Insight: Will Scottish department stores experience a post-lockdown revival?
Once a bustling flagship shopping centre, its corridors are now lined with shuttered shops and the public areas are deserted.
On the top floors, chain restaurants such as Nando’s are temporarily shut to all, but takeaway due to the latest Scottish Government guidelines, until at least 26 October.
The cinema, although still open, is quiet with social distancing regulations, which leaves empty seats between household groups of film-goers.
Smaller shopping centres in Scotland are also hard hit.
In Kirkcaldy, The Postings centre, which was last year put up for sale for £1, is still around 90 per cent empty, housing just a chemist and a frozen food shop.
Nearby, The Mercat Shopping Centre - the town’s main shopping area - is suffering from a loss of flagship brands, with Marks and Spencer and BHS having vacated their premises in recent times.
Bricks and mortar retail has been struggling for some time, but its demise has no doubt been accelerated by the coronavirus pandemic. Experts have warned that high streets and shopping centres need to adapt to changing consumer demands if they are to survive.
Ewan MacDonald-Russell, head of policy at the Scottish Retail Consortium, says he believes the post-Covid retail market will thrive - but could look very different.
He says: “With non-food sales in decline in Scotland, there is a finite market. That has put immense pressure on retailers to adapt.
"In some cases that adaption is through focusing on a smaller estate. Ultimately in the digital shopping era, retailers need fewer stores and workers to cover the whole country.
“It’s this context which defines how the industry is responding to coronavirus. The existing pressures have been amplified and we are seeing an acceleration of these trends. When this crisis abates there will still be a vibrant and dynamic retail industry in Scotland, but it will look quite different.”
Shopping habits acquired during lockdown appear to have been adopted permanently, according to the latest figures from the British Retail Consortium.
During the peak of the pandemic, three quarters of Scottish consumers received between one and three online shopping orders delivered to their homes every week, according to a YouGov survey.
Meanwhile, footfall in Scottish shopping centres and malls was down 43 per cent compared to the same period last year in August, the second weakest performance of any part of the UK.
In August, a Scottish Retail Consortium report estimated that £2.1 billion of retail sales had been lost in Scotland over the previous five months, exacerbated in part by the longer lockdown north of the Border, compared to other parts of the UK.
The pandemic is still continuing, with local lockdowns driving people to spend more time at home, with many shying away from lengthy, non-essential shopping trips.
Yet, even before the Covid crisis hit, the writing was on the wall for the most traditional of Scottish shopping outlets - the department store.
Just three miles away from Ocean Terminal, on the Scottish capital’s Princes Street, scaffolding covers a prominent corner store that once housed major department store brand House of Fraser.
Building work began shortly before the pandemic to transform the former department store into the Johnnie Walker Experience - an eight-floor, “multi-sensory” experience about the Diageo-owned whisky label.
House of Fraser was the first department store to close on Princes Street in a planned domino effect that will decimate the traditional style of retailer that dominated Edinburgh’s well-known shopping street for more than a century.
It will be followed by nearby Debenhams - a firm that has fallen into administration twice in the past two years, which is expected to vacate its prime building to make way for redevelopment into a hotel, leisure and retail “hub” - and Scottish icon Jenners.
Also owned by House of Fraser, it was announced last year that Jenners, which has been on Princes Street for more than 180 years, will move from its historic home on Edinburgh’s main thoroughfare.
The building’s Danish billionaire owner, Anders Holch Povlsen, unveiled plans to reinvent the historic building, to create a hotel, cafes and rooftop restaurant and bar, alongside a potential raft of luxury shops linked to his clothing empire Bestseller.
In Glasgow, a similar fate has befallen the historic Watt Brothers store.
The department store fell into administration at the end of last year, ultimately closing in December. Last month, businessmen brothers Sandy and James Easdale spoke of their plans to undertake a £20 million revamp of the site, with the idea of turning it into mixed-use development with hotel and residential accommodation the most likely option.
Meanwhile, the closure of 149-year-old Beales in Perth earlier this year was accelerated by the pandemic, with the loss of 1,000 jobs, while in Ayr, Hourstons, one of the west of Scotland's oldest high street retailers, ceased trading last year with the loss of 70 jobs, in a move that was described as “truly heartbreaking” for the town.
“High streets, and department stores in particular, have had a torrid time in recent years,” says Mr MacDonald-Russell.
“High street stores have more and more had to compete with digital rivals who can offer a range and convenience which is hard to match. Some retailers have responded effectively through developing their own multi-channel operations and enhancing reasons to visit, focusing on high quality service, extra incentives, and food and drink options to tempt consumers into visiting.
“Those approaches have worked well in vibrant town and city centres where there are compelling reasons for visitors to come to the high street.”
Retail analyst Graham Soult of Canny Insights believes that many chain department stores have become too homogeneous.
