The Mis-Identity of the Modern Department Store
If you skim the latest news in retail, stories of department store woes, declining foot traffic, store closings, and the uncertain future of brick and mortars seems to dominate the headlines. In fact, it’s been going on for quite some time, and for the industry, it’s likely starting to sound like a bit of a broken record. Simultaneously, we’ve seen some pretty significant announcements from the likes of Amazon, who recently kicked off a “try before you buy” fashion option with Prime Wardrobe, and Farfetch, a UK-based retailer trying to tackle the “store of the future”. With Amazon being a constant reminder of the threat to traditional brick and mortar, and other younger players breaking out onto the scene to change the face of retail, department stores may face a dire future.
Consumers have changed, and they continue to evolve with more complex demands of brands, and of the shopping experience. But have they also fundamentally changed the definition of the department store as we used to know it? Has their behavior shifted the landscape so much, that department stores are making it harder on themselves by not recognizing this identity shift? And what does this all mean for brands that have traditionally relied on department stores to reach consumers, and their overarching go-to-market strategy?
What is a Department Store Anyway?
These are all difficult questions no doubt, and not ones with the most obvious answers. But the questions around the changing definition of the department store are ones that have come to mind more recently as we see the continued proliferation of off-the-rack retailers like T.J. Maxx and Nordstrom Rack. The reported hot streak of T.J. Maxx dates as far back as last May, when we started to hear more news of mall struggles. While stores like T.J. Maxx, Marshalls, and Saks Off 5th (with more of a luxury focus) are known widely for their bargain prices, to some of the population, they bare little to no difference to a Macy’s or other common department store. Millennials, in particular, are driving the growth of these stores – seeking a place to mix and match various trends and brands, with a mind for a good deal. But if you asked a Millennial whether they considered T.J. Maxx a department store, you may be surprised to find that many agree it is.
This notion led us to consider what a department store really is in this day and age. The wiki definition reads,
“A department store is a retail establishment offering a wide range of consumer goods in different product categories known as ‘departments’.”
While yes, stores like Macy’s have distinct departments devoted to product categories outside of clothing, like furniture and other kitchen and home supplies, it’s not so far out there to understand why many might view the Marshalls of the world as department stores, perhaps just on a smaller scale. But in this vein, isn’t Amazon a department store that simply lives online, with a vast range of products and brands? While that idea may cause further distress (if this were even possible) to today’s struggling retailers, it may also lead to a brief moment of clarity. While it’s not a secret that the more traditional department stores have seen better times, maybe the reasons for their failures aren’t so cut and dry; maybe it’s their dated sense of identity that is prohibiting them from truly evolving in the necessary ways to re-capture the attention of today’s modern, savvy consumers.
So, why have these off-the-rack stores been more resilient to the common challenges faced by many brick and mortars, or on the flip side, what elements of shopping have they imagined differently to exist apart? We’ll give you a secret – it’s not only about cheap prices. Aside from convenience and competitive pricing, customers connect with great experiences.
Own the Experience, From Digital to Store
Consider this statistic: according to Cowen & Co., Amazon is expected to pass Macy’s as the US’ largest apparel seller this year, and its clothing and accessory sales are expected to grow nearly 30% next year. Amazon continues to be a disruptor to the retail market, particularly as it seems to be interested in more nuanced tactics for its own Fashion and retail experience. But, there is still something left to be desired from Amazon’s digital experience when it comes specifically to fashion. The sheer number of brands is overwhelming, the navigation is not easy and in terms of personal curation abilities, there is still much room to grow. And, what Amazon does not play in (yet) are apparel brick and mortars. Stores like Macy’s are likely feeling the heat from Amazon, but they also have an opportunity to really enhance and own their in-store experience – better yet, own the entire journey from in-store to online.
Breathing life back into the physical store space should be a number one priority, perhaps even disrupting the traditional layout of the old department store where brands exist in their own sections. Knowing that Millennials and Gen Z’ers appreciate diverse style (and they’re not particularly brand loyal), re-imagining the floor space may give them an entirely new perspective. Keeping the merchandise always fresh is also crucial for maintaining customers’ attention, particularly with the amount of choice they have today. It’s one of the strategies that has made TJ Maxx a hit with shoppers, especially those who show willingness to casually peruse the racks.
Inviting customers in through complementary experiences like in-store coffee shops or places to relax and read may make the physical store experience more worthwhile of their time. Adding in innovative technology aspects like a VR or AR experience could also further entice them to engage with products.
Even though there may be a more pessimistic outlook for department stores in this current moment, challenges bring forth new opportunities for reinvention. And maybe, we just need to lose this idea of a department store all together in order to move forward in the right strategic direction.