In June 2021, real estate trade publication React News reported British department store Selfridges was considering a sale after receiving an offer from an unnamed potential buyer that valued the business at $5.7 billion. It was an eye-popping figure for a chain with just four stores — even if its real estate alone was estimated to be worth about $2.8 billion — and the latest proof that Selfridges’ approach to retail has made it an outlier in a troubled department store sector.
Since being acquired by the Weston family in 2003, Selfridges has secured a reputation for being one of retail’s most innovative players. As online shopping and monobrand retail grew their share of the fashion market and once-mighty department stores waned, Selfridges bucked the trend by investing heavily in glitzy renovations and immersive, constantly evolving experiences, primarily in its flagship location on London’s busy Oxford Street.
Selfridges leased prime square footage to top fashion brands, while also interweaving these concessions with the retailer’s own wholesale buys to avoid coming across as a generic luxury mall. To this mix, Selfridges added novel pop-ups and a layer of services and experiences, from restaurants and a FaceGym to art installations and a skateboarding bowl. The result was a tapestry of shopping and experience that drew a wide range of visitors — tourists, local office workers and wealthy expatriates alike — to a store that became famous as a social destination, offering a “day out” for clients rather than a place to simply buy things.
Selfridges’ big bet on experiential retail (including a $415 million David Chipperfield Architects-designed new accessories hall) seems to have succeeded in earning the time and attention of consumers and translating this into sales: Selfridges revenues doubled to £853 million ($1.2 billion) in 10 years before the Covid-19 pandemic hit, reflecting a compound annual growth rate of 7.5 percent.
Since the pandemic, however, Selfridges’ model has been tested: its dependence on luxury brands which largely cater to tax-free shoppers from abroad has made it vulnerable to the lengthy collapse in international tourism. Despite significant upgrades to its e-commerce platform, its online business has remained too small to plug the gap in revenues from store closures during coronavirus lockdowns.
Selfridges’ reputation as a social hub worthy of people’s time has helped draw back consumers since stores reopened in the UK in April. Popular food and beverage vendors, brand activations (like a Dior “Riviera” café and pop-up shop on the store’s roof) and a sprawling handbag gallery continue to attract both locals and domestic tourists. The store is integrating new consumption models like resale and rental into its approach in a bid to seduce sustainability- and price-conscious shoppers, and continuing to expand the range of products and services it offers online. But the slow return of key international constituencies continues to pose a challenge to Selfridges’ luxury focused model.
In this BoF deep-dive case study, we look at the strategy that helped Selfridges carve out a position of strength before the pandemic, as well as the challenges the department store currently faces to adapt its model to a radically changed fashion market. We’ll examine what made Selfridges a retail outlier, and whether the store can remain a top performer in the post-pandemic world.
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Editor’s Note: This case study was corrected on July 20, 2021. A previous version misstated that Selfridges was sold to the John Lewis department store chain, that Selfridges delayed submitting its 2020 results and “Project Earth” was referred to as a temporary marketing scheme. This is incorrect. Selfridges was sold to the Lewis’s department store chain, Selfridges has not yet submitted its 2020 results and “Project Earth” is a long-term initiative.