The department store death knell is ringing loudly once again in the wake of weak holiday sales reports and announcements of looming store closings.
Macy’s started the year with plans to close 68 stores as part of its previously announced 100-store reduction.
Sears Holdings followed with its plan to close 41 Sears stores (on top of 109 Kmart locations) and sell its revered Craftsman brand to Stanley Black & Decker.
Kohl’s holiday comps declined 2.1%. J.C. Penney reported a .8% same-store slip, stunting its turnaround talk.
Let’s start with the doom and gloom. We likely haven’t seen the last of such dispiriting announcements from department store operators.
Common Refrain
Many retail observers, with sound reason perhaps, proclaim it will be impossible this time to reverse the department store demise— a common refrain for some thirty years— against the relentless assault by e-commerce, discounters and off-price stores.
If it is hard to see hope amid the pending wreckage, that doesn’t mean the rescue effort should be called off.
We were hearing about an over-stored landscape long before Amazon and TJX, among other chief disruptors, conclusively exposed it.
Department store operators, who expanded assertively after the first wave of channel consolidation in the early 1990s, should have been more preventatively systematic in their downsizing during the tenuous past decade.
Sudden Rash
The sudden rash of store closings will be painful in the near term to every link in the supply chain. The longer view doesn’t have to be so dire if it leaves these retailers with stronger front-line locations to balance against their growing digital sales.
Before anyone starts proclaiming omnichannel as the magic potion, allowing online shoppers to pick up their orders at stores won’t be nearly enough to keep the stores afloat over time. Omnichannel actually will work best when stores can stand on their own without the help of an app.
Many mall operators are replacing vacant department stores with entertainment and recreational outlets that cater to growing demand across generations— not just Millennials— for more experiential spending.
Department stores can remain in that spending matrix by recreating a sense of consistent retail theater and by offering more exclusive services and attractions that require neither a one-day sale nor a purse-full of coupons to attract and engage people.
Under Fire
The potential for improved balance sheets after closing weak locations could enable these retailers to craft inviting experiences in the remaining stores without abandoning merchandising and promotional strategies that have contributed to the channel’s vulnerability but also have become inseparable from the business.
Department stores for generations were bastions of an entertaining shopping experience when they weren’t under fire and didn’t need the help. They’re missing that now when they need it the most.
The department store death knell is ringing loudly once again. Let’s hope it’s actually a wakeup call.
