What America Will Be Like With Fewer Department Stores

Omichannel strategies, beefed up marketing and a host of other initiatives haven’t been enough to keep department stores across the U.S. from having to shutter doors left and right.

Whether it’s all uphill or downhill from here for department stores, at this point, depends on who you ask.

J.C. Penney Co. Inc. joined Macy’s Inc., Sears and others last week when it announced its plans to close between 130 and 140 stores over the next few months.

On one hand, some experts have said that less is more, and department stores that are rationalizing their fleets are setting themselves up to operate more effectively and profitably in the new age of retail.

In that vein, Cowen & Co. analyst Oliver Chen cheered Macy’s and JCPenney’s decisions to downsize their store counts in the midst of retail turbulence and a significant consumer shift to online.

We believe in the long-term thesis of physical bricks [plus] online clicks, and Macy’s is currently in the crosshairs of deleveraging as e-commerce grows and the store base is rationalized,” Chen wrote of Macy’s 100 planned store closures and its earnings results last week. “Most of these stores are underperforming stores, and there are a number of cases where the stores will be closed as the value of real estate exceeds their value to Macy’s as a retail store.”

Chen and others have suggested that a rightsizing of store counts along with stronger digital strategies and better cohesion across channels can be the saving grace for many traditional retailers.

Still, we’re only a few years removed from the introduction of the highly acclaimed omnichannel approach to retail, which continues to leave much to be desired for many.

The fact that [companies] tried to use [omnichannel] as the answer for everything in retail was the scariest thing to me about 2016,” The NPD Group’s retail-industry analyst Marshal Cohen told Footwear News earlier this year.

Are store closures the new omnichannel? Is this new tactic just the latest case of retailers throwing mud at the wall to see what sticks?

In contrast to experts who see the rightsizing of retail doors as a step in the right direction, there are those who say the growing list of retailers dropping stores — and filing for bankruptcy — portends the end of brick-and-mortal retail altogether.

Certainly, the original purpose for department stores — to serve as a marketplace for a variety of items — has all but died away. (See: Amazon.)

Now, if the brick-and-mortar channel is to be kept alive, its success will hinge on offering customers something other than a physical location from which they can buy product — that’s what Amazon is for.

Unmatched in-store experiences and a better price-value equation are necessary pieces to the puzzle.

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