Are department stores the ideal platform for online retailers?

In the week that female fast fashion e-tailer Missguided unveiled a concession in Selfridges, one topic of debate to arise at the British Retail Consortium (BRC) International Retailing event in London on Thursday was that of department stores' potential to bring online retailers into the physical world.

Whether as full-on concessions or as straightforward point-of-contact hubs, it would appear there are a number of practical ways digital players in the industry might be able to utilise the extensive real estate space, the national coverage and the high footfall offering provided by likes of John Lewis, Debenhams and House of Fraser.

As suggested at the BRC event, there could be an opportunity for department stores to help ease the burden of dealing with issues such as customer returns, which impact online-only companies and traditional retailers alike.

John Scott, director of international business development at Debenhams, was first to raise the point at the conference, saying: "Do pure-play operators start looking at stores to assess their multichannel offering?"

Although acknowledging the complexities that might arise related to the integration of back-end systems and fulfilment processes, he suggested department stores could be used as a pick-up, drop off location for partner brands. "It's cheaper to get customers in-store – they don't have to pay the extra mile," he explained.

With the cost of returns still a huge drag on retailer profitability and the latest IMRG UK Consumer Home Delivery Review 2015 finding that overall consumer satisfaction with returns dropped in 2014, Anita Balchandani, partner and head of UK retail at OC&C Strategy Consultants, described delivery and fulfilment as a real "pain point" for the majority of retailers.

Google's sales director for retail, Martijn Bertisen, went a step further in his analysis by describing the so-called 'last mile' of the retail delivery process as "the most interesting and innovative part of retail for the foreseeable future".

Of course, alongside Missguided's recent Selfridges experiment, it is Google's store within a store at Currys PC World on London's Tottenham Court Road that represents the most recent substantial example of an online pure-play taking out physical retail space in the UK.

Bertisen said the technology company believes the ability for customers to touch and feel Google's Chrome products before purchasing them is a powerful factor in the overall sales process. But is this the beginning of a new dawn in the relationship between digital and traditional retailers?

Paul Martin, director at consulting firm Boxwood said: "We are likely to see more of this type of retail relationship.

"It's a cheaper way for a pure-play to test its offering. We saw a potential move in this direction with the recent rumours about Amazon buying up stores from the collapsed US electricals retailer Radio Shack but online players just don't have the experience in running traditional retail.

"Zalando has done it with pop-up stores – used primarily as a promotional tool to build its brand – but this type of arrangement could evolve into online retailers using bricks and mortar stores as returns hubs. There's certainly a level of interest from department stores in getting brands with high customer appeal into their properties in order to improve footfall."

And following Missguided's news, could we be about to see the likes of Asos exploring opportunities with House of Fraser or Debenhams? Might Boohoo appear in a John Lewis near you soon? If it doesn't make commercial sense in the individual retailers' home countries, where there is arguably fiercer competition for sales, then perhaps these partnerships will manifest themselves as companies enter new international markets.

Martin added: "Warby Parker is an example of a retailer that realised it needed a physical presence to drive the all-important experiential element of the shopping experience. They already operate concessions in the US, but if it is looking to the UK – as rumours suggest – could it go into a Debenhams, a House of Fraser or a Selfridges? It probably could because it would be operationally easier and it would require less capital investment, which is particularly important in today's retail world when so much cash needs to be directed towards system change."

The BRC International Retailing conference chair, former Fat Face chairman and HMV Group CEO Alan Giles, suggested that the subject of running concessions in a multichannel retailing world is worthy of much wider debate. Standby for more developments in the year ahead, as the boundaries between the online and off-line retail worlds continue to blur.