He says: “The big names have rolled out the same things all over the place. If you are going to offer the same department store experience in Edinburgh and Exeter, it’s just not going to work.
"I don’t believe the department store as a concept is dead, it’s about finding new ways of doing things.”
He adds: “I think the future of places in Scotland is going to be more in individuals doing exciting things as independents, along with more diverse uses.”
At the east end of the city centre, Edinburgh’s branch of John Lewis - once the darling of the high street - this week unveiled plans for a £24 million makeover.
The only store that remains untouched as part of the St James Centre redevelopment into the St James Quarter, John Lewis is to redesign its 160,000sqft facility, with new services including home design, style studios for personal shopping and a beauty concierge service.
It will also feature “shops within shops”, with brands including Edinburgh Gin, Hotel Chocolat and Kurt Geiger.
The brand has suffered a difficult year.
Last month, staff - known as “partners” at the department stores - were told they would not receive a bonus for the first time since the aftermath of the Second World War, amid plummeting profits.
Chief executive Sharon White this week admitted in an interview that online shopping would be here to stay - internet retail accounted for around 40 per cent of sales even before the pandemic hit - and said the company needed to find other ways of diversifying to stay afloat.
Mr Soult adds: “I think people will always want to go into an actual shop and buy stuff. Online will always have that problem – for now, at least – that you can’t get something physically in your hands when you want it, straight away.
"City centres will always be able to offer those experiences that you can’t get online too, such as having a coffee or getting your hair cut. It’s about how you package the experience and if it’s appealing.”
Indeed, the focus of the redevelopment of the John Lewis offering is notable in that it is based in physical experiences.
At the start of the pandemic, retail experts warned of the end of services such as the traditional make-up counter as Covid-19 restrictions looked set to make it impossible to test products in person. Meanwhile, anything offered online – or with remote payment options and contactless collection - was regarded as far more attractive due to fears over the spread of the virus.
Yet, John Lewis now appears to be returning to customer-focused service.
Barry Blamire, head of branch for John Lewis Edinburgh, says the makeover will be scheduled for April next year to tie in with the opening of the new centre.
“We want to give shoppers more reasons than ever to come to the shop and the city centre, while knowing they can do so safely,” he says.
“The new look store will be designed to not only offer a superb selection of products, but provide outstanding experiences and inspiration for customers, which give a sense of occasion when they visit.”
April is not just auspicious timing in terms of the opening of the new centre - it is when many scientists believe that a vaccine for coronavirus may be within reach.
Leigh Sparks, professor of retail studies at Stirling University, believes that Blamire’s “sense of occasion” is what shoppers will be looking for when they do return to the high street in their droves, once the pandemic is behind us - leaving online shopping for more basic items.
“When we come out of this, with the huge sighs of relief that we have beaten Covid, if there is a sense of a rise in economic fortunes, what will that translate to in consumer terms?” he says.
“People will want to go places and have experiences that they can’t do now. They have been denied these experiences for so long.
"Someone who actually gets the pampering and the spa type experience right, or the beauty treatments an consultants, they have got to do very well out of this.”
He points to the department store heyday of the late 1800s.
“I wouldn’t be surprised at all if we get a swing back towards the department stores of the 1870s,” he says.
"As well as the retail side of it, for people then, it was the experience. They had never seen anything like it - these massive cathedrals of consumption with the plate glass and the huge staircases.
“This is how people are going to feel after the pandemic, that they want to go places and experience things. However, they need to offer something different. Why would I go to a department store in Edinburgh to shop, when I can get the same brands on George Street, or online?”
Outside of traditional department stores, the concept is growing.
Online, Amazon is akin to a department store retail experience, with an increasingly large range of brands and categories.
Supermarkets, which boomed over lockdown as people increased their weekly grocery spend due to spending more time at home, are teaming up with specialists to provide an almost department-store-like experience.
Asda is among the supermarkets which is trying to turn its increasingly diverse offering into a specialist experience.
The supermarket this week announced a tie-up with toy specialist The Entertainer. The partnership will launch early next year as a five-store trial, with The Entertainer having full responsibility for product range, pricing and merchandising, as well as selling its budget line, Addo.
In further partnerships, Asda also announced the expansion of its trial with musicMagpie and a new partnership with fragrance distributor Per-Scent.
Meanwhile, rival Sainsbury’s houses in-store departments of furniture retailer Habitat and, in some locations, is also under the same roof as catalogue retailer Argos.
The two brands came under the Sainsbury’s stable in 2016, with the store group’s £1.4bn acquisition of Home Retail Group.
“There is potentially an awful lot of change due to happen in terms of the future of the high streets,” says Prof Sparks.
“People do want really good retail, but they want in a space and place that they can get to and businesses need to be able to offer it in a cost-effective way.”
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