Departmental stores have been a part of shopping patterns of urban consumers for over a century. These large-scale retailers provide diversity of items for urban shoppers and the convenience of many different types of goods under one roof. Departmental stores vary in the wide range of different products they sell such as clothing and cosmetics as well as electronics and furniture.
Definition and Characteristics
A department store is a large retail establishment made up of a number of "departments" that sell specific types of products. This allows shoppers to buy multiple types of products all in a single stop with a little bit of organization. Each department has trained staff and operates separately, and is "run" like any business would be.
Some key characteristics of departmental stores include:
Centralized Management: While departments are organized into groupings, all the departments plan, manage, purchase, stock, sell, and market products through a central management team.
Range of Products: Arguably, one of the biggest advantages is the range of merchandise you can find from the unique to the common.
Service Level: An added dimension of convenience is the various services many department stores offer; services such as delivery, gift-wrapping, tailoring in-store, or personal shopping assistants.
Assisted and Self-service: Depending on the department store and the department the customer is shopping in, some department stores allow the customer to shop at their own pace, or the customer can receive specialized assistance from the attendant(s) in the department.
History and Evolution
The origin of the department store is in the 19th century, with many referring to Bon Marché in Paris, which was established in 1852, as the first modern department store. The model changed shopping internationally with fixed prices and an opportunity for consumers to browse without needing to buy something immediately after entering and shopping in a panic.
The department store format taken shape in Europe and North America during the first part of the 20th century and created famous examples and brands like Macy's in New York, Harrods in London, and Galeries Lafayette in Paris. Initially retail environments will become firstly less and less retail environments and secondly more and more environments focused on cultural and social experiences, cafés, displays, exhibitions, and events.
Layout and Organization
The internal structure of a departmental store is central to the customer experience. Departments focused on customer demand are often deliberately spaced out in the store so that customers are encouraged to browse. For example, cosmetics and accessories can be found near the entrance or escalator to draw customers in. Larger stores may even have areas set aside for high-end merchandise, sales, seasonal items, etc.
Digital technologies are also now part of departmental stores as kiosks, digital price tags and mobile payment methods have been introduced to enhance both the operational aspect and customer experience.
Role in the Retail Industry
Departmental stores hold a special place in retail. They are the hybrid between specialty stores and supermarkets, offering a limited and expansive array of goods. The advantage of departmental stores is providing something to various segments and budgets.
Unlike supermarkets that sell only consumables or specialty stores that cater only to established niche markets, departmental stores serve a broad audience. For example, when a family visits a departmental store, they may buy school supplies, purchase a new outfit, browse home décor, and eat lunch in one shopping trip.
Challenges in the Digital Era
In recent years, changes in consumer behavior and the rise of e-commerce have created an enormous threat to traditional departmental stores. The convenience of online shopping and lower prices have shifted the way many shoppers approach the shopping experience altogether - and for some retailers who had decades of brick-and-mortar presence, they have literally painted the shop with a large red vacant sign.To address these valid changes in shopping habits, many departmental stores are looking at ways to give customers both online and offline support and increase in-store sales. Examples of this could include providing click and collect functionality and virtual try-ons, while engaging customers through personalized digital marketing, and other means. Departmental stores are trying to find ways to maintain a meaningful shopping experience for their customers. The growth of sustainability has also pushed departmental to re-assess their sourcing of supply, their packaging, and their store designs. Including eco-friendly product lines and conducting green business will be required to attract eco-friendly consumers.
Importance in Developing Economies
The significance of department stores to the growth of retail in developing markets is often overlooked.There is increasing urbanisation, as well as increasing disposable incomes which have led to a consumer market that wants a more organized and structured experience. In many cases, department stores act as anchor tenants of shopping malls or other commercial developments. They are also supporting local infrastructure and jobs.
Departmental stores also facilitate customer education by exposing shoppers with global brands, standardised price points, and consistent quality. In economies relying on informal retail, departmental stores ensure some level of order and transparency that benefits both customer and supplier.
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