Department Stores Focus on Home’s Online Potential
MILAN — The home and decor sector represented 15 percent of the overall total department store business on average in 2022 and the category posted stable revenue growth between 2019 and 2022, as major players focus on curating their online offering to boost sales, the Paris-based International Association of Department Stores said Monday.
“In 2020 and 2021 the category bumped to a peak as customers were focusing on their homes, and growth was taking place mainly online due to lockdowns,” IADS’ managing director Selvane Mohandas du Ménil told WWD.
More from WWD
Inside the Museum of Arts and Design's Punk Graphics Exhibit
Looking ahead, IADS said due to an increasing number of players the category is pressured to keep up more than ever with fashion trends and rhythm, in a home and decor insights report compiled with the help of digital platform The Style Pulse and business and creative intelligence consulting agency Nelly Rodi.
Online commerce is seen as the main catalyst for the future, as omnichannel services have been tremendously developing in all categories and department stores are increasingly curating their websites by refreshing and narrowing the product offer “to avoid online customers from feeling lost in an ‘infinite aisle,’” the association added.
The global home and decor market in department stores represents a “dynamic” business facet and is now influenced by fashion trends, the retail trade association said. IADS was founded in 1928 as a think tank to address the challenges faced by retailers around the world.
IADS has 10 members across the world including Galeries Lafayette in France and El Corte Inglés in Spain and represents more than 26 billion euro in cumulative annual turnover across more than 360 stores in 19 countries.
Within the home and decor category, which includes home accessories, electronics, furniture and appliances, the home accessories segment represents the lion’s share of revenues, at 48 percent in 2022, down from 62 percent during home and decor’s peak during the pandemic. This shows brands are hard pressed to refresh their collections and find a balance between quality and price, amid an era of rising inflation. Department stores are also finding it hard to to compete with pure players with fast and free delivery services, as well as the rise of aggressive sales promotions.
“This goes in line with the general trend for department stores,” Mohandas du Ménil said. “To remain relevant, they need to offer a differentiated, curated and exciting selection of products, and this goes for the home category, too. If they do not manage to be differentiated and sell products available elsewhere, customers will always find cheaper options online. The lowest possible price battle is often a very difficult one to win.”
The report pointed out that Louis Vuitton’s latest home goods activity in Shanghai “represents a significant example and shows that department stores are increasingly facing more intense competition not only on the product offer (whatever the positioning) but also on the range of services they recently developed to remain relevant.”
Louis Vuitton recently opened a showroom to showcase its furniture collection Objets Nomades at Shanghai’s historic Zhangyuan Shikumen compound.
“Overall, online commerce is seen as the main growth lever for the future and omnichannel services have been tremendously developing in all categories,” the report said, adding that in-store “showrooming” is still generating positive results.
“Some product categories are booming and supporting the business: tableware, furniture and private labels are considered key to maintaining and growing sales. As for other product categories, the online business remains a priority for department stores that are improving operations,” IADS said.
Best of WWD
Nike Deepens Relationship With Megan Rapinoe With New Logo and Curated Nike Collection