Department Stores: How are they being reimagined?

Evolving consumer trends over the last decade have resulted in a changing profile of the UK high street. Though at one point in time the department store acted as an anchor to the town centre, the overexpansion of retail increasingly led to a duplication of offers, and the growth of online retail started to erode their appeal. And as a result, according to MSCI, department store capital values are 60% lower than they were five years ago, seeing significantly weaker performance than the all property average (-21%).

Some household names, including Debenhams and BHS, struggled to adapt – continued weak trading led to their eventual exit from the market. But for the department stores that have successfully navigated evolving consumer trends, their in-store experience remains a top priority. An obvious example is reflected in the recent landmark announcement that Marks & Spencer has received planning permission to rebuild their Marble Arch property, aimed at creating a modern store fit for the future. In addition, in the next three years, the strongly trading retailer has ambitious goals to rotate their current portfolio of 247 full line stores across the UK, to 180 high quality stores, delivering a best-in-class in-store proposition while also offering integrated digital services to support the omnichannel journey. M&S isn’t alone; despite reducing its portfolio in recent years, John Lewis continues to invest in their remaining stores. Just last month the retailer announced a £6.5m investment programme into its flagship Oxford Street store, including an upgrade of its beauty hall and the reintroduction of a Waterstones concession. A Jamie Oliver cooking school is also due to open in March 2025. Selfridges has also reported a positive response to their in-store investments, with a million more visits to their stores in the last year. Outside of London – following the sale of their property on Bond Street, Fenwick is investing £40m in its Newcastle flagship, creating two new atria as well as revamping their beauty hall. And of course, this year Frasers Group has continued to ramp up the national roll out of its next generation department store Frasers, as it phases out the House of Fraser brand. Frasers’ portfolio of brands, including sports, premium, and luxury, has built a strongly admired and compelling offer, which has clear appeal to the modern-day consumer.

While the future of some former department space is still yet to be determined, the reimagination of much has already begun.

In fact, a significant portion of future plans continue to revolve around retail. Given the size of unit, the space could either be used by the next generation of department stores or split to provide individual brands with an opportunity to upsize. These larger format stores allow brands like Next, Primark, and Inditex to deliver their full range of products as well as more in-store experiences. One recent example of this retail-led refresh is CBRE’s letting to Sports Direct and Frasers in Meadowhall, Sheffield. In addition to stocking a wide range of fashion and beauty brands, the flagship delivers Frasers’ largest home concept to date. It also provides services like the Evans Cycles bike workshops or running gait analysis, helping consumers find the right product for them. Meanwhile, Zara recently announced plans to take 47,000 sq ft of the old Debenhams unit in Silverburn, featuring their latest store concept and integrated online services. And just last week, Next’s plans to triple its footprint at Landsec asset, Bluewater, in the former House of Fraser unit, were confirmed.

The retail approach can also be well complemented with the introduction of leisure into a scheme. Last year, Liverpool One welcomed M&S alongside leisure and entertainment specialist Gravity MAX into the former Debenhams space. Similarly, the former Debenhams unit in the Bullring, Birmingham was split, with M&S taking the lower and mid-levels, and sports leisure concept TOCA Social occupying the upper floor.

However, in some locations there may be a case for moving away from retail, and introducing new uses such as office, residential, or hotels. The approach typically consists of converting the building’s upper floors into a new use, while retaining some combination of the lower ground, ground, and first floor as retail.

For example, given the tight supply and demand dynamics of the West End market, office-led redevelopments have been a popular strategy in locations such as Oxford Street. Following the closure of Debenhams in 2021, Ramsbury has begun master planning a major redevelopment and extension of the site. In its new form, the M Building will comprise mainly of office space – see figure 1. Reflecting the strong levels of demand for prime office space, the scheme has already pre-let 220,000 sq ft to BDO, who will relocate from their nearby Baker Street property in 2027. The retained retail space will be located on the ground floor and reconfigured to meet the needs of the modern retailer. Meanwhile, the former House of Fraser unit on Oxford Street, rebranded as the Elephant, is currently undergoing extensive retrofitting by Public Properties Establishment and McLaren Construction. Like the M Building, most of the reconfigured space will be dedicated to the office sector, with 17% retained as retail. The Elephant will also benefit from a gym, swimming pool, and rooftop restaurant. M&S’s Marble Arch planning approval will also enable the retailer to unlock additional value from the site by adding prime office space to the upper floors of the scheme.

On nearby New Bond Street, Lazari Investments received planning permission to redevelop the former Fenwick department store in April of this year. The redevelopment will deliver 115,000 sq ft of office space at the same time as reconfiguring the remaining 36,000 sq ft to best-in-class retail space – located on the ground and first floor. The project will preserve a significant proportion of the existing structure and historic façade, while enhancing the building’s original architectural charm.

Although office-led redevelopments are more common in London, we’re also seeing examples in the core regional cities. In Manchester, the Ryland’s Building, which Debenhams vacated in 2022, is undergoing transformation and will offer over 300,000 sq ft office space. And in Birmingham, the former flagship John Lewis store which closed in 2020, is being retrofitted by Hammerson and rebranded as Drum. The scheme comprises offices and 40,000 sq ft of hospitality space.

Figure 1: Proportions of future floorspace (sq ft) at The Elephant and M Building

The grand exteriors of former department stores could also lend themselves well to be restored into high-end residential or hotel schemes. In Bayswater – West London, former department store The Whiteley is being repurposed into 139 luxury private residences alongside the UK’s first Six Senses hotel and spa. The scheme will also include 20 new shops, restaurants, a cinema, and a gym. This development comes at a time when London has experienced an increase in luxury residential demand, as well as increased interest in branded residences. In Oxford, former department store Boswells, which closed in 2020, has been reimagined as a boutique hotel, The Store. And in Edinburgh, the second-most visited city in the UK, the former upmarket department store Jenners is being redeveloped into a new high-end hotel alongside retail space. Elsewhere in the city, the former House of Fraser department store has also been transformed into a flagship experience for whisky brand, Johnnie Walker. The attraction has already welcomed more than one million visitors.

In student cities such as Bristol, Bournemouth, and Northampton, the former Debenhams and House of Fraser units are set to be redeveloped into housing to accommodate the growing student population. Meanwhile, in Oxford, the former Debenhams will be transformed by The Crown Estate, in partnership with Oxford Sciences Enterprises and Pioneer Group, into a 100,000 sq ft life sciences, technology and innovation space. Subject to planning construction will begin next year, with the lab space due to be fully operational by 2027/28. And given their proximity to public transport links, former department stores are also being considered as potential community healthcare sites. For example, the NHS is currently developing plans to use part of the former Debenhams in Chatham as a new elective care centre to increase capacity for planned operations, easing the burden on Medway Maritime Hospital.

Changing consumer behaviour has provided a shake-up to the established high street model. Successful department stores have remained agile to new trends and continue to invest in delivering a best-in-class service to consumers through their physical store network. Meanwhile, for the space left behind by those that have exited the market, the answer of what to do next really depends on the unique supply and demand dynamics of each given location. In some cases, the next generation of anchor store has seized the opportunity to upsize and expand their offering, while in others, alternative uses are being found – breathing new life into locations across the country.