Industry Analysis & Industry Trends
Department stores were doing well prior to the 2008-09 recession. Demand was driven by the luxury market and high-end stores benefited from this trend. Consumers under the age of 30 are often impulse buyers of non-essential items like personal care products and they contributed significantly to revenue. Then the recession hit and things changed. IBISWorld estimates that industry revenue only rose 0.6% per annum to £17.51 billion over the five years through 2011-12 due to the economic slowdown.
The recession led to plummeting consumer confidence, high unemployment and uncertainty within the economy. The government tried to prop up demand by temporarily lowering the value-added tax rate in December 2009 to 15%... purchase to read more
Industry Report - Industry Investment Chapter
Department stores do not believe in self-service. Unlike smaller variety stores and supermarkets, they tend to have a lot of staff on hand in each department to help customers when shopping. Many, if not most, department stores also have separate tills in each department, each requiring more than one employee. Capital costs mainly consist of depreciation on retail fixtures and fittings as well as buildings and other equipment such as computers. These costs are fairly stable.
For each unit of capital employed, companies in the industry spend about £4.80 on labour. In other words, the industry has a medium level of capital-to-labour ratio. This means that both factors are fairly important when considering the investment requirements associated with department stores... purchase to read more