Reimagining Retail: How French Department Store Icon Printemps Is Reinventing US Retail — Inside the New NYC Flagship

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Sara Lebow (00:00):

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(00:20):

Hello listeners. Today is Wednesday, April the 16th. Welcome to Behind the Numbers, Reimagining Retail, an eMarketer podcast made possible by Kinective Media by United Airlines. This is the show where we talk about how retail collides with every part of our lives. I'm your host, Sara Lebow.

(00:39):

Today's episode topic is the department store in 2025. Before we jump into that, and into a special field trip we went on, let's meet today's guests. Joining me for today's episode. We have podcast regular, VP of content for our retail desk, Suzy Davidhkhanian. Hey Suzy.

Suzy Davidkhanian (01:01):

Hey Sara. Thanks for having me.

Sara Lebow (01:03):

Thank you for being here. Also with us is one of our analysts. It is Carina Perkins joining us from the UK. Hey Carina.

Carina Perkins (01:12):

Hi Sara, thanks for having me back.

Sara Lebow (01:13):

Yeah, it's been a while, glad to have you back. Okay, so what's jumped off this episode idea for us is that Hudson Bay, an iconic Canadian chain of department stores, cue Suzy mentioning something about being Canadian here, filed for bankruptcy last month. This got us thinking about the department store space worldwide. Department stores are, I don't know, kind of struggling with eCommerce, and so we decided to go on a field trip to a new store that opened over by the eMarketer office in New York City.

(01:45):

But before we get into that field trip, let's talk about how department stores are doing. Suzy, you're up first. How are they doing in the US?

Suzy Davidkhanian (01:53):

I think department... You guys, we talk about department stores a lot, because I come from the department store world, and it's not with that lens that I am saying department stores are getting a bad rap. I think what's really important to think about in the US particularly is that there's only so many store opportunities, and the way that department stores were structured as this one hit wonder shop where you could find every single thing under one roof is a fallacy. So, that's not supported anymore. There is nowhere that, I don't think across the world, where there are no... The one hit, one-stop shop, where everything is happening under one roof. And everywhere now there's a proliferation of specialty stores.

(02:40):

So the relevance of department stores, I don't think it's a question of eCommerce as much as it is give me a reason to shop here. So to answer your question a little bit more directly, the really high high-end department stores seem to be doing okay in the US. It's that middle market department store, the JCPenneys of the world who also declared some kind of bankruptcy, or are in the process of trying to reconfigure, Lord and Taylor. I think it's that mid-tier having a tough time, because they don't really stand for something.

Sara Lebow (03:12):

Yeah, the high level, the Bloomingdale's, and I was in a Bloomingdale recently and I didn't buy anything, but it was crowded in there, there's definitely a reason to go there. The mid-level, there's a question of why would I necessarily go here when a Walmart can do this for way cheaper? And I recognize that JCPenney and Walmart are way different stores, but that mid-level shopper is definitely strained, so they might be trading down.

Carina Perkins (03:38):

Yeah. I think that we're really seeing a similar trend in the UK. I found a report from Avison Young citing July, 2023 data from StorePoint, and it found that 85% of the department stores occupied by the former traditional operators have closed down, and we've seen quite a few of the big guys go out of business, several of them have reopened as online only, and other ones are having their stores repurposed into slightly trendy new formats.

(04:07):

But it's similar thing here, I think it's that real mid-level which is struggling. And it's quite interesting if you think about it, because when you look at eCommerce marketplaces, which are that one-stop shop, are doing really, really well, but it's perhaps not a format that's translating so well in physical retail anymore.

Suzy Davidkhanian (04:23):

Well, I also think here in the US, not only it's the mid-tier, but it's the mall landscape. A lot of the department store brands are doing strip mall and different configurations, open-air malls, where it seems like those stores are doing a little bit better, versus the fleet of stores that are typically in a mall.

(04:41):

So, it becomes a bit chicken and egg. As the mall is quote, unquote, dead, which I don't think it is, but as we're hearing people say that, does that make the department store also, that was typically the anchor store, suffer when there's not as much foot traffic at the mall?

Carina Perkins (04:54):

Yeah. And we've seen a similar thing here on our high streets. A lot of department stores were on high streets, and we've seen high streets really struggle with that footfall. And also people are shopping, they're browsing, but then they're going home and they're buying online, and I think a lot of stores are really suffering from that at the moment.

Sara Lebow (05:10):

Suzy, you had a big reaction to that.

Suzy Davidkhanian (05:12):

Well, I did because I think one of the critical things, and Sky is working on a private label report, is as a store if you do not have unique to you brands, whether it's private label or market brands that are not being sold elsewhere, then you're going to lose, because people will go online and look for the lowest price point. And I think a lot of the retailers are still, the department store retailers I should say, are still struggling to have an authentic online experience and activation, especially through the mobile app, that connects the store and the online experience. They're just having a tough time doing that, which is also not great for them.

