The retail landscape is changing, and the traditional Department Store is losing its niche as consumers show a clear preference for smaller stores with a singular focus. This has led to a change in the way that Department Stores have to operate to remain successful. Some experts are calling this the new or second generation of department stores.

A Need for Reinvention

In 2018, department stores have seen that they need to take the time to reinvent themselves, or they will be forced to close. As an overall category, department stores in the United States did worse financially than non-department stores in 2017. Major companies, such as Kohl’s, Sears, and Macy’s, are all taking this as a sign that they need to make changes if they want to keep up with the changing retail requirements of consumers.

Smaller Locations

One of the biggest and most dramatic changes for these department stores is moving on from the large locations that have served them well for decades. Instead of these huge spaces with dozens of departments spread out, they are opening smaller-format stores, something consumers seem to demand.

Other Changes

The department stores who want to stay in business and are willing to make changes to do so are also taking steps to partner with apparel brands that are in high demand. They are also working toward creating a more loyal base of customers and enhancing their mobile apps. This last step is particularly important since online shopping has made department stores somewhat less desirable.

They Must Offer Something Unique

In today’s world, retailers need to offer consumers something special that they cannot get with online shopping. Otherwise, they have no reason to leave their homes and visit the physical stores. Good deals are no longer enough, especially when online retailers do not have to pay all the overhead costs of brick-and-mortar stores. Best Buy, for example, has tried to utilize the store-within-a-store concept and offer some services in addition to its goods, such as the Geek Squad.

Another example of this innovation is Nordstrom Local, which will have 3,000 square feet of space instead of 140,000, like the average location most people think of. These retail locations will have such services as personalized stylists and manicures, plus the ability to enjoy a glass of wine. Oddly enough for a department store, there will not be inventory on hand at Nordstrom Local, with customers instead getting purchases from same-day delivery and curbside pickup. It remains to be seen how well this new generation of department store will work for Nordstrom and what methods other retailers will opt for.

Sources:
https://www.marketwatch.com/story/how-nordstrom-is-changing-the-department-store-game-2017-09-14
https://www.fungglobalretailtech.com/research/changing-retail-landscape-squeezing-department-stores/
https://www.cnbc.com/2017/12/27/how-us-department-stores-will-reinvent-themselves-in-2018.html

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