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Published April 4, 2017
Published April 4, 2017

Department stores are a big black cloud over the retail industry. Shoppers are showing up – they’re just not showing up at department stores. The fact that the department store model is broken is not a new topic; the discussion has been going on for years. Leadership at these retailers are not sticking their heads in the sand, but change is not happening fast enough. The looming question remains: can American department stores survive?

In Forbes, Phil Wahba identified five reasons department stores continue to fail:

  1. Same old, same old. According to consultancy AlixPartners, traditional, middle-of-the-road department stores now have a 40% merchandise overlap.
  2. Discount addiction. Without diversified product assortments, retailers are forced to attract consumers by doubling down on deals.
  3. Location, location, location. There are simply too many department stores, and consumer preferences have changed. Retailers need to continue to close doors so they can focus their efforts. 
  4. Vanishing vendors. Fed up with department store discounting, vendors like Ralph Lauren, Coach, and Michael Kors have begun exiting department stores.
  5. Too big to fail. After successive waves of mergers, retailers gained in scale, cost savings, and clout, but lost the agility and the ability to cater to local tastes.

“The department stores have lost the battle department by department,” says Scott Galloway, founder of retail consultancy L2. “But with ingenuity, they may have the time and resources to win the war.”  I certainly hope he’s right.

Read the full article in Forbes.


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