Department Stores, Shopping Centres, and the Rule of Brands

Department stores are competing hard for more than thirty years to overcome the challenges posed to them by shopping centres and malls. They keep refreshing their interior designs, merchandising and marketing methods to remain relevant, up-to-date, and especially reinvigorated for the younger generations of shoppers. Department stores and shopping centres are two different models in retailing for offering a wide array of product categories, and accompanying services, within enclosed built environments — different in requirements and responsibilities of managing them, in their structures, and most importantly with respect to the shopping experiences they create. There is enough room in consumers’ lives for shopping both ways.

Shopping centres may be found in the central areas of cities and on their outskirts, on main roads at city-gates and in suburban neighbourhoods. A shopping mall, according to the American genuine model, is a shopping centre characterised by location outside the city centre, housed in a single- or two-floor building spread over a large area and a large-space parking lot, free of charge. But shopping centres or malls exhibit nowadays such a variety of architectural structures and styles of interior design, at different sizes and locations, that the distinction in terms has become quite vague and less important.

Department stores belong traditionally in city centres. They also are typically housed inPartial back closed windows allows a glimpse into the Coop store their dedicated buildings (e.g., 5 to 7 floors, including one or two underground floors). Each floor in a contemporary store is hosting one or more departments (e.g., cosmetics, accessories, menswear, furniture, electric goods and electronics/digital) or amenities (e.g., restaurants). That was not the case in the early days (1850s-1920s) when the retail space open to the public included only up to three floors and the rest of the building was used for production, staff accommodation, and other administrative functions; the range of products was much smaller. So the department store as we better know it today follows the format redeveloped in the 1930s and further progressed soon after World War II. The styles of interior design and visual merchandising, nevertheless, have certainly changed several times over the years.

There is however another recent format of a department store which resides within a shopping centre. It is a reduced and condensed exemplar of the ‘classic’ department store, probably not how consumers more often perceive and think of such stores. But having a reduced store version is perhaps not a problem inasmuch as its location. Shopping centres invite retail chains of department stores to open a branch as an anchor store in their premises, and it seems as a necessary action by the retailers to maintain visibility and presence amid the threat of the shopping centres posed to them. This venture also allows the retailer to extend and reach shoppers away from city centres. Yet, one may question if it helps and serves the interests of the department store retailer as much as of the proprietor of the shopping centre. Being more limited in space and scope of products, while surrounded by a few hundred other shops and stores under the same roof, the department store could get more easily lost and vanish from shopper attention in the crowded space. It should be much more difficult for the store to remain conspicuous in this kind of environment, especially when shoppers can refer to a selection of specialist shops in any category they are interested almost next door.

When a shopper enters a respectable department store he or she tends to get absorbed within it. The variety of products on display, lights and colours, brand signs, and furnishing and fixtures in different shapes and styles pull you in, making you forget of the outer world. The shopper may find almost anything one needs and seeks, whether it is for wearing, decorating the living room, or working in the kitchen, enough to forget there is a street and other shops and stores out there. Think of stores — just for illustration — such as  KaDeWe in Berlin, Selfridges in London, La Rinascente in Milano, or Printemps in Paris: that is the magic of a department store. Of course there are many other stores of this type from different chains, in different styles and atmospherics (which may vary between departments within the same store), and in some of the main cities in each country. For instance, Marks & Spencer opened its modern flag store in a glass building at the turn of the century in Manchester, not in London. Not long afterwards Selfridges also opened a store in Manchester, and then in Birmingham. Printemps and Galeries Lafayette sit next to each other on Boulevard Hausmann in Paris — both are very elegant though the latter  looks more glittering and artistic,  appearing even more upscale and luxurious than the former. Now Galeries Lafayette is planning its yet most modern concept of a department store to open on Champs Élysées.

That is not the impression and feeling one gets in a shopping centre. Although a centre can be absorbing and entertaining in its own way, usually it would be the centre’s environment that is absorbing as a whole and much less any single shop or store. Even in larger stores the shopper is never too far from being exposed again to other retail outlets that can be quickly accessed. In the shopping centre or mall, a shopper moves around between shops and stores, reviews and compares their brand and product selections, and at any point in time he or she can easily return to “feel free” walking in the public pathways of the centre, eye-scanning other stores. It is a different manner and form of shopping experience for a consumer than visiting a department store.

The rise of branding and consumer brands since the 1980s has also had an important impact on trade, organisation and visual merchandising in department stores, as in other types of stores in general. There is a much stronger emphasis in the layout of floors on organisation by brand, particularly in fashion (clothing and accessories) departments. The course of the shopping trip is affected as a result. Shoppers are driven to search first by brand rather than by attribute of the product type they seek. That is, a shopper would search and examine a variety of articles (e.g., shirts, trousers, sweaters, jackets) displayed in a section dedicated to a particular brand before seeing similar articles from other brands. It can make the trip more tiresome if one is looking for a type of clothing by fabric, cut or fit, colour and visual pattern. But not everything on a floor is always sorted in brand sections, like a shop-in-shop; often a shopper may find concentrated displays of items like shirts or rain coats of different models from several brands. Furthermore, there is still continuity on a floor so that one can move around, take along articles from different brands to compare and fit together, and then pay for everything at the same cashier.

