Why Department Stores are Failing


The start of the new year typically brings about excitement, positive change, and rejuvenation for everyone. But it certainly seems like 2017 is not shaping up well for many of the nation’s once-popular department stores.


With just a few days into the new year, Macy’s and Sears Holding, the parent company of Sears and K-Mart, both announced a wave of store closures that will be affecting hundreds of stores and employees by the beginning of spring. Macy’s will be shutting down 68 stores as sales are slowing and online competition from retailers like Amazon are growing. Sears Holding will be closing 108 Kmart stores and 42 Sears stores. And most recently, JCPenney announced 140 stores and two distribution centers will be closing in June.


Not only that, but stocks for Macy’s, J.C. Penney, and other department stores like Kohl’s and Nordstrom are falling as well. Even the upscale retailers like Neiman Marcus, Bloomingdale’s, and Saks Fifth Avenue have all had trouble getting people into their department stores.


Since 2013, more than 700 department stores have shuttered their doors. Why are so many of them failing? Read below for some insight into the spiraling business of retail.


Stores Can’t Keep Up With Fast Fashion


Over the years, our society has become more reliable on instant gratification. When shoppers see trends on the runway, they want to wear the style as soon as possible — not wait around nine months or so for it to appear in stores. This is where fast fashion comes in. Low-priced apparel stores like H&M, Forever 21, and Zara have thrived on this idea by making the runway trends appear in their stores only a few weeks later — and for a cheaper price than traditional department stores. It’s no surprise that fashion-forward shoppers flock to these stores! The traditional department store business model can’t keep up with this revelation simply because their chains are too big and expensive for today’s shopper.


Our Country is Oversaturated with Stores

For every person in the United States, there is 23.5 square feet worth of retail space — which is an absorbent amount of retail space! “The U.S. has too much space and too many shops,” said Neil Saunders, CEO of Conlumino, a retail research agency and consulting firm. “Shopping patterns have changed, and some of those shops are in the wrong place and are of the wrong size or configuration.” That means retailers need to reduce brick-and-mortar space to accommodate. Retail Dive, an online newsletter for professionals in the retail industry, suggests retailers need to cut back on one billion square feet!


E-Commerce is Dominating


The rise of e-commerce has encouraged more consumers to shop online instead of the brick-and-mortar stores. Companies like Amazon and Jet base their business model not on stores, but fulfillment centers and shipping. Shoppers can often find a variety of the same products as traditional department stores, but they can have it delivered right to their door. This steals business from brick-and-mortar stores, which ultimately, prompts some locations to close because they can’t gen enough foot traffic in their stores.


Carole Argo is a business woman from Baltimore, Maryland. Her primary focus in business has been on corporate execution growth strategy, specifically dealing with merger and acquisition activity.