ReportsnReports – UK Department Stores 2011


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UK Department Stores 2011: The department store channel proved to be resilient in 2010 and is forecast to grow again in 2011, despite disposable incomes coming under significant pressure from rising prices of basic commodities including food and fuel. We forecast that sales via department stores will grow by 3.9% in 2011, outpacing the whole retail sector for the third consecutive year.

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ReportsnReports – UK Department Stores 2011

  1. 1. UK Department Stores 2011UK Department Stores 2011: The department store channel proved to be resilient in 2010and is forecast to grow again in 2011, despite disposable incomes coming under significantpressure from rising prices of basic commodities including food and fuel. We forecast thatsales via department stores will grow by 3.9% in 2011, outpacing the whole retail sector forthe third consecutive year.Buy Now: UK Department Stores MarketBrowse All: Latest Market Research ReportsFeatures and benefitsBenchmark your performance against competitors, through comparing market shares, salesdensities and profitability to other department store playersUncover how inflation pressures will challenge your business performance and what isrequired to justify charging more for productAchieve revenue growth by identifying the most successful product sectors and utilisingspace for the best performing categoriesHighlightsVAT and sourcing cost rises will cause department store prices to increase by 1.2% in 2011,only the second year they have done so since 1998, which will affect customers’ willingnessto buy, subsequently bringing 2011 sales volume growth down to just 2.7% from 5.8% in2010Department stores are planning a new wave of growth having put expansion plans on holdduring the recession. However, figures show that retailers with high operating margins tendto be those who have avoided opening space. Retailers may need to reassess their approachto new investment to establish whether it really adds more to sales than to costsOnline sales have now reached the point where their growth is accounting for a larger andlarger share of turnover, impacting performance in physical stores. We believe retailers willneed to start a review of their physical store requirements to decide which are the mostprofitable formats, layouts and product ranges to serve their future needsYour key questions answeredWho are the top performing department stores in terms of UK turnover, profitability andmarket share?How are my competitors expanding through new store formats within the UK and how arethey increasing their international presence?What are the benefits of own-brand ranges and which of my competitors have them?Table Of ContentsExecutive SummaryMain conclusions[Missing title]OVERVIEWKey findings
  2. 2. Department store market growth slows to 3.9%Increased VAT and sourcing costs create inflationMarket leader M&S recovers 0.1 of a percentage point to reach a 31.6% shareJohn Lewis adds the same amount to make 21.0% market shareDebenhams loses share as it focuses on own brand and marginsHarrods and Selfridges outperform at the top endTJ Hughes strugglesStore expansion may hurt profitsOnline kills instore sales growth in UKInternational growth increasingly temptingMARKET ANALYSISMarket definition and methodologyDepartment store market spending trendsDepartment store sales growth weakens in 2011Tourism continues to help London department storesJohn Lewis drives the market in 2010M&S just ahead of the market in 2011Department stores outperform retail sectorInflation intensifiesHome related spending in declineMore attractive as leisure destinationsNew ranges boost homewares share but not salesClothing & footwear exposure increasesSmaller gain in health & beautyRising share of troubled furniture & floorcoverings marketElectricals remain a problemSpace growth slackensExpansion moderated by cautionDepartment stores gain in non-food and retail overallCOMPANY DATA ANALYSISDepartment store market sharesTop 10 department stores market sharesWinners and losersUpmarket stores gain the most since 2006Key operating statisticsSelfridges leads on profitabilitySales growthBeales buys growth with stores purchaseOperating marginsSelfridges profits rocketSpace growthGreatest increase by BealesSales densitiesHarrods space most productiveSpace allocation
