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Re-Imagining Retail: The Shift From Department Stores

Brands are shifting their retail spaces and it is the location in which people are shopping that is changing, not the action of shopping itself. Instead of going indoors to a department store with lower inventory selections, the shopping locations of choice have become outdoor centers with a variety of necessities all located in one area. As Chain Store Age explained, “[In 2019], department stores struggled to align inventory with demand last year.” People are spending less at the department stores and, instead, look to get their shopping done elsewhere where the selections are wider and greater.

Stores that were once a big competitor are being outmaneuvered by their other competitors who are becoming the primary market. For example, Rite Aid being overpowered by CVS. “It’s becoming a trend for older brands to have these cyclical challenges” says Michael Leon, Rappaport’s Leasing Representative. Primarily it is the mall businesses that are expressing these issues or challenges with bankruptcy and it is in large part the department stores due to the evolution of shopping centers.

There is less of a demand for large format department stores. Everything that we used to be able to find at a department store can now be found at various stores within shopping centers were there is an apparel store next to a home goods store next to a cosmetics store. Moreover, each of these separate stores has a large quantity and varying selection of goods compared to the more limiting selections that can be available in a department store.

Rather than choosing to go shop in a large format department store, it appears that shoppers are electing to spend their money at separate stores and most likely in the outdoor shopping centers. Chain Store Age continued to report that, “department stores lost momentum in 2019, with operating income for the year projected to be down about 20%.” Thus, it is evident there is an issue brewing for these department stores. The question remains, is this due to their inventory or is this due to something else? If it’s due to something else, are we to fear the end of department stores or will there be a resurgence? It remains to be seen how department stores will choose to react to our shifting choices when it comes to shopping locations—will they adapt and develop new techniques to stay relevant and current or will they fall behind?