The strain on the UK department store market has been highlighted by the high-profile struggles of leading chains. In summer 2018, the retailer House of Fraser announced plans to close a large proportion of its stores, before falling into administration and eventually being bought out by owner of Sports Direct, Mike Ashley. This came after a decline in the company’s gross profit of around two million pounds in 2017, as well as the retailer’s share of the market having fallen slightly between 2012 and 2017. During the same period, Marks & Spencer and Debenhams also experienced declines in their market shares of around six and 1.5 percent, respectively. Debenhams lost about one-third of its operating profit in the UK between 2015 and 2018.
It is fair to say that the demise of the department stores is part of the ongoing decline of British high streets. Retail traffic and footfall to retail centers such as high streets and shopping centers have for some time been suffering from diminishing visitor numbers, long before the coronavirus restrictions on mobility were introduced. Throughout 2019, with the exception of a slight improvement around Christmas time, high street footfall presented negative growth numbers. The same was true of shopping centers as well, where department stores are also located.
As is true across the entire retail industry, contrary to the declining interest at high streets, department store retailers have seen an increasing number of their products sold online, with the internet sales growing at accelerated levels. Accounts by leading chains have also shown that online retailing is a key area for growth. In 2016, Debenhams reported that almost a quarter of its retail sales were made online. Similarly, online sales at M&S.com have almost doubled since the 2011/12 financial year and growth in John Lewis’ online performance was as high as 9.9 percent in 2018.