  3. 3. OUTLOOKKey issuesInflation vulnerabilityMore focused on three categoriesVolumes sufferValue communication is keyStaff training also importantStore expansionPace of growth down in 2010/11John Lewis expansion derailed by recessionbut may restart: shopping centres are keyCut down formatsFormat flexibilityExpansion and profitabilityGrowth in a time of uncertaintyIs space growth damaging profitability?Exceptional casesSales density key to profitOptimism biasReasons for underperformanceOrganic store expansion may have cost dangersNew assessment needed of expansion returnsSelfridges the exampleDevelopment of own brandOwn brand grows furtherCreating brands rather than labelsImpact of onlineThree market leaders dominateOverseas sales investmentStore only sales set to flatlineImpact on store developmentEffect on store operationsCovering for non-availabilityLonger run impactTourism and OlympicsRapid recovery after the recessionTourists drive luxury salesLondon not the only destinationOlympics prospects mutedInternational developmentWholly-owned stores return to favourAcquisition or store openings?M&S prefers store openingFranchising the core modelMarket positioningOlder, more upmarket segment dominatesSummary and strategies for successInflation challengeStore expansion may be costly
  4. 4. Own brand drives profitsOnline impact on storesTargeting tourismInternational expansionMarket positioningBEALESAdds scale with Co-op acquisitionRecent key eventsTakes total store portfolio to 32PropositionFinancialsStore acquisitions and VAT effect flatter salesReduces lossesSpaceAcquisition makes Beales a more significant playerSpace allocationMarket shareOutlookTakes a risk with acquisitionDEBENHAMSStrong own label helps in tough UK marketRecent key eventsOwn brand, multichannel and international main growth pillarsPropositionFinancialsAcquisition of Magasin du Nord boosts salesOnline speeds ahead with multichannel services expandingUK sales growth comes to a standstillSpacePresses on with expansion programmeSpace allocationMarket shareOutlookOpportunities in own label, online and internationally but also risksFENWICKIncreasing competition could threaten profitabilityRecent key eventsMakes the most of existing storesPropositionFinancialsSales growth grinds to a haltProfitability recoversSpaceStatic store numbersSpace allocationMarket share
  5. 5. OutlookNeeds to review strategy as competition growsHARRODSNew owners continue to investRecent key eventsConcentrates on developing core businessPropositionFinancialsSales continue double digit growthSecond highest margin in the sectorSpaceDensities highest in the sectorSpace allocationMarket shareOutlookNew owners promise future stabilityHARVEY NICHOLSBeauty standalones may protect UK growthRecent key eventsUK beauty stores and international growthPropositionFinancialsSales revive in 2010Focus on building marginSpaceUK to see return to expansionSpace allocationMarket shareOutlookBeauty Bazaar zeros in on greatest demandHOUSE OF FRASERFurther own label push needed to boost marginsRecent key eventsStrengthens own label and reduces debtPropositionFinancialsMenswear leads sales increaseSlow recovery in operating marginSpaceGrowth on hold for nowSpace allocationMarket shareOutlookFurther margin improvement needed’
  6. 6. JOHN LEWISOnline impact will growRecent key eventsMajor investment in new stores plus online growthPropositionFinancialsMargins recover in 2010/11 but 2011/12 will be much harderSpaceAt Home stores add to portfolioDensities reach new peakSpace allocationMarket shareOutlookOnline plays major roleMARKS & SPENCERReinforces brand and expands internationallyRecent key eventsBolland pursues evolutionary changePropositionFinancialsGood performance across year especially for internationalSpaceSteady rise in floorspaceSpace allocationMarket shareOutlookGradualist long term approach but consumer climate will get harderSELFRIDGESTourist spend to drive salesRecent key eventsRefurbishment and new brands keep stores excitingPropositionFinancialsHealthy growth thanks to tourist spendProfit margin highest among Top 10SpaceMaximises use of existing spaceSpace allocationMarket shareOutlookSelfridges appears a late adopter in some areas like online but hard to argue with highmarginsTJ HUGHESCalls in administrators as it struggles to overhaul product, sourcing and storesRecent key eventsNew owners and new management fail to turn around performance
  7. 7. PropositionFinancialsTough retail conditions hit performanceSlim margins disappearSpacePossible store closures on the cardsSpace allocationMarket sharesOutlookMerchandise and stores both need major shakeupAPPENDIXFinancial Statistics – VATTrading ProfileKey Operating RatiosPhysical DevelopmentAbbreviationsMethodologyFurther readingAsk the analystGlobal Retail FreeViewLatest Market Research Reports:Electricals Retailing in Europe: Market Size, Retailer Strategies and Competitor PerformanceASOS: A Spotlight On ServiceUK Non-food in Grocers 2011Where Britain Shops Department Stores 2011About Us:ReportsnReports is an online library of over 75,000 market research reports and in-depthmarket research studies & analysis of over 5000 micro markets. We provide 24/7 online andoffline support to our customers. Get in touch with us for your needs of market researchreports.Follow us on Twitter: Facebook Page: Priyank7557 Rambler road,Suite 727, Dallas, TX 75231Tel: +1-888-989-8004 EXT 106E-mail: sales@reportsandreports.comhttp://www.reportsnreports.comBlog: