Department stores: Major trends transforming the retail landscape
SUMMARY
In the increasingly competitive world of retail, department stores are struggling. This case study takes a close look at the major trends which have transformed the landscape in which department stores operate, how this has ultimately led to their downfall and whether they will be able to bounce back in the future.
KEY HIGHLIGHTS
- Department stores have undoubtedly suffered as a result of the popularity of online retail and fast fashion, two trends which have drastically changed the needs and desires of the modern day customer.
- Department stores with a strong identity and clear target audience are best placed in the new environment, illustrating that department stores are not simply doomed, but that the poor performers are now feeling the implications of years of failing to adapt.
- There is a future for department stores in retail, but they are entering another period of fundamental change in how the sector is organized, and adapting to new challenges is critical.
- Implementing exciting technology into stores and excelling in the services that online retailers are unable to offer will be crucial for department stores that wish to thrive in the future.
- Examines the key trends which have impacted department stores
- Identifies the failures of those unwilling to adapt
- Analyzes department stores that are performing well
- Examines future trends that will effect stores
- Determines whether department stores have a future in retail
- What are the trends negatively impacting department stores?
- Which stores have failed to adapt to change?
- Which stores are doing well and why?
- What does the future hold for department stores?
Catalyst
Summary
The dynamics of physical retail have changed, many have failed to adapt
A struggling high street has inevitably led to store closures
Online retail has become tough competition
Failure to bring online features into brick and mortar stores
Lack of appeal and in-store experience
Inability to keep up with fast fashion
Years of poor financial management
Some stores have adapted to trends and are performing well
High end department stores insulated from issues
Brands need a clear identity to stand out and attract customers
Strategic partnerships can be lucrative
Department stores can survive the online /digital era
Technology entering stores is the future of immersive shopping
Focus on developing aspects that online retailers can’t offer
Localization of stores
Conclusions
Department stores won’t go extinct, but only the most innovative will survive
Appendix
Sources
Further Reading
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Disclaimer
Figure 1: US store closures
Figure 2: United Kingdom online retail sector value: $ million, 2013–17
Figure 3: Debenhams new minibar feature will showcase travel-size items
Figure 4: Debenhams supply chain lead time is approximately 7 months
Figure 5: Sears Holdings Corporation revenue ($bn) 2005 to 2017
Figure 6: Global luxury goods market value: $ billion, 2013–17
Figure 7: Mid-priced retailers are being squeezed
Figure 8: Selfridges is known for its vision and creativity
Figure 9: Amazon smart home experienced in Kohl’s
Figure 10: The future of immersive shopping
Figure 11: Curated makers pop-up in Manchester
It is no secret that the once bustling high street has struggled in recent years. Footfall has faced an unprecedented decline due to online competition, weaker consumer confidence and rising overheads, and department stores- once anchors of the high street- have suffered as a result.
Department stores, like other physical retailers, are going through a transformational period. Although many brands across the globe are closing thousands of stores, this does not mean that department stores are doomed, but that a long overdue shake-out of the poorest performers is occurring.
Several reasons have been given to explain Boohoo’s exponential growth in recent years. MarketLine Analyst Eleanor Uttley stated that “While the current retail environment is tough, it doesn’t mark the end of the road for department stores, it is simply a transformational period in which only the best can survive. Department stores have undoubtedly suffered as a result of the popularity of online retail and fast fashion, two trends which have drastically changed the needs and desires of the modern day customer”.
A number of stores have failed to merge online features into their physical stores, which has proven to be an effective way to attract customers for many other retailers. Many department stores also lack a clear identity and in-store experience, a failure to innovate in this way has meant that stores are often perceived as outdated and stagnant, which has been particularly damaging in a time when footfall is declining.
Despite the difficulties stores are facing in the current climate, there are a number of brands bucking the trend, suggesting that there is still a place for department stores in the retail environment. Brands that establish a clear identity stand out and appeal to customers and high-end department stores have proven to be somewhat insulated to the issues others stores are facing.
