Departing the norm: Department stores

Just as there will always be consumers who prefer leafing through novels in print to pressing a button on a handheld e-reader, there will always be shoppers who prefer department stores for their watch and jewellery purchases over an independent or multiple specialist.

With department stores taking a growing share of the watch market and proving popular for jewellery sales, we have taken a magnifying glass to what’s driving that growth, who the department store shopper is, and what impact this surge in sales is having on the market.

Recent figures from market research company GfK revealed that, when comparing May 2010 to April 2011 with the previous year period, the channel of purchasing described as combined department stores and mail order houses experienced a 33.5% rise in the volume of watch sales. This equated to an increase in value of 22.7%. This is significant growth when taking into consideration the fact that the total market had a volume decline of 1.8% and a value rise of 4% in the same period.

“Department stores and mail order houses have realised the value in watches and jewellery,” explains GfK product manager of watches and jewellery Jonathan Hedges. Consequently, department stores are being recognised

as a valuable sales floor for watch and jewellery houses. Where certain watch brands may previously have shunned appearing alongside an array of other companies, they are now realising the sales opportunities that a department store presence can offer.

Hedges points out that, compared with the previous year, in the past 12 months there have been 100 more watch brands selling in the department store and mail order channel. “By stocking more brands they have been able to take advantage of new trends in the market, such as coloured watches and ceramic,” he adds.

This trend awareness works in department stores’ favour. Their high street or shopping centre locations encourages their buyers to ensure stock is at the peak of high street fashions, and GfK’s figures suggest a large number of department store shoppers are looking for fashion items. According to GfK, the average price of watches in department stores and mail order houses is £77, indicating that the mass-market brands are more popular in this channel than the higher-end products.

It is not all about low price points in department stores, however. Selfridges accessories buyer Lydia King says the retailer has seen a rise in the sales of both high-end and mass-market items. “We have widened the range of exclusive product in reaction to demand for higher price points and more hard-to-obtain pieces,” she says. “We introduced Richard Mille watches in April in The Wonder Room, which have an opening price point of £30,000 and have seen a fantastic reaction.” Selfridges is launching newly expanded jewellery and watch departments at its Manchester Exchange Square store over the next six months in reaction to demand for increased selection and a widened brand mix.

Fashion-forward
According to Skagen UK brand manager Richard Hill, the department store customer enters with a certain amount of money and is generally open-minded about what to spend it on. Regardless of how much the consumer wishes to spend, most industry experts agree that department store shoppers are likely to be fashion conscious.

“I would assume department store shoppers are more fashion orientated and up to date with the latest trends,” says Raoul Sagal, brand UK manager for Marco Bicego, a jewellery brand that is opening two concessions in Harvey Nichols later this year. Sagal adds that the number of tourists visiting department stores also exposes the brands to an international clientele. Such customers are important for watch brands like Gc, which has a presence in Selfridges and Harrods, says Sequel UK sales director Vicki McCabe.

Being fashion-forward, department store shoppers tend to find the prospect of buying a whole outfit - including accessories - in one place very appealing. Able to meet all fashion needs in terms of clothes, beauty, shoes and accessories, the department store has a one-stop-shop lure that is not too far removed from the ever popular online shopping environment, where shoppers can buy everything they are looking for from the convenience of their armchair.

“People are becoming progressively more lazy with their shopping habits and this is why our high streets are struggling so much,” says chartered psychologist Dr Colin Gill. “People under 40, in particular, expect to turn up and find everything they are looking for under one roof.”

While shopping at a bricks-and-mortar department store may mean stepping out into the cold light of day, the concept is consistent - a shopping experience all under one roof. And, if leaving the house is a daunting prospect, then the department stores’ websites mean that, for those looking for super-fast, convenient shopping, even the number of mouse clicks is reduced.

At Selfridges, there has been double-digit sales growth in jewellery and watches at its stores over the past year or so, which King says is down to increased consumer product knowledge and brand loyalty as opposed to retailer loyalty. “Whereas there used to be loyalty to one jewellery house, now customers are buying into a wider variety of brands and it is far easier to see multiple collections under one roof that are already edited down to a presentation of the best-selling lines,” she says.

Names you can trust
Although GfK does not yet have figures specifically related to jewellery sales in department stores, industry insiders suggest the shops are also proving popular for jewellery purchases.
So Jewellery’s collection of silver cufflinks was launched into John Lewis’ UK department stores in 2009. So Jewellery sales and marketing director Emma Finney says having a presence in department stores has taken on greater significance, as long as it’s the right store. As well as improving brand visibility, she says the brand can benefit from
the verification of having a “beacon retailer” that chooses to stock it, which gives a good impression to other potential retailers.

