Peter Williams: ‘Fenwick move from Bond Street is sad but inevitable’

The news that the Fenwick store on Bond Street will be closing in 2024 marks yet another moment in the shrinking of the department store sector. 

But the causes of these changes go beyond physical department stores. The way consumers buy fashion and beauty products continues to change and evolve.

When I began working in London – way back in the 1970s – department stores were the aggregators for fashion and beauty. A large physical space with multiple third-party brands and some own-label products offered customers choices that could not be found elsewhere.

At that time, the brands needed department store exposure because it provided guaranteed footfall and sales. The brands were more submissive, allowing the department store to decide which ranges and items would be put on sale.

In the 1990s, the emphasis changed, with fashion brands becoming more confident of their own existence. Also, a brand always knows more than a department store about the items to be featured in advertising and given to celebrities, and hence the likely winners. 

As a result, the contractual arrangement for fashion brands in department stores changed from an own-bought or wholesale basis, where the department store took the risk on the product, employed the staff and provided the shopfit, to a concession basis, whereby the brand paid a turnover-related rent subject to a minimum guarantee and supplied both the staff and the shopfit. 

The department store buyers morphed from being purchasers of product to selectors of brands.

Then, in the new millennium, ecommerce arrived.

“All of a sudden, a woman looking for a party dress could go to the Asos site and view a hundred of them – in minutes. That would have taken hours on a good high street”

Initially, new digital fashion aggregators such as Asos, Zalando and Net-a-Porter, which all started from nothing, took the market by storm. 

All of a sudden, a woman looking for a party dress could go to the Asos site and view a hundred of them – in minutes. That would have taken hours on a good high street or in a big shopping centre and been impossible in a weaker retail location.

Department stores suddenly had new competitors in fashion and beauty as younger generations went online. 

From another direction, the growing confidence of the brands extended into their own ecommerce operations. 

Having a shop without walls enabled the brand to display all the item and colour options without the space restriction in a department store, or even their own stores.

Having a shop that was open 24/7 and accessible to all reduced the need for a physical retail presence in a local department store.

The consumer has also become more confident. In the digital world, we have all learned how to search and undertake our own aggregation, curation and editing.

This is a current challenge for retailers such as Asos and Zalando, which are having to resort to increasing amounts of price discounting – a strategy that will not endear them to the brand owners.

“Department stores struggle in their attempt to be digital aggregators because they only sell a subset of a brand’s offering”

Even now, these digital aggregators need to offer more in content and features to avoid becoming less relevant to the consumer.

Department stores struggle in their attempt to be digital aggregators because they only sell a subset of a brand’s offering.

Once a consumer has found a product they are interested in, they will inevitably check the brand’s ecommerce site to see what other options are available, and the department store almost certainly will not have the same depth of stock by size.

Leaving aside market changes and pressures, there is then the question of the physical department store itself. 

Department stores mainly occupy old buildings that require significant maintenance and investment, which are essential to continue to provide a positive retail experience. Selfridges provides a world-class example of how to avoid the downward spiral by investing in stores.

Bond Street is one of the great shopping streets in the world and a mecca for luxury brand stores. The plan for the Fenwick site to become a quality mixed-use development will no doubt augment the environment and the previous incarnation as a department store will be forgotten.

Sad, no doubt, for some – but inevitable. 

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