Department Stores Have A Big Problem

Seems it’s less about the stuff these days. Consumers are spending more on experiences, from travel to a meal out, which is chipping away at sales of tangible things, like clothing. And when shoppers do buy apparel, they’re gravitating to off-price retailers such as T.J. Maxx and Nordstrom JWN +0.59% Rack, and fast-fashion chains like H&M , which churn out runway knockoffs and sell them for a song.

Consumers are also buying more fashion from the nation’s online juggernaut: Amazon is expected to eclipse Macy’s as the largest apparel retailer in the U.S. by 2017, according to Cowen & Co. This perfect storm of factors is threatening the very heart of the department store model: apparel, the sector’s biggest business. Department stores have long served as paeans to fashion brands showcased in expansive shops from the Calvin Kleins, Ralph Laurens and Tommy Hilfigers of the world. But that model feels a tad anachronistic these days.

Rethinking The Model

But they  still have to address the elephant in the room: Rejuvenating business in their full-line stores. To do just that, department stores are turning to categories such as beauty, in-store services, even food. “Oh by the way, let’s not forget the additional coffee shops and bistros.” (Dallas High Life)

In addition to shedding stores, Macy’s has been tinkering with its format by testing new concepts that point to a shift away from apparel. During the holiday season, it began testing Best Buy consumer electronics shops in 10 stores. And last year, the retailer bought freestanding beauty chain Bluemercury, which it will expand to 100 stores by mid-year, and bring to four Macy’s locations with in-store shops.

J.C. Penney, in the throes of a turnaround, is also turning to non-apparel businesses to drive growth. The moderately priced chain aims to double the number of Sephora beauty shops in its stores by 2017, while moving the concept to the more prominent, “center core” area. It’s also modernizing and rebranding its hair salons via a partnership with InStyle magazine.

Chen said in a Cowen & Company research note: “Our industry consultants believe department stores will eventually devote less space to women’s apparel, and more to other categories, which tend to be more productive, including home, beauty, wellness, electronics.”

Great article written by Barbara Thau! Working in one of the FLS stores that was mentioned in the article, she’s pretty much on point. One of the big problems with stores being filled with apparel is the trend of online shopping. Many consumers prefer to buy online and try clothes on at home, but when they don’t fit they are sure to return them. (Dallas High Life)

Cheers to the New Year, Eat, Drink, and be Merry!

~Forbes Magazine by Barbara Thau~

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