Carina Perkins (05:51):

And I think if you are looking at the square footage as well, the cost of running those stores versus the profitability is also something that's really tricky to maintain at the moment.

Sara Lebow (06:01):

Yeah, we did an episode on malls a few weeks ago with myself, Emmy and Rachel, two of our analysts, and something we were talking about is how those anchor stores are no longer what's bringing people into malls. It's different experiences, it's different food opportunities, it's different events, but it's not the anchor store anymore. Obviously that's not universal, but that is a changing trend.

Suzy Davidkhanian (06:25):

I also think, to Carina's point, which we should intensify, is this square footage, sales per square foot KPI, is probably a thing of the past. And if department stores are only worried about comp sales, then they're going to lose out, because there are a lot of... So for you guys it's high street, for us maybe here in New York it's Fifth Avenue, there are no department stores on Fifth Avenue, but being in a really nice mall for department store might mean more about activations and other non-sellable square footage usage, versus just trying to cram a bunch of stuff into a store to try and get the maximum dollars possible.

(07:04):

Canada had a lot of department stores and slowly they're all going away. The mall that had one of the department stores as the anchor turned into a science fair pop-up, where our science museum came and did a whole activation for kids. So malls are trying to figure out how to make traffic come back. So, it's a bit chicken and egg. Is it the department store? Is it the mall? It's hard to know.

Carina Perkins (07:26):

What we've seen here as well, actually, you mentioned the food and drink element. We've seen a lot of department stores here opening new formats that include food and drink concessions, or they're pop-ups for brands that are only online, things like that. So again, I think it's really that giving people a reason to come in store.

Sara Lebow (07:45):

Yeah. I think that segues us nicely into the field trip that Suzy and I went on just yesterday. So like I said, French luxury department store, Printemps. Suzy, can you do the French pronunciation for us?

Carina Perkins (07:58):

Sure. It's Printemps.

Sara Lebow (08:00):

Let's pretend I said it that way also. Just opened up by our office in the financial district in New York City. Suzy and I decided to go on a field trip there yesterday, and I think that a lot of what we've just been talking about is what stood out to us. So Suzy, why don't you go first with just what stood out to you about the store layout and the merchandise?

Suzy Davidkhanian (08:24):

So for me there were a couple of things. It's a very majestic store. It's in a historic area, in an iconic building, and it felt so airy and a little bit like Alice in Wonderland in terms of the fixtures, the mirrors, the way that the fitting room was done. There was so much space, which also meant that there wasn't a lot of merchandise, and it was a little bit kind of made me think a bit about Herod's, in terms of kind of a maze that it wasn't you see everything and then you know exactly where you're going to go. You had to be forced to walk into different areas and groupings of things.

(09:00):

Very light on merchandise, but they did have a lot of tchotchke, and they didn't have every single category under the sun. They maybe had one or two vases. It was all cross merchandise, so you didn't say like, "Oh, I want to go buy textiles for my house." You just either saw something you liked or you didn't, and it was very inspirational.

Sara Lebow (09:22):

Yeah, honestly, we had a blast in this store. It was smaller than both Suzy and I expected. And that space also, like Suzy said, was not full of merchandise. So, this is where what you were just mentioning, the sales per square foot, probably isn't the best KPI for this store to be measuring their success, because honestly they don't have that much merchandise in the store.

(09:44):

What they do have a lot of, that we haven't even gotten into, is experiential drink opportunities. I think we saw four different bars in the two-story department store. Each bar had a kind of expensive price point, like 20 plus dollars per a drink, but not unreasonable for what you would expect in a fancy building in the financial district. And definitely a good place to bring both tourists in, and also Wall Street professionals looking for a nice place to take a drink.

Suzy Davidkhanian (10:15):

Yeah, Carina, it's like you were saying, we're starting to see that here too in the US, where department stores are building out food-based, beverage-based, and Bloomingdale's, Nordstrom, they all are doing it, but here it was really like you go through this beauty, quote, unquote, corridor of some skincare and it was very, very tight merchandising, in terms of the breadth of merchandise and brands. And then there's like, oh wow, there's a little bar here with a person who's serving you champagne and other high-endish feeling things. And then there's a coffee shop when you first walk in, and so there's a lower price point.

(10:52):

There's a little spa area, which looked so... It was kind of unluxurious, but still so cool that they're doing facials and other activations there at a price, but I'm sure they're using all the great skincare that they have that's very hard to find here. It's a very interesting space. I didn't see a food restaurant, but I think that's probably just coming.

Carina Perkins (11:14):

It's about making it a destination, isn't it? People come to Harrods to go to Harrods. It's not necessarily because they want to buy something from Harrods. It's because it's one of the stops on the tourist journey when you come to London. And I really think that's the direction that a lot of the department stores are going in, especially the higher end ones.

