A New Department Store Just Launched. (Really.) And it's Exciting.

We’ve heard the doom-and-gloom about U.S. department stores. They’ve missed earnings expectations, experienced comp store sales decreases, decided to close stores, struggled to grow online sales as fast as they wanted, and/or lamented e-commerce profitability. Last week, JP Morgan cut price targets and lowered estimates on four different department store stocks. 

Yet, the retail community - myself included - warmly received recent news of Anthropologie & Co., which is basically a department store. Why the optimism?

Let’s take a step back and consider what made department stores appealing in the first place:

1. Brands used department stores as a conduit to reach customers. For many brands in many towns, department stores were the only representation they had.

2. Whether as part of a day at the mall or as a standalone shopping trip, department stores were a social destination for browsing and discovery.

3. Most importantly, department stores used to be the obvious destination for convenient purchasing across brands and product categories. They were, physically, the biggest stores around and had the widest selection available.

Today, consumers need not rely on department stores exclusively for any of this. 

First, if the brand you love hasn’t opened a brick-and-mortar outpost nearby, it’s almost definitely available to buy online. Second, if you want a fun day out and you’re a millennial, you’re probably looking for an experience whose sole purpose isn't to acquire more clothes and accessories. 

The good news: If you do live near a great department store and it actually still has sufficient stock, it can be convenient for trying on 40 dresses/swimsuits/jeans in the event you have a same-day purchase need or didn't want to max out your credit card only to find one winning item and ship back the rest.

To be clear, I like department stores and I think there's a future for them. Being a nearby destination for breadth of selection is one ongoing reason for their being. Another is experience and brand discovery, which some locations of some companies still provide (recent announcements include Hermes at Nordstrom and Combatant Gentleman at Bloomingdale’s). 

They’re also using personal shoppers to filter and personalize merchandise assortment. And they're looking to technology for self-service solutions for customers who want them. Finally, events, restaurant concepts, and creative merchandising also are helping to create experiences.

But perhaps the biggest challenge for department stores is this: We’re living in an age when everything can be entertaining and streamlined to be “just for me”. Department stores, by nature, are for a wider range of customers. And too many aren’t engaging. Many are even an eye sore.

Anthropologie doesn’t have these problems. The whole store is for a specific woman, the "cultured Bohemian" (as the BoF article link above describes). The average length of a store visit is enviable as that covetable customer journeys through the store and pauses to absorb. (Note: I'm sure I've seen discussion of this dwell time metric, but I can't find a link; please comment if you can.)

With Anthropologie & Co., URBN, Inc. is using the license it’s earned with its Anthropologie, BHLDN and Terrain customers and undoubtedly leveraging its learnings from large-format Urban Outfitters stores. Anthropologie & Co. is going to give this customer more — more space, more merchandise, more to do. It’s the experience she wants and the place she can find what she needs. This is an even bolder lifestyle concept from a brand that's long excelled at lifestyle merchandising.

Image source: http://blog.anthropologie.com/introducing-anthropologie-co-a-tour-of-our-new-walnut-creek-store/