It has been a tough period for U.S. department stores, to say the least. Now, investors and market watchers have turned their focus to Q2 earnings and sales — with releases this week from Macy’s Inc., Kohl’s Corp., Nordstrom Inc. and J.C. Penney Co. — for reassurance that a turnaround is brewing.
With 2015’s issues — including slow traffic, inventory overages and heavy promotions — spilling into 2016, department stores have continued to scramble to address a slew of industrywide and company-specific challenges.
Inquiring minds will have a first look this week at whether those efforts will deliver the boost that this segment of the industry so desperately needs.
In the meantime, Footwear News rounds up three possible solutions that could help department stores get their mojo back.
Up The Ante On Experience
It may be well-known that today’s consumer (see: millennials) prefers experiences — such as travel, dining and museums — over things, but understanding how that concept impacts their business has become the bane of many retailers.
Product — compelling or not — is no longer sufficient to get consumers into a store. Not to mention the Amazon/Zappos effect. If a consumer needs a pair of shoes, what’s stopping him or her from ordering online? Once a shopper is aware of his or her size in a particular brand, it can be simpler and more convenient to order that product online.
Department stores must change their way of thinking around what it takes to get people shopping in brick-and-mortar stores again. To compete, experts say, stores must offer experiences, too.
But it’s easy to stumble into a few pitfalls here. Market research must be done to determine the kinds of experiences that will augment the shopping experience at a particular store in a specific region. Solutions could run the gamut from specialty mirrors in fitting rooms to hiring personal shoppers and experts to offer VIP treatment.
Sign The Right Leases
Or none at all. Over-expansion has appeared on the death certificates of several retailers in 2015 and 2016. And while department stores have started closing underperforming locations — an effective first step — determining where and when to open new ones can be an even tougher task.
With brick-and-mortar leases at an all-time high in many cities and consumers developing a growing preference for online shopping, department stores ought to seriously consider whether any expansion is worth it. If it is, bargaining more aggressively for affordable leases is critical.
What’s more, consumers may be growing weary of large retail spaces, and conventionally large department stores may need to start thinking about narrowing down their square footage — a strategy that could also save big bucks.
Further, as some department stores have already done, it has become imperative that stores shift resources from brick and mortar to omnichannel to develop more capabilities in the digital realm.
Rethink The Assortment
Research has shown that millennial and Gen Z consumers are less interested in big brands than the generations before them. More and more, niche brands and novel products are getting the attention of today’s shopper.
Gone are the days when department stores needed to be a museum for every mid-to-top tier brand under the sun.
To keep today’s consumer interested, experts say less is more, so product assortments need to be carefully curated and pared down.
Consumer involvement in assortment decisions should be an even greater priority. Department stores should be tapping into a variety of sources — from traditional market research to social media — to determine what people really want.