Sara Lebow (11:32):

Yeah, the merchandise there was definitely out of my price point, we found very little that was under a thousand dollars. That said, it wasn't out of a high spending New Yorker's price point. We definitely saw people holding bags with the merchandise. And also like Suzy said, they had tchotchkes, so you could go there and say you bought something.

(11:53):

Something that really stood out to me from a merchandise perspective is there was an entire area that they were calling a residency. They had a Nike residency there at the time. It was almost like a shop within a shop of Nike shoes, and they had an exclusive shoe that they said they only made 350 of, so there was that exclusive draw. Those shoes were definitely affordable, in terms of Nike shoes as well. And they told us that they would be doing other residencies in that area in the future.

Carina Perkins (12:22):

Yeah. And like I said before, that's something we are really seeing over here. It's department stores teaming up with brands to do pop ups or residencies or show rooms, quite often online only brands. And I think that's a really interesting way to get people through the door, because it's rare that they can go and actually see that merchandise themselves.

Suzy Davidkhanian (12:40):

And I think I remember, which was a long time ago, the last time I was in London, I went to John Lewis and there I went to... I love Benetton. It's hard to find, and I grew up on Benetton, and they were doing an activation where you could get whatever you wanted embroidered on whatever piece you bought, and there was a lineup for that. And there is something fun about doing unique things.

(13:03):

This place here, Printemps, is too small to do that kind of stuff. They probably... We didn't count, but I don't think that there were more than 20 brands in terms of clothing that were there, at the very maximum. They had a small selection of bags and accessories. Probably the biggest selection was in shoes. They had a whole section on shoes, but everything else was kind of-

Sara Lebow (13:24):

Either shoes or skin care, there was so much skin care in this beauty corridor, and very little makeup which stood out to both Suzy and I. And you actually had to walk through the skin care to get to the makeup. I think that's just indicative of a greater trend in beauty as well. That skin care is what's big.

Suzy Davidkhanian (13:42):

Yes, and Macy's has so much skin care that for me it felt like they didn't actually have a lot of stuff there.

Sara Lebow (13:43):

Sure.

Suzy Davidkhanian (13:49):

So, I think it just depends on what your data point is, but they are SKUing on the too much choice is paralysis and you walk away a customer. So they are standing behind brands, and then a limited type of SKU assortment within those brands. So, there were definitely lots of different brands that we've never heard of before, and some French pharmaceutical, skinceutical type brands that are hard to find here. But for me, from a volume perspective, it was just very awe-inspiring in terms of it was this white corridor that you walked down and it was so nicely merchandised.

Sara Lebow (14:25):

It was curated, the whole experience was so curated. It felt like, I don't know, it felt like walking through an algorithm almost. The installations were gorgeous, the architecture was just absolutely gorgeous. But something that Suzy and I walked in expecting to see a lot of technology and Suzy, can you speak to that?

Suzy Davidkhanian (14:45):

Yes. We saw nothing. We saw no QR codes. We saw no-

Sara Lebow (14:50):

One QR code with map.

Suzy Davidkhanian (14:51):

Oh yes, sorry. We saw one QR code, we saw no... There are a lot of products that have QR codes, either at the fixture or on the tags, there was none of that. There were no TVs. There was music, but it was very low-key, not very loud. We were also surprised at the number of individual sellers and associates that were on the floor. The place was packed, but there were definitely a lot of workers there, versus... The ratio was a little bit unexpected, if you ask me. But there was nothing until we got to Nike, and at Nike the roof was an LED, sort of TV, very subdued, it looked like beach sand, I'm not even sure what it was.

Sara Lebow (15:34):

The ceiling was multimedia.

Suzy Davidkhanian (15:36):

Yeah, that's the only place we saw... Plus, as Sara said, the maps that were, this is where you are, and it was a touch screen map.

Sara Lebow (15:45):

Carina, is that consistent with anything you've seen in the UK?

Carina Perkins (15:48):

Yeah, I'm trying to think about how you could compare that. I think the thing is, if you're setting up this kind of higher-end, destination department stores, I don't know how heavily they're leaning on tech at the moment. I think you'll see more of the tech in that mid-level stores that are really trying to find another way to get people in.

Sara Lebow (16:08):

Yeah, so let's move on from this store in particular to lessons for the contemporary department store. The question I have here is what does the contemporary department store need to stick around? Let's talk about both luxury stores and the mid-level store. So, let's start with luxury. What does the luxury store need to stick around?

Suzy Davidkhanian (16:27):

I would say, I'm sorry I'm not answering your question directly, I think it's probably the same for both. So, whether you're luxury or not, probably based on everything we've seen and said and read about, having the right KPIs to measure success. So, is it just about sales? I would say making sure that you have a really strong assortment and that you stand behind brands and that you don't look cluttered, so that people know where to go to get what they need.

