Department Stores’ Pains Eased In Q2, But Challenges Are Digging In
The underlying challenges facing department stores remain: many of them, are hurting from declining mall and store traffic, says eMarketer.
This past week’s earnings results for Macy’s and Kohl’s were brighter than expected, but that doesn’t mean troubles afflicting major retailers are fading.
As eMarketer pointed out on Thursday, Macy’s same-store sales slipped 2.8 percent — the 10th consecutive quarterly drop.
Meanwhile, Kohl’s same-store sales were essentially flat, falling 0.4 percent year-over-year, continuing a dynamic that was seen for the past five quarters.
Even Nordstrom’s reversal was fairly meager, as it delivered a same-store sales gain of 1.7 percent.
On Friday, JCPenney posted a 1.3 percent declines in same-store sales, a bit worse than the expected fall of 1.2 percent.
The retailer, like its rivals, have been aggressively pursuing in-store omnichannel strategies designed to combat online showrooming, even as it and other major store brands shrink the number of locations they have.
For JCPenney, it did point to some bright spots in its home, fine jewelry, footwear and handbag, and Sephora beauty units.
“The company has gained customers across these segments — including younger shoppers who might previously have shunned JCP,” GlobalData Retail’s Saunders told CNBC about JCPenney’s focus on the home, footwear, and fashion categories.
Looking at how broader shifts away from malls and other big boxes have seen a retreat in foot traffic, eMarketer, citing RetailNext data, says that through July, sales and traffic at US brick-and-mortar stores have declined each month since at least January 2014. Both Macy’s sand Kohl’s, for instance, said on Thursday Q2 traffic declined.
“Department stores themselves also have failed to keep up with fast fashion rivals like Zara,” eMarketer says. “They also have shot themselves in the foot with frequent promotions and one-day sales.”
Some observers find that omnichannel moves, such as advancement of mobile-based loyalty programs, are unlikely to reverse the trajectory of department stores’ dwindling fortunes.
“It’s all band-aid stuff, said Mark Cohen of Columbia Business School in an interview with eMarketer. “The slope of the curve of their performance continues to point downward. The slope may be abating a bit, but not turning up. Macy’s is the poster child of the whole sector. The department store genre is in decline.”