01 May 2019
Posted in Retail
Department stores are top choice for gifting but recent struggles will threaten their reign, says GlobalData
Department stores are popular among consumers for purchasing gifts for occasions such as weddings and birthdays, as 44.9% of UK consumers who purchased a gift in a store bought from a department store*. As struggling department store retailers such as Debenhams and House of Fraser close stores, other retailers should position themselves to gain share of gifting spend, according to GlobalData, a leading data and analytics company.
GlobalData’s latest report: ‘All Year Gifting in the UK, 2019’ reveals that department stores are the second most popular physical location for purchasing gifts with Debenhams being the eighth most popular retailer for purchasing gifts, and John Lewis tenth, however retailers Tesco and Amazon take the top spots. As most Debenhams and House of Fraser shoppers are unlikely to have a branch of the same retailer nearby, the retailers must focus on persuading these shoppers to purchase online with them after store closures. Otherwise, the grocers and Amazon are well positioned to steal this gifting spend from department stores.
Emily Salter, Retail Analyst for GlobalData commented: “The popularity of department stores is bolstered by the presence of branded products across a number of sectors, more premium items and a perception of being an appropriate location to purchase gifts for special occasions. Department stores are the most popular for purchasing gifts for weddings and engagements, as quality is the most important driver of retailer choice and gift recipients direct purchasers to department stores due to the presence of gift list services.”
To harness gifting spend after the closure of department stores (Debenhams announced the proposed closure of 22 locations last week as part of a CVA) which often have uninspiring product ranges and store environments, retailers should promote the quality of their ranges, especially for more special occasions such as engagement and new baby gifts. Low prices should also be highlighted (53.1% of all year gifting shoppers consider this when choosing where to purchase gifts, according to GlobalData*) on items for occasions such as retirement and life achievements such as promotions or passing driving tests, when consumers wish to spend less.
Salter concluded: “Supermarkets are in a good position to capture gifting spend as they already offer a wide range of products at low prices, but to entice more shoppers they must improve their reputation for good quality. Amazon is set to grow in popularity due to the appeal of its often lower prices, vast product range and the convenience it offers, especially to Prime members.”
*The survey data is taken from GlobalData Retail’s 2019 All Year Gifting survey of 3,000 nationally representative UK respondents.