Department stores shouldn’t be afraid of the digital world, they should embrace it. At the same time, it is all about maintaining the right focus: luxury, emotion, entertainment and service are more important than price.
Exclusive luxury
Department store Illum has been making its mark on the shopping heart of Copenhagen since 1891. Four Years ago, the 127-year-old-spirited lady came into the hands of the holding company Central Group, which also owns the Italian luxury department store La Rinascente and has an interest in the KaDeWe Group. Illum is now working on a strategic repositioning that also involves a thorough facelift and major investments.
“We are about halfway, but in a department store remodelings are actually a story that never stops,” says the enthusiastic CEO Jeanette Aaen. In any case, the direction is clear. “Before I joined Illum, I also worked for Magasin du Nord. This department store has a completely different strategy and positioning: more accessible, in the middle segment, with lower prices and private labels. Illum, on the other hand, resolutely opts for exclusive luxury.”
Emotional needs
One will notice this by the presence of premium brands such as Prada, Valentino, Chloé, Céline, Rolex, Tiffany’s… Moreover, the department store wants to offer its visitors an overwhelming experience, for example in the unique ‘Illum Rooftop’ restaurants and bars on the top floor, under a beautiful glass dome. In the basement there is the trendy ‘Illum Underground’ department with street food in a hip, ‘urban’ environment. On each floor you can see a different look and there is a different atmosphere. The store is a real attraction and has been recognized by the travelmagazine Travel and Leisure as one of ‘the world’s most spectacular department stores’ . The building itself has an older section with lots of marble, while a tighter, Scandinavian look characterizes the more recent part that dates from the 1970s. Everything has been curated and designed by some of the world’s best architects.
“In any case, the design is transparent and well-organized. We attach importance to a quiet atmosphere in which people feel at home quickly. We also want to entertain our customers. They don’t come here for the products in the first place, but rather for the experience. You can buy products anywhere. We fulfill emotional needs. Actually we are in show business.” The appeal of a department store is therefore in the combination of a surprising assortment – the task of the purchasing department – with services and emotional values.
Christmas shopping
“I have department store blood flowing through my veins,” laughs Jeanette Aaen. “My pulse is accelerating as soon as I step through the entrance door. From my childhood, I especially remember the Christmas shopping with my mother. That was always an important event, and I was impressed by the beautifully decorated large display windows with gnomes and Santa Claus. During my masters studies in economics, I went to work in the accessory department at Salling. On the shop floor you learn how to deal with people. Then followed IC Companys and then Magasin du Nord where I implemented a new strategy as a store director for the 6 department stores. After some time at an investment fund, I returned to my great love…”
“My favorite department store? Illum, of course! But I admire many colleagues. The design of the new La Rinascente store in Rome is truly amazing! Barneys in New York has great shop windows, beautiful decorations, an exciting interior… And for fashion I go to Selfridges. At Galeries Lafayette I love the extravagant campaigns, at Le Bon Marché I love the boutique set-up. Moreover, I think that Saks Fifth Avenue really sets new standards with its approach. They were a first mover with their impressive luxury shoes department for example. Recently, they removed the beauty department from the ground floor to the second floor, and they have created a large accessory hall on the ground floor. This way they create a new experience. You see, I’m a total nerd when it comes to department stores…”
Embrace the digital world
According to Jeanette, what is the most important success factor for a department store? “I think the most important thing is to keep the focus on entertaining and surprising your customers. You cannot build relationships on product and price. The customer will run from one retailer to another. But if you offer them a unique experience, and services… they will stay forever.” Her most important decision has been to embrace the digital world as an inherent part of the retail operations, she says.
“Digital tools help us to offer people better service and to set up more targeted actions. The entire value chain of Illum has been digitalized. Recruiting is now also done via Facebook, for example, and for our employees we have an app that informs them about the events on the program, the offers, the best-selling products… This way they can optimally prepare for their working day. There are also digital services for consumers: for example, they can book a beauty advisor or a personal shopper online. These are things that you really have to do, otherwise you will die…”
In short, online is no threat to department stores. “Digital is not an accessory for us, it is rather something like underwear. It is essential. I have a dashboard on my smartphone where I can consult all the figures at a glance, in real time: the sales, the visitors on the website, the e-mail conversion… You have to embrace those possibilities. On the other hand, you don’t have to be afraid of ‘pure players’: they can’t offer an experience.”
“A funky workplace”
As a CEO, Jeanette thinks it’s very important to manage the store staff properly. “We actually have two types of employees: our own staff and that of our concession holders. But we treat them the same way. Shoppers do not see the difference either. We spend a lot of energy on guaranteeing an exciting customer experience. Working in a store is hard, and it is not immediately a job that people look up to, so many people only work here temporarily. It is therefore a big challenge to train them so that they offer perfect customer service. The average age here is around 25 years. We are a funky workplace!” She herself is very enthusiastic: “This is the best job in the world!”
Illum is part of a group of department stores, but it is not a chain. The owner, Central Group, lets each department store roll out its own local strategy. There is not even a common back office. After all, every market is different. The Italian market, for example, is very mature in terms of luxury. What La Rinascente does there would never work in Denmark. Yet there is synergy, but at a different level, Jeanette says: “We meet, we exchange ideas, and we negotiate with some brands.”
Finally: is there a future for the department store? “Certainly, on the condition that you do not focus on selling products, but that you fully embrace entertainment, emotion and excitement. We are here in the center of the city, near the shopping streets and the market place. We will always be relevant here.”
About the project
With the interview series ‘A Love for Department Stores’, retail expert Erik Van Heuven and journalist Stefan Van Rompaey (RetailDetail) set out to explore the world of department stores. Discussions with international investors and managers will identify the challenges and opportunities for this retail industry. In the digital age, department stores are not relics from the past, but the ultimate example of retail as entertainment. The interviews will appear on the RetailDetail websites in the coming months, in RetailDetail Magazine and will result in a book about the history and future of department stores in Europe.
As a former top manager at, among others, Galeria Inno and Karstadt, Erik Van Heuven knows the sector through and through. As chief editor of StoreCheck and RetailDetail, Stefan Van Rompaey has been following developments in the retail sector for decades.
