage celebrations after a year of pandemic delays.

Expand digital selection and services

In the years leading up to the pandemic, even the most spectacular physical retailers were already under pressure to offer more information and services online as consumption habits

shifted. E-commerce has been a challenge for luxury department stores like Selfridges as it’s hard to replicate their winning blend of luxury concessions and experiences online.

In 2010, Selfridges.com launched with the same buying team as the physical store, but with other key functions contracted to third parties. In 2019, as the company ramped up investment in its online experience, it moved its engineering and customer experience functions in-house, so that they could work more closely with its creative and

merchandising teams. Rather than trying to become an e-commerce giant in its own right, Selfridges has focused on using e-commerce as a way to round out its menu of services for clients, and aims to be an online expression of the in-store experience.

Despite having never been a “digital first” company, Selfridges has managed to accelerate upgrades to its digital presence lately. More and more of the store’s luxury tenants have agreed to integrate their stocks with Selfridges.com.

While Selfridges still has a way to go to get its full selection online, the number of SKUs available for sale on its site has grown. Online sales grew 47 percent in the year ending February 2021, Selfridges said. The share of Selfridges customers who shopped online more than doubled from 19 percent to 45 percent last year, and the company expects this to stick at 32 percent for 2021, even with stores open.

Can Selfridges Future Proof the Department Store