Stuttafords: Whither the grande dames?

Article written by ADELE SHEVEL for Financial Mail

Stuttafords was once where ladies bought homeware and clothing in an ambience of affluence and gentility. Some took tea or a bite of lunch or met friends while they did their shopping. It was a rarefied atmosphere where hours could be whittled away.

It wasn’t the only such establishment: at Garlicks, Greatermans and John Orr’s rows of product sat comfortably spaced over several floors. But these stores mostly closed shop, while the 158-year-old Stuttafords has kept its doors open, though it no longer sells tea and cake.

It’s a sign of the challenges facing department stores globally. Competition from speciality stores, plus the game-changer of online shopping, has knocked the grande dames.

“Fast-fashion” retailers such as Zara and H&M turn around stylish new merchandise far quicker. As one American designer told reporters: “Ten years ago, you needed a major department store to be successful. Now, you need Instagram.”

At its peak, Stuttafords had 23 department stores in SA and elsewhere in Africa. Today there are eight in SA, two in Botswana and one in Namibia. A new 6,200m² store will be opening in Fourways in the first quarter of 2018.

Yet, finally, something is changing. Last week, Stuttafords opened its first “off-price” store in Woodmead, Jo’burg’s discount hub. Called “The Outlet” by Stuttafords, it is following US trends of “off-price ” stores selling branded “last season” product. If it’s successful, more like it can be expected.

It’s what some of the world’s most prolific department stores are doing, including Macy’s, Saks Fifth Avenue, Nordstrom and Neiman Marcus. Forbes magazine says there has been a 12% increase in off-price stores in one year.

Stuttafords also owns and operates 15 mono-brand locations (shops with their own branded entrances), which include Ted Baker, Tommy Hilfiger and Jo Malone. But, like Edgars, it is shifting strategy and reintroducing “house-branded” goods to enhance margins. Stuttafords-owned brands such as Oaktree, Stephen Cole and Joseph Cotton will be resurrected.

Some say Woolworths has become something of a department store, but Stuttafords remains the only “true” one, selling branded product not owned or entirely controlled by it. Globally, not all department stores are suffering. But many are in decline, and some are in a terminal state. In August, Macy’s announced plans to close 100 stores. Sears is losing customers, and Kohl’s has closed stores, as has JC Penney.

In the UK, the trend is less pronounced. Luxury stores such as Selfridges and John Lewis do well, and Harrods had record sales and profits in 2014 after its multimillion-pound refurbishment.

Do department stores have a role in today’s retail environment? Yes, says Stuttafords CEO Rob Amoils, given the dominance of the “mall shopping experience”, and the efficient structure of a “large-box retailer”. He says: “It goes without saying that the introduction of vertically integrated international retailers (like Zara, Cotton On and H&M) in super-regional malls provides a tremendous challenge to SA retailers (including Stuttafords), particularly in a price-sensitive and disposable environment.”

But times are changing.

This week, in what The Wall Street Journal describes as “an unusual move”, mall owners in the US bought teen apparel retailer Aéropostale on auction.

If the retailer had gone into liquidation, landlords would have been stuck with more than 200 vacant stores.

Expect more such left-field deals.