US department stores are emerging from a protracted period of underperformance with a leaner and more refined focus, tighter supply chains, and an emphasis on rebooting growth in a digital world, a new report says.
While many department stores still have a distance to go in taking the friction out of shopping for increasingly demanding customers, early indications are that the biggest companies are making important progress, according to Moody’s Investors Service.
“After two years of bruising underperformance, department stores are in the midst of their next big transition, which is making shopping as seamless as possible for an increasingly exacting customer,” says Moody’s vice president, Christina Boni. “To do so, companies are undertaking the expensive but necessary process of rolling different shopping platforms – online, brick and mortar, and smartphone apps – into one.”
Department stores are employing a range of strategies as they seek to satisfy customers spoiled for shopping choices, Boni says. Some are harnessing big data to build loyalty programmes, which have become critical differentiators among stores, while others are providing product and inventory information online to save customers time or are steering customers toward more cost-effective behaviour, such as returning products to stores. Some offer customers free shipping when they spend more than a certain amount.
Department stores must continue to allocate capital spending to technology, the credit rating agency says in its report ‘Sector looks to reboot growth as it reinvents shopping in a digital world.’
Mobile applications are critical to remaining relevant, with shopping apps becoming the norm for many customers, allowing them to check prices, make payments, manage reward programs and track orders. At the same time, department stores can leverage their online capabilities to mitigate some of the challenges associated with managing large, mall-based stores.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalDataDelivering an integrated front-end experience for customers has forced department stores to tighten up their supply chains, though the process has negatively affected margins as the stores wait for their investments to reap rewards. However some stores, such as Nordstrom, are now approaching the inflection point where they are expecting margin pressures begin to ease.
