The recent entry of Chinese budget retailer Shein into the flagship BHV in Paris has stirred up a political storm, adding to the ongoing struggles of department stores worldwide. These traditional retail outlets are grappling with the seismic shift of consumers towards online shopping and ultra-fast fashion.
Shein opened its inaugural brick-and-mortar shop in the BHV department store, situated on the Rue de Rivoli in the heart of Paris, earlier this month. This move sparked a backlash from lawmakers and fellow retailers, who argue that Shein’s low-cost business model has been detrimental to the traditional shopping streets of France.
For BHV, a store recognized for its diverse array of products, this partnership was a strategic move designed to lure younger consumers. This demographic has increasingly turned to online platforms, such as Shein, for a variety of needs, ranging from cosmetics to fashion.
The shift to online shopping, further exacerbated by the pandemic, has posed a significant challenge to department stores around the globe, with many still struggling to recover from a steep decline in physical footfall during the crisis.
New Threat from Ultra-Fast Fashion
Laetitia Henry, general manager of the iconic Printemps Haussmann store in Paris, noted that while competition from other large local department stores was once the norm, the rise of online platforms has led to a new international threat. Ultra-fast fashion can replicate a designer dress in as little as three weeks and sell it for a fraction of the original cost.
This competitive landscape has prompted top-tier department stores like Macy’s to close outlets, while Saks Fifth Avenue’s parent company, Saks Global, is exploring divestments to manage its debt.
The Société des Grands Magasins (SGM), which acquired BHV from the Galeries Lafayette group two years ago, is banking on its partnership with Shein to safeguard its future. On the day of Shein’s launch at BHV, store traffic surged by 50%, with a quarter of Shein’s customers going on to make additional purchases at BHV.
Department Stores Innovate to Attract Consumers
Several prominent French department stores, including Printemps, Galeries Lafayette, and LVMH-owned Le Bon Marché, have sought to redefine themselves as lifestyle destinations. They are aiming to attract more shoppers by offering unique luxury experiences.
Le Bon Marché, for instance, organizes regular events such as concerts and dance performances. Printemps offers fine dining and beauty treatments, even featuring an in-store ice rink during the holiday season. Galeries Lafayette invested over 100 million euros (approximately US$115.06 million) in renovations during the pandemic, which helped boost visitors and foot traffic.
However, these innovative strategies have not been as successful for mid-range stores trying to break into the luxury experience market. These stores are keenly observing the publicity generated by Shein’s partnership with BHV.
Late payments to brands at BHV have resulted in product shortages, impacting sales and causing job security concerns among workers. Despite these challenges, SGM president Frederic Merlin maintains that retailers should collaborate with new models like Shein’s. He argues that moving forward is vital, even in the face of criticism.
However, the launch of Shein’s physical outlets hasn’t been without controversy. When Shein’s Paris store opened, France temporarily suspended its French marketplace after discovering inappropriate items for sale on the platform.
Questions & Answers
Has the shift towards online shopping affected traditional department stores?
Yes, the move towards online retailers and ultra-fast fashion has posed a significant challenge to traditional department stores, many of which are still struggling to recover from the pandemic-induced drop in footfall.
What strategies have department stores adopted to stay relevant in the market?
Department stores have been attempting to innovate in various ways. Some are partnering with online retailers like Shein to attract customers, while others are reinventing themselves as lifestyle destinations, offering unique luxury experiences such as concerts, fine dining, and beauty treatments.
Did the opening of Shein’s store in BHV increase footfall?
Yes, the launch of Shein’s shop in BHV led to a surge in store traffic by 50%, with a quarter of Shein’s customers making additional purchases at BHV.
