After 135 years, closure of Barkers marks death of department stores

Food will replace fashion at the landmark site that anchors one of the capital's busiest shopping parades. The site is to be filled by a wholesome US food retailer that has long been keen to unfurl its organic banner in the UK.

Whole Foods Market, the Texas-based supermarket group, has bought the lease from Barkers' owner, House of Fraser, and plans to open its first UK store in early 2007. The group has been eyeing up expansion opportunities since it swallowed the eight-strong Fresh & Wild chain last year.

The decline of Barkers mirrors that of Dickins & Jones, which is also part of House of Fraser. Both stores, long part of the capital's retail landscape, will close next January.

A company insider blamed Barkers' downfall on changing shopping habits, which he claimed meant the ladies-who-lunch brigade had abandoned Kensington in favour of the brighter shopping lights of central London. "People who want to buy designer labels aren't going to Kensington, they are going to Bond Street and Oxford Street," one said.

But retail analysts were less convinced. Richard Hyman, who runs the retail consultancy Verdict Research, said: "It's just that no one is shopping at Barkers. They don't shop there because what's being provided is not very attractive." Matthew McEachran, at the City brokerage Investec Securities, estimated that Barkers was close to, if not already, making a loss.

The closure of Barkers will mark something of the end of an era for the London borough that, for decades, had top billing on every fashionista's shopping agenda. It was here that Biba, the Sixties fashion phenomena that pioneered the era of chic, disposable clothing, first started trading. Kensington Market, too, was for years a legendary destination for the latest designs. But both have long since shut their doors, leaving more run-of-the-mill retailers such as Next, Marks & Spencer and Gap to fill the breach.

The arrival of Whole Foods Market continues the recent march of food retailers on to UK high streets. Frustrated by prescriptive planning laws, supermarket chains such as Tesco have been forced to seek out smaller sites on main shopping thoroughfares instead of opening the edge-of-town stores that they prefer.

Where Whole Foods Market differs from the likes of Tesco is that its produce is aimed at a more upmarket clientele, which is prepared to pay top dollar for well-presented, fresh food that is free from pesticides, additives and other edible nasties. In the US, its premium pricing has earned it the nickname "Whole Paycheck".

John Mackey, the chairman and chief executive of the group, said the UK was the obvious first choice for its mission to expand into Europe because of the "advanced acceptance of organic foods and the lack of a language barrier".

He said the 75,000 sq ft site would position it well to duplicate the success it has had in metropolitan cities in America. Most recently, the company, which is the fastest-growing retailer in the US, has moved into New York, going where Wal-Mart has never managed.

Jim Sud, who is in charge of growth and business development for the group, has long had a map of central London pinned up in his office. He hopes the Kensington High Street site will be the first of several Whole Foods Markets in the capital, where it already has six Fresh and Wild stores. In taking the high-profile site, the group will show property developers it means business, making other locations easier to secure.

As well as fresh produce, the food store will try to woo "foodies" with cooking demonstrations, a medley of cafés and the opportunity to sample before they buy.

Mackey, a yoga-loving, outdoorsy health-nut, is renowned for his idiosyncratic approach to retailing. Gimmicks his stores have offered range from a musical amphitheatre in its store in Austin, Texas, to a chocolate-dipping service that one customer used to encase a salmon. The group, which has annual sales of almost $4bn (£2bn), has 171 stores, including the seven Fresh and Wild sites.

Rival retailers said the company could struggle to make a viable return from such a large and costly base.