Sara Lebow (16:56):

Yeah. What we saw definitely is that the department store almost feels like an ad for eCommerce, and in order to stop people from shopping around for the cheapest available option of what they saw in the department store, I think they need exclusivity.

Carina Perkins (17:12):

Yeah, absolutely. And I also think it's about, especially perhaps at the mid-level, it's about providing some services or experiences that people can't get when they're shopping online. So, there's a department store here Frasers, which has an Evans Cycle workshop in it. There is John Lewis has opened some repair and alteration services in its stores. And I think it's really about those kind of things that are drawing people in, giving them another reason to be there, another experience for being there, that is something that you can't get online.

Sara Lebow (17:45):

Yeah.

Suzy Davidkhanian (17:46):

Yeah, absolutely. And I would even add with that, you need to have a really strong loyalty program, because people don't come to buy $5000 bags or $300 bags every week. And so, having a really well-thought-out loyalty program will probably draw people in more frequently. But it also potentially help you not put everything on promotion all the time. So now this is the mid-tier here in the US, where there's... And in Canada too, where they do a lot of sales, like one-day sales and Coles days, and other unique-to-them sales, because they're trying to drive traffic. But they're also discounting their products to try and increase sales, and that takes a margin hit.

Sara Lebow (18:30):

As great as the Printemps experience was, it's unique. It's in a high wealth city, and within that city it's on Broadway, but it's by Wall Street, it's in a high wealth area. So, you're right, your average consumer is not coming in to buy an expensive handbag every week, but a celebrity stylist might be. So, they have access to a consumer that the average department store does not have.

Suzy Davidkhanian (18:58):

I'm fascinated by that particular space though, because Saks opened not that far downtown and already closed shop there, and it had that same breathy, airy feel. So, we'll see what happens. I wish them really good luck.

Carina Perkins (19:12):

Another thing I'm going to add on the things that they need, I think again, we'll come back to that food and drink concessions. People are coming and they're visiting these places. If they are shopping at physical shops, often that's because it's a social event, they're meeting up with friends. So, I really think that food and drink element is another really great way to draw people in.

Sara Lebow (19:33):

Yeah, we saw people walking around carrying a glass of wine while shopping. Suzy's take on that was, "Why aren't they sitting down and enjoying that glass of wine?" But it is a unique experience that you're not getting at other stores. It feels very luxurious. I would also sit down and enjoy the wine, but to each their own.

Carina Perkins (19:51):

Yeah. And like we said as well, the beauty I think is a really important department for department stores. We've seen a lot of department stores here launching full service beauty halls. Again, it's giving people those experiences that they can't get from shopping at home.

Sara Lebow (20:07):

For our next field trip, Suzy and I will get facials there.

Suzy Davidkhanian (20:10):

I love it. The thing about beauty is in addition to it lends itself well to an experience, it's also something that you buy more frequently. You usually buy mascara if not three times a year, at least twice a year. It's a repeatable purchase that people feel very loyal to a brand typically, and so that's a nice way to draw traffic.

Carina Perkins (20:33):

It's also a relatively low price point purchase. So, you go to Selfridges here, you might not be able to afford much in the shop, but you can probably afford a lipstick. So, if you want to have a souvenir from your trip to a destination department store, beauty is a great way to go. A new skincare cream, or lipstick, or something like that.

Suzy Davidkhanian (20:53):

When we walked into that Printemps on the far right there was chocolate and stuff, and I think that's the same as beauty. These kind of tchotchke sort of, there were candles, it was very animated packaging, really it felt like Alice in Wonderland style, that is also maybe what you're buying to say you bought something at that store.

Sara Lebow (21:13):

To wrap up, I'm putting you both on the spot. Answer this for me. The contemporary department store in 2025 needs to be blank.

Carina Perkins (21:22):

Experiential.

Sara Lebow (21:24):

Suzy?

Suzy Davidkhanian (21:25):

I would say department stores need to be well-curated, and their assortment needs to be thought out.

Sara Lebow (21:30):

Experiential, curated, and well-thought-out. I love it. Thank you both for being here today. Thank you, Carina.

Carina Perkins (21:37):

Thanks Sara.

Sara Lebow (21:38):

And thank you, Suzy, for being here and for going on the field trip with me yesterday.

Suzy Davidkhanian (21:42):

Thanks. It was so fun.

Sara Lebow (21:43):

It was so fun. We need to do more field trips. Thank you to our listeners and to our team that edits the podcast, that is their department.

(21:52):

We'll be back next Wednesday with another episode of Reimagining Retail, an eMarketer podcast. And Friday, join Marcus for another episode of the Behind the Numbers Daily, an eMarketer podcast, made possible by Kinective Media by United Airlines.