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The UK's Last Surviving Department Stores Prepare To Fight It Out

Depending on the source of the statistics, the number of UK department stores fell from 240 in 2009 to 180 in 2021; or is down from 467 department stores in 2016, plunging to 79 in 2021.

While the stats are debatable, the conclusion is not: Department stores are on the canvas after Debenhams, BHS and House of Fraser closed entirely, or very nearly.

Now the last two fighters in the ring — John Lewis & Partners and Selfridges — are about to slug it out to see who will come out on top.

New owners at Selfridges plan to confront a plunge in profitability by extending their network of regional bases. Today the retailer is in Manchester (two stores), Birmingham (one) and on London’s Oxford Street (also one).

Expansion into the next tier of regional cities will place Selfridges on a collision course with John Lewis, which has been facing problems of its own.

In 2020 John Lewis closed eight regional stores. A total of 36 remain.

The winner of the John Lewis v. Selfridges face-off might face two potential challengers.

Next, the clothing chain, is dipping a toe into the department store scene with a 94K SF outlet at Watford, north of London. For the first time, its apparel, beauty and homeware offers will be united under one roof. Changes in its London flagship format suggest Next may be tempted to go down the now largely empty department store route. But as yet nothing is certain.

Harvey Nichols is the other potential contender. The luxury brand has five larger regional stores (Bristol, Birmingham, Manchester, Edinburgh and Leeds) plus some smaller outlets and their Knightsbridge flagship. The firm shows no sign of further UK expansion.

Selfridges' new owners are already pioneering smaller regional stores in Switzerland. Central Group Europe, owned by the Thai-based Chirathivat family, is in partnership with Signa, an Austrian property business. Together they acquired Selfridges in 2021, paying the Weston family £4B.

Half year accounts to 30 July 2022 for John Lewis showed a loss of £99M (or £92M before exceptional costs). Sales volumes were up 3%, and a £90M cost savings plan is in process.

The partnership is resting its hopes on strong customer loyalty, a customer base it knows well and strong cash reserves (£1.1B). It is using existing sites and property to diversify into build-to-rent housing, targeting 10,000 new homes in 10 years, starting in London and Reading.

A new regional entrant could find welcoming landlords and relatively low-cost sites, if they act quickly.

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