In some cases, especially for more renowned and luxury brands, the shop-in-shop arrangement is formal where a brand is given more autonomy to run its dedicated “shop” (known as a concession), making their own merchandising decisions and employing their own personnel for serving and selling to customers. The flexibility of shoppers may be somewhat more restricted when buying from brand concessions. However, even when some “brand shops” are more formal, much of the merchandising is already segregated into brand sections, and shoppers frequently cannot easily tell between formal and less formal business arrangements for brand displays. The sections assigned toView over terraces in a multi-storey department store specific brands are usually not physically fully enclosed and separated from other areas: some look more like “booths”, others are more widely open at the front facing a pathway. Significantly, shoppers can still feel they are walking in the same space of a department or floor, and then move smoothly to another type of department (e.g., from men or women fashion to home goods). That kind of continuity and flexibility while shopping is not affordable when wandering between individual shops and stores in a shopping centre or mall. The segregation of floor layout into dominant brand sections or “shops” within a department store (and some architectural elements) can blur the lines and make the department store seem more similar to a shopping centre, but not quite. The shopping experiences remain distinct in nature and flavour.

  • “With so many counters rented out to other retailers, it is as though the modern department store has returned to the format of the early nineteenth-century bazaar.” (English Shops and Shopping, Kathryn A. Morrison, 2003, Yale University Press/English Heritage.)

Department stores have gone through salient changes, even transformations, over the years. In as early as the 1930s stores started a transition to an open space layout, removing partitions between old-time rooms to allow for larger halls on each floor. Other changes were more pronounced after World War II and into the 1950s, such as  permitting self-service while reducing the need of shoppers to rely on sellers, and accordingly displaying merchandise more openly visible and accessible to the shoppers at arm’s reach. These developments have altered the dynamics of shopping and paved the way for creative advances in visual merchandising.

Department stores have also introduced more supporting services (e.g., repairs of various kinds, photo processing, orders & deliveries,  gift lists, cafeterias and restaurants). In the new millennium department stores joined the digital scene, added online shopping and expanded other services and interactions with consumers through the online and mobile channels. In more recent years we also witness a resurgence of emphasis on food, particularly high quality food or delicatessen. Department stores have opened food halls that include merchandise for sale (fresh and packaged) and bars where shoppers can eat from freshly made dishes of different types of food and cuisines (e.g., KaDeWe, La Rinascente, Jelmoli in Zürich).

Department stores in Israel have always been in a smaller scale than their counterparts  overseas, a modest version. But they suffered greatly with the emergence of shopping centres. The only chain that still exists today (“HaMashbir”) was originally established in 1947 by the largest labour union organisation in the country. Since the first American-style mall was opened near Tel-Aviv in 1985 the chain has started to decline; as more shopping centres opened their gates the stores became outdated and lost the interest of consumers. By the end of the 1990s the chain had come near collapse until it was salvaged in 2003 by a private businessman (Shavit) who took upon himself to rebuild and revive it.

The chain now has 39 branches across the country, but they are mostly far from the scale of those abroad and about a half are located in shopping centres. Yet in 2011 HaMashbir opened its first large multi-category store in the centre of Jerusalem, occupying 5000sqm in seven floors. It seems the stores have gone through a few rounds of remodelling until settling upon their current look and style. They are overall elegant but not fancy, less luxurious and brand-laden, intended to better accommodate consumers of the middle class and to attract families.

It is rather surprising that Tel-Aviv is still awaiting a full-scale department store. The chain has stores in two shopping centres in Tel-Aviv but none left on main streets. At least in two leading shopping centres the stores have shrunk over the years, and one of them is gone. The latter in particular, located once in a lucrative and most popular shopping mall in a northern suburb, was reduced from two floors to a single floor and gave up its fashion department amid the plentiful of competing fashion stores in the mall, until eventually it closed down. Another store remains near Tel-Aviv in “Ayalon Mall”, the first mall of Israel.

Tel-Aviv has the population size (400,000) and flow of visitors on weekdays (more than a million) to justify a world-class store on a main street. Such a store has also the potential of increasing the city’s attraction to tourists. The detriments for the retail chain are likely to be the high real estate prices, difficulty to find a building suitable for housing the store, and the competition from existing shopping centres as well as from stores in high-street shopping districts. Yet especially in a city like Tel-Aviv a properly designed and planned department store is most likely to be a shopping and leisure institution and centre of activity to many who live, work or tour the city.

Shopping centres and department stores can exist side by side because they are essentially different models and concepts of an enriched retail complex in enclosed environments. Unlike the shopping centre, the department store is a world in itself of retail and not an assortment of individual retail establishments. The department store engages shoppers through  its structure, design and function given the powers the retailer has to plan and manage the large store as an integrated retailing space. Consequently, a department store engenders customer experiences that are different from a shopping centre regarding the customers’ shopping trips or journeys and how they spend their time for leisure in the store. One just has to look at the flows of people who flock through the doors of department stores in major cities, most of all as weekends get nearer.

Ron Ventura, Ph.D. (Marketing)

3 thoughts on “Department Stores, Shopping Centres, and the Rule of Brands

  1. Danny Rainer

    Very insightful article! Personally, I find the Department Stores a bit asfixiating. I think the Shopping Malls are more up-to-date, but Dr. Ventura’s article has given me food for thought. Maybe there will be a renassaince of the former.

    1. Thank you Danny! May you continue to enjoy your visits to shopping malls. Whether shopping malls or department stores, it is certainly a question of our personal preferences as consumers. But let us not cancel out one solution or model of retailing for the sake of another. From a consumer perspective as well as a business perspective, there are advantages to both department stores and shopping centres. As for being up-to-date, that is truly in the hands of the retailers. Nevertheless, depatment stores have become on some aspects more similar to shopping centres, probably seeing how the latters have become more popular in recent decades. The better approach for consumers in my view — mixing the best of both worlds, where available.

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