Jewellery brand Dower & Hall is available at Liberty, Harrods, Fenwick and John Lewis. While creative director Diane Hall recognises that department store shoppers tend to want to buy from under one roof in a trusted, established store environment, she adds that the brand’s presence in these stores can help their own stores and those of their core stockists because “usually the selection in a department store is much smaller than that available in other shops”. And Hall doesn’t believe the benefits end there. “You have the backing of a big company such as John Lewis, which can afford to advertise and promote its stores, plus it has access to a huge customer database,” she says. Additionally, the prestige of being in a store such as Harrods can apply huge kudos to the brand, Hall says.

Being linked to a trusted name such as John Lewis has also worked in watch brand Mondaine’s favour. “Department stores like John Lewis [are] frequented by an intensely loyal customer who knows they can shop from a well-edited range of watches, specifically selected for them,” says Mondaine UK brand director Derek Salter.

Other shoppers who are drawn to department stores are those deterred by forced interaction with sales staff. The impersonality of a department store can make it easier for individuals to browse without fear of being swooped on by overly eager shop personnel.

Layout also aids the more casual shopper who is keen to avoid social interaction. “Stock tends to be laid out on large, waist-height display cases,” explains Gill, “so it is easier to wander around and look at a variety of different brands without having to ask somebody to take a tray down or to unlock anything.”

At specialist jewellery retailers customers often have to open the door - maybe even two if security is high - where they are greeted by staff. For some this is preferable, particularly if they are about to spend a significant sum of money, but it is not everyone’s cup of tea. “People can get very anxious about buying higher-value items like jewellery and watches,” says Gill. “And as soon as the conversation begins they find it hard to back out so they don’t want to start the conversation. In a department store there is no need for that conversation.”

While an element of anonymity may strike a chord with some department store fans, the personal touch is not obsolete. According to Gill, those buying items at the top end of the scale may expect interaction and often want to build a relationship with the vendor. In these circumstances consumers tend to seek out a smaller specialist where they believe product knowledge will be superior.

However, customer service and staff knowledge are also priorities at department stores. “We constantly monitor and challenge our service levels to maintain our high standards of care,” says Selfridges’ King.

Those feeling particularly at home in department stores are likely to be men, according to Gill. “Men have the natural psychological tendency to impulse buy, which is why, if you send men down to the supermarket, they are likely to come back with a lot of sweet rubbish,” he explains. “Secondly, men find that sort of environment more stimulating. It appeals to their hunter instinct because there are a lot of things they can search [through], almost literally tracking down what they want. It stretches them a little bit but not too much, because if they
were stretched too much they would get bored with it.”

The popularity of a department store for those inclined to impulse buy is also observed by Paul Harry, sales and marketing director of Peers Hardy, distributor for Ice-Watch. “More and more watches are becoming an impulse purchase and department stores are the destination for consumers looking to buy a little something without necessarily planning beforehand,” he says.

Indie advantage
Gill also points out that department stores don’t tend to appeal to both genders simultaneously. “They tend to separate out - menswear is on one floor and womenswear on a different floor. Similarly with high-value watch and jewellery items, they will have men’s pieces and women’s pieces in different parts of the display area.” This is perhaps a link-selling opportunity for independents and also a chance to show off their expertise. Gill says: “The independent can make a virtue of coupling products - his and hers.”

However, department stores can also offer brands link-selling opportunities, particularly for a fashion brand such as Guess. “Department stores offer a variety of other lifestyle products - apparel and also handbags - that help build the Guess brand and the watches’ significance within it,” says Zoe Uhrmacher, brand head of Guess watches at Sequel UK.

Although department stores have recently become the shopping flavour of choice, independent and multiple watch and jewellery retailers have little need to feel threatened yet. Hedges explains that the strong sales at the department store and mail order houses has taken market share away from the mass merchandisers channel, which includes supermarkets and major high street chains that retail across fashion, accessories and homewares, rather than the specialists. In March, department stores and mail order houses had a value market share of 13.3% compared with 10.8% in March 2010. In contrast, the mass merchandisers went from a 12% market share in March 2010 to 10% in March 2011.

Hedges confirms that independent and multiple jewellers have had robust sales over the past year, especially for watches worth more than £1,500, which have had dramatic sales growth. “If these specialist retailers can continue to offer the product knowledge through their specialist-trained staff and the ‘exclusive experience’ of buying a high-end watch, then department stores will find it hard as a channel to take market share away from specialists,” says Hedges. “The specialists have maintained a market share of more than 75% in value for the past 12 months and there is little sign of this decreasing unless the department stores and mail order houses can replicate the knowledge and experience offered by this specialist channel.”

But, as some shoppers look for fashion fulfilment under one roof, department stores are stepping up to the plate and increasing the range of product on offer, optimising displays, and arming staff with more and more product knowledge. For other shoppers, the magnitude of a watch or jewellery purchase drives them to seek out multiple or independent specialists where they are guaranteed instant attention from staff and the level of in-depth understanding that comes with being a watch or jewellery purist.

With competition for consumers’ spend getting fiercer, retailers everywhere can breathe a sigh of relief that individuality prevails and a multitude of purchasing habits means a variety of stores will continue to successfully co-exist.

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