Department stores are convenient because people can shop almost everything under one roof. Back in the early days, they provided almost everything, literally, almost everything. Nowadays we have seen the rise of independent brand stores, supermarkets, fast fashion brands, e-commerce and many others. This has changed the whole landscape. Department stores are fighting back. Some department stores have always stayed modern and they have quickly adapted to change. While others have stayed comfortable like video rental stores.
For many, department stores are magical places. Those who have been to Harrods and Selfridges what it means to visit high-end department stores because they provide excellent customer experiences, products, and customer service. When I studied marketing and innovation in Cambridge, hence, doing my master's degree. It was nice to visit department stores and brand stores, which were world-class.
But when I returned to Helsinki, Finland in 2011, I was shocked. I was able to see the contrast between British department stores and Finnish department stores. Every single Finnish department store was badly outdated. One when bankrupt in 2016. The second one is still operating mainly because of internal funding because it is owned by a large chain, which operates supermarkets, gas stations, restaurants and many others. The third one, my dearest, Stockmann, which was already founded in 1862, was still doing great profits but it was also lacking behind market trends.
Stockmann was doing fine because it had department stores in Finland, Baltic states and in Russia. Also, it owned other businesses as well. Stockmann's Russia business was doing fine. The brand has a good name in Russia because the brand was founded in the 19th century when Finland was a part of Imperial Russia as an autonomic grand duchy. This makes Stockmann one of the oldest "Russian" and European department stores. It might be the oldest Russian department store because GUM in Moscow was built as a passage in 1799. GUM was the largest passage in whole Europe in 1893. In contrast, Harrods was founded in 1834 and Selfridges in 1908.
When the Ukrainian crisis hit in 2014, it also hit hard the Russian economy and currency rates. EU's and Russia's trade sanctions increased the speed of the downward spiral. This was a major blow for Stockmann because as a department store it sold Finnish food products in Russia. Suddenly it had to stop selling and this was a major blow. Finland was also enjoying of Russian consumers and because of currency rate changes, they almost disappeared in a second. Stockmann's cornerstone was blown into pieces.
Stockmann quickly decided to make changes. It had to sell its department store businesses in Russia. Stockmann brand still exists in Russia but under a different operated. Russians trust the brand because the other choice was to use British Debenhams as a brand name. One department store was shut in down Finland. Stockmann had to sell food markets, multiple brands, and real estates away. At the same time, it had to move higher from the mid-end market. The department store, the crown jewel of Stockmann has gone through radical changes. Lots of changes happened and they are still going on. Stockmann is playing catchup.
When Stockmann was in deep trouble. Finnish business expert said in 2014 that the brand should imitate Nordiska Kompaniet, a famous Swedish department store, which is located in Stockholm, Sweden. The company was founded in 1902 and it has only two department stores. One in Stockholm and one in Gothenburg, which are major cities in Sweden but Stockholm is the crown jewel.
Nordiska Kompaniet has also faced turbulent times. Before the Russian revolution in 1917, it had shops in Saint Petersburg and Moscow. It also expanded to several cities inside Sweden and it had to shut them down because they were not doing any profits.
During January 2018 I could visit Nordiska Kompaniet in Stockholm. I wanted to see what was the magic bullet, which people were talking about in Finland. Yes, the department store has lots of shop-in-shops and premium and luxury brands. There was also something missing. It felt like a dreary shopping mall. Department stores typically have a cozy feeling and different shopping areas integrate seamlessly together. But this was not the case at NK. However, I was delighted in February 2018 when the department store announced the following:
"Nordiska Kompaniet in Stockholm is about to enter a new era following a decision by Hufvudstaden to proceed with development plans aimed at reinforcing NK’s position as a world-class department store. The renewal will encompass both the physical environment and the digital presence, and will include expansion of the service range to meet customer demands and changing purchasing patterns. The store will become larger and more personal, and it will acquire a more unique profile. Over the next couple of years, further international brands will appear on the ground floor. Two of these brands, Valentino and Balenciaga, are due to move in this autumn."
Staying awake is a fine choice because department stores must keep up with market trends - always.
Published in Luxury Sales Academy.