Analysis: Department stores fight back from online challenge

Wed Oct 15, 2014 9:49am EDT
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By Emma Thomasson

PARIS (Reuters) - Department stores are starting to enjoy a renaissance after finding ways to attract a new generation of consumers in an age of global fashion chains and online shopping.

Retail consultancy Verdict predicts the global sector should return to growth in 2014 and expand by 22 percent to about $450 billion by 2019. The recovery will be driven by expansion in emerging markets, with China set to account for 30 percent of total spend five years from now.

Pioneered in France, Britain and the United States from around the 1840s by household names like Printemps, Harrods and Macy's, department stores lost their edge from the late 1970s with the rise of stores for fashion, electronics and home wares like Inditex's Zara and Sweden's IKEA.

The advent of e-commerce was the final straw for many stores which had become drab halls catering to an aging clientele, with the likes of Germany's Karstadt and U.S. mid-market chain J.C. Penney the latest to flounder.

But some of the oldest names in the business have turned the corner, restoring the grandeur of flagship stores and celebrating their national identity to attract tourists and win back local trade from more rootless global brands.

Many have focused on high-end fashion, accessories and beauty, while also investing in websites and challenging online players like Amazon with convenient in-store pick-up.

"The question is how to stay relevant in a market where everything is available everywhere," Printemps chief executive Paolo de Cesare told the World Retail Congress this month.

"We moved from selling products to creating experiences."   Continued...

The first shoppers arrive at Macy's Herald Square on Thanksgiving Day in New York November 28, 2013. REUTERS/Eric Thayer