Global department store market will grow by $100 billion, or 22.2%, by 2019, according to Verdict Retail in its Global Department Store Retailing report. The growth will be lead by China, which may account for to half of the growth ($49.5 million) and 30% of all department stores sales, according to Verdict.
“There are extensive growth opportunities in China; however, as overheads such as labor costs rise, we expect less profitable and weaker players to fall out of the market,” said Kate Ormrod, Analyst at Verdict. “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.”
Just two of the top 12 U.S. retailers increased market share between 2009 and 2014: Macy’s (0.3%) and Nordstrom (0.7%). During that five year period, the remainder of the top 12 experienced declines, with Sears (-2.5%) and JC Penney (-2.2%) getting hit the hardest.
Ormrod offered her perspectives on Sears and JC Penney: “U.S. player Sears has lost relevance in the U.S. market, causing consumers to transfer spend to rivals, with a lack of investment in stores primarily to blame, particularly at a time when its competitors are doing the opposite. This has resulted in its share of the global market falling by 2.5 percentage points.
Meanwhile, between 2009 and 2014, JC Penney has seen its share almost halve to 2.4%, due to a change in pricing structure and a proposition revamp. While it will take time to get shoppers back onside, it still has a clear place in the market and its initiatives — such as store refurbishments and its shop-in-shop concept — could bear fruit in the long term.”
In contrast, the outlook for Macy’s and Nordstrom is bright, Ormrod added: “Since overtaking Sears’ top position in 2012, Macy’s has increased its lead over its rival and is forecast to reach a 6.4% share in 2014, and while it has not been without its challenges, Macy’s product offer and store environment have been central to its success. Nordstrom’s continued investment in innovation and its decision to embrace multichannel has secured market share growth, and we expect it to remain a strong force in