How Department Stores Will Survive
There are retail giants – Macy’s, Dillard’s, Nordstrom
1. Changes will occur, and it is important to know that young people, millennials and GenZ want to have a say in what stores will be like. They will dictate content, rapid service and especially whether stores have taken action on sustainability.
2. Sustainability must include reduction of gases, conservation of energy, storage and usage of solar energy,
3. To compete and to survive in the current, challenging environment, brands require economies of scale that are often beyond their immediate reach. No longer can they just serve department stores, but must look for alternate ways to reach customers which includes direct to customer sales, own stores and wide wholesale distribution.
4. Investors are increasingly applying environmental, social and governance factors to identify material risks and growth opportunities.
5. The United Nations Development Goals for sustainability are:
A. No poverty
B. Zero Hunger
C. Good Health and Well Being
D. Quality Education
E. Gender Equality
F. Clean Water and Education
G. Affordable and Clean Energy
H. Decent Work and Economic Growth
I. Industry Innovation and Infrastructure
J. Reduced Inequality
K. Sustainable Cities and Communities
L. Responsible Consumption and Production
M. Climate Action
N. Life below water
O. Life on Land
P. Peace and Justice Strong Institutions
Q. Partnerships to achieve the Goal
6. Stores must have a vision for the future. They must visualize their mission as unbeatable and must have milestones to measure the success of their endeavor.
7. They must communicate their vision in clear, understandable, terms and at the same time assure shoppers that they are hell-bend to achieve some sustainability goals. There must be a time line to measure the achievement of each goal.
In the past, cities like Breslau in Eastern Germany had as many as 30 department stores. Even more recently, department stores had an impressive lead commanding about 60% of the consumer’s dollar. Today however, department store sales account for less than 20% of the consumer’s spending. The consumer can shop on-line, in specialty stores, discount stores, warehouse clubs or many other places that give him or her service, a smile and the ability to return the goods hassle-free.
Yet, there is another side of the coin. Many retailers have taken steps to make their stores more hospitable. Some now have comfortable restaurants and others offer fashion shows or models who walk through the eating areas. For many customers these shows are an inspiration as to what to wear since many find total dressing is a challenge. The advice of a dress-consultant is invaluable. The introduction of new fashion trends is best done in a department store environment.
It is true that a trip to a mall is a chore. Stores must reward the customer by having wanted items is stock. These items may be basic, but the customer generally needs them right now. Stores must also display the latest fashion trends to reassure the female shopper and to highlight famous brands for the whole family.
The core of the business is changing to product innovation must recognize changes in tradition. Men no longer wear ties, except when on a business call. Women often wear pant-suits to look professional when working. Yet, there are so many occasions when a splash of color makes a dress and its wearer come alive.
We will always have department stores in the center of cities and as anchors to shopping malls. Their influence on fashion and home-fashion will remain a solid cornerstone of retailing. Department stores like Macy’s are streamlining, eliminating many of the “C” positions that are unnecessary. Younger companies, that do not hark back to past centuries, can operate with leaner staffs by empowering lower rank staff. I still remember when “red flower” Macy’s supervisors had to sign every return, and over a certain amount a “white flower” supervisor had to countersign it. The customer could wait – no, had to wait. Today returns are handled quickly and with a smile.
POSTSCRIPT: Yes, the industry has changed because of tremendous operating cost increases. Young companies like TJX have grown with value offerings of department store merchandise. They call it “treasure hunt” to find a great item at a low price. TJX, or their main stores TJ Maxx or Marshall’s, often sell department store merchandise. But ultimately, it was the department store that had set the example and the original price to make the treasure hunt possible. I think that structure will remain in place.