Here's why department stores aren't cutting it
To understand why shoppers aren’t frequenting JCPenney, consider the alternatives.
At T.J. Maxx, shoppers relish the hunt for a bargain-priced designer dress. Visitors to a Nike store in Manhattan can try out sneakers by taking a virtual jog through the park. And Ulta customers can sample an array of makeup without assistance from a sales representative.
Some retailers are developing success formulas that are helping them thrive while department stores like J.C. Penney, Sears, and Macy’s are shuttering dozens of locations and struggling to lure shoppers away from their mobile phones and laptops and into stores. J.C. Penney said Friday that it will close up to 140 locations, a move that mirrors a decision by rival Sears, which plans to shutter 150 stores, and Macy’s which closed 66 locations last year and intends to close 34 more.
The new recipe for retail success entails offering immediacy, experiences that can't be found on a screen, bargains galore and speedy, specialized service. While some chains are executing better than others, industry watchers say stores, in the hands of the right operator, still play a key role in satisfying shoppers.
“People still want to feel, touch and look to make a decision,’’ says Farla Efros, president of HRC Retail Advisory, a retail strategic firm. “It’s just the role of the store is different. It needs to be more experiential than it has been.’’
But against that backdrop, some other chains are soaring. TJX, operator of discounters T.J. Maxx and Marshalls, said this week that the company envisions opening roughly 1,300 more locations in the U.S. and Canada. Nordstrom, famous for its high-touch service, saw an earnings boost in the last three months of its fiscal year that was buoyed in part by $4.5 billion in sales at its off-price division, Nordstrom Rack. Riding the home-buying wave, Home Depot earned $1.7 billion in its fiscal fourth quarter, up from $1.5 billion.
Each of those companies exemplifies the factors that can still encourage a consumer to get offline and head to the mall.
•Deals. People will put down their tablets and visit a store if they believe they can get a great price. A report released this month by consultancy PwC found that 64% of those surveyed said good prices were the main reason they were drawn to a particular retailer, whether online or in a storefront. And the treasure hunt for quality clothing at a bargain price has been key to the success of off-price stores like T.J. Maxx and Nordstrom Rack. “It’s ‘look at what I’ve gotten, I’m a smart shopper,' ’’ says Lisa Haddock, who teaches consumer behavior and general marketing at San Diego State University.
•Discovery. When Millennials and Generation Z, the nation's youngest shoppers, walk into a store, they tend to want to have an experience that they can’t replicate online, industry watchers say. New York City’s Nike Soho, for instance, allows shoppers to put on a pair of sneakers and go for a virtual run through Central Park.
Meanwhile, beauty supplier Ulta has thrived because of its appealing make-up displays that customers can sample at will. “It’s really an activity,’’ Efros says. “I’m not forced to buy anything and when I leave the store, I look beautiful.’’
Stores also become destinations when they offer various services, along with products for sale, under one roof. The PwC report notes how shoppers at some Walmart stores can get their hair done, pick up their medications and grab dinner, all without leaving the parking lot.
•Specialization. Stores like Home Depot are known for being one-stop shops for particular types of merchandise. "They’re creating that special niche,'' says Efros. Home Depot for instance is "the go to to build a deck. . . They have people on the floor who are unbelievably talented and knowledgable. And I think that gives them a leg up on those (retailers) that are all things to all people.’’
•Service. Shoppers who need guidance on what outfit looks best, or which appliance is most efficient still appreciate the guidance of an experienced salesperson, says Haddock. “That can’t be diminished,’’ she says. "You still have a huge population of baby boomers who may not be as comfortable buying things online, and they have to have a salesperson there for that comfort, that human interaction.’’
As a result, Haddock says, traditional shoppers need not fret about fewer stores.
"I don’t think brick-and-mortar stores are going to go away," she says. "They serve too many purposes.''