Comment: Department stores are being left behind in the global market

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Waitrose has become a supplier to Eurostar, and fellow travelling Partners at John Lewis are moving into the departure lounge at Heathrow.

Waitrose has become a supplier to Eurostar, and fellow travelling Partners at John Lewis are moving into the departure lounge at Heathrow. Is this a signal that the department store sector, mostly so confined within national borders, is finally waking up to an age sans frontières? With Asos, the Dickens & Jones de nos jours, increasingly flexing its virtual muscle overseas, bricks-and-mortar counterparts in the ‘house of brands’ division need to get in similar shape. And arguably not just online.

Many department stores have impressive ecommerce operations but, apart from some licensed agreements, their store portfolios are primarily domestic. Debenhams is the noble exception with 62 franchised stores in 24 foreign markets (65% in the Middle East).

Others have dipped a toe in the Middle East - Bloomingdale’s, Harvey Nichols and Saks for example - but it is investors from the Middle East who are doing the serious travelling. Not least the Qataris, whose acquisition of Harrods in 2010 was followed last month by the purchase of Printemps in Paris, and reports also suggest they’re well advanced in negotiations to secure a €1bn stake in El Corte Inglés.

Private equity firms and family funds have also acquired interests in national department store assets around the globe: TPG, which (with Warburg Pincus) is currently considering an IPO for Neiman Marcus in the US, has formerly bought and sold department store businesses in Australia (Myer) and the UK (Debenhams). And the Weston family controls quite the richest global collection of trophy department stores: Brown Thomas, de Bijenkorf, Fortnum & Mason, Holt Renfrew and Selfridges. But while these company names have international renown, the stores themselves stay land-locked in their home territories.

Like their investors, their landlords also know no such bounds: Westfield, for example, has more than 100 malls in four countries - all of them anchored, no doubt, by local department stores. Similarly, department store chief executives are themselves no strangers on foreign shores. Bonnie Brooks spent a decade in Hong Kong, turning round Lane Crawford, before returning to Canada in 2008 to preside over what is now Hudson’s Bay Company, which has just agreed a $2.4bn deal to acquire Saks Inc. And that most peripatetic of chief executives, Andrew Jennings, has occupied the hot seat at department store companies in the UK, Canada, the US, South Africa and Germany.

Yet investors, landlords and company executives pale in their international scope alongside brands that department stores sell.

These are the true global players in the physical retail distribution of fashion, perfume and luxury goods: Armani through Zegna, these brands are ubiquitous - from David Jones in Sydney to Nordstrom in Seattle. But the stores of their retail hosts resolutely tend to stay at home. Store groups would point to their virtual reach (Nordstrom says it supplies customers in 44 countries) but if owners, landlords, management teams, branded goods suppliers - and indeed customers - recognise no geographical constraints, why should the department stores? Would Selfridges really not hack it in Manhattan?