Introduction

Verdict Research: The UK department store sector has been through a period of change since the millennium driven by exits and consolidation. It now faces further contraction as the non-food sector suffers during the recession. This report examines expenditure trends in the sector, the performance of the market leaders and highlights threats and opportunities available to drive future growth.

Scope of this research

• Consumer expenditure via department stores 1999-2009e, growth and inflation/deflation trends, store numbers, space and sales densities.
• Market shares 2004-2009e, sales, space, operating profits and margin and sales and profit densities of Top Ten retailers in the sector.
• Trading and space performance, with product allocation, of Top Ten department store operators, including analysis and outlook for each.

Research and analysis highlights

The department store sector came to a virtual halt in 2008, with 0.1% growth. The core department store shopper, the 45+s saw their incomes cut by falling interest rates, and were hit by pension worries, declining house prices and fuel and food inflation. In 2009 we expect the market to be even tougher, falling -2.6% to £13.95bn.

In 2008 and 2009 together, the sector is set to increase its floorspace by 5.6%. This extra capacity is coming into a market with consumer demand in steep decline. As a result, average sales densities per square foot will decline by 5.7% in 2009 alone, to £353 per sq ft, putting operating profit margins under severe pressure.

Supermarkets are an increasing competitive threat to department stores. The expansion of their non-food ranges as well as the development of new formats, Internet retailing and higher quality products have the potential to take sales from midmarket operators. This is particularly true in a climate where customers are trading down.

Key reasons to purchase this research

• Understand the issues that face the department store sector and the opportunities available for growth.
• Discover how previous recessionary trends affect each sector and how retailers can exploit this.
• Identify where the risks lie for the sector and individual operators.