WORLD: Department store market set for 22% surge
Sales in department stores around the world are set to rise by 22% over the next five years, fuelled by growth in China, according to a new report.
Verdict’s “Global Department Store Retailing” report predicts that China will account for almost half of the forecast US$100bn incremental spend over that period, with sales in the country rising 38.1%.
By 2019, about 30% of the world’s department store sales will come from China, thanks to rising affluence, increasing urbanisation and expansion opportunities, Verdict said.
“There are extensive growth opportunities in China,” said Verdict analyst Kate Ormrod.
“However, as overheads such as labour costs rise, we expect less profitable and weaker players to fall out of the market.
“Remaining players must further differentiate their offers through greater use of private label ranges, investment in in-store environment and brand exclusives to drive footfall and sales.”
Among the world’s 12 leading department store companies, only Macy’s and Nordstrom have increased their market share over the past five years, Verdict added.
Ormrod said Sears had “lost relevance” in the US, sending its global market share down 2.5%, while JC Penney’s radical overhaul had led to its market share more than halving to 2.4%.
By contrast, Macy’s, which overtook Sears in 2012, is forecast to have a 6.4% market share by the end of this year.
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