3 Ways Small Format Experiences Are Changing The Department Store

Posted by on Feb 4, 2016 in Omnichannel

Department stores are sitting at the forefront of retail controversy, but many of them have stayed afloat despite the vastly changing landscape of retail. Even as store after store closes, the top retailers are getting smarter, leaner, more agile; making them a breeding ground for innovation. They’re always coming up with new ideas to reinvigorate department store shopping, from new technologies like smart mirrors to off-price stores like Nordstrom Rack.

With small-format stores becoming more popular, especially with millennials, large department stores are finding it difficult to deliver on quarterly earnings when it takes time to shift their strategies. This is why they benefit from bringing those small-format experiences into the fold. Some retailers are already experimenting with ways to provide the small feel without compromising what they already have.

In-Store Pop-Ups

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The Pop-in @Nordstrom is an excellent example of collaboration, partnership, and good branding. Pop-ups are no doubt an increasingly popular way for brands to spread awareness and set themselves apart. It’s a great model: it creates feelings of urgency and exclusivity and it saves money on space. The Pop-In @Nordstrom works because it features something new and different from what Nordstrom shoppers see in-store every day while still attracting them to the store.

Nordstrom also launched SPACE at Nordstrom to feature a revolving door of emerging and advanced designers in a boutique setting. While not exactly a traditional pop-up, SPACE is an excellent approach to accepting change rather than fighting it. It also allows Nordstrom to always be on the cusp of fashion names and trends.

Stores Within the Store

Macy’s has a track record for partnering with smaller retailers to provide them with space and get increased foot traffic in return—think the iconic Lush counter, and now the first ever Etsy shop in its flagship Herald Square store. The Etsy shop will feature a new assortment of handmade items from different makers every 6-8 weeks—an excellent way to leverage a partnership and keep things fresh at a 150-year old department store. Even though the Etsy shop appears to be a permanent fixture, the rotating collection shows that Macy’s knows what its customers are interested in and gives the sense of urgency and exclusivity of a pop-up.

While we don’t believe that the hype of the mass discounted price store model is here to stay, Macy’s Backstage concept is notable because it meshes the discount/outlet store with the department store itself. It means Macy’s is owning it, instead of distancing itself by putting it in outlet malls around the country. And it means a greater variety of products and prices within the store.

Independently Defined Departments

Renovations are always exciting, and in the Department Store Wars, they’re a no-brainer, especially in New York City where department stores are still known for their nostalgia and luxury. To that point, we’re seeing more department stores renovate individual departments to look and feel somewhat independent of the store as a whole.

The Jewelry Salon at Bergdorf Goodman and the giant 10022-Shoe floor at Sak’s Fifth Avenue are great examples of this. These amped-up departments give a similar small-format experience with the added benefits that both retailers are owned and branded by the same company.

What are your thoughts on department stores changing their store models? Let us know on Twitter @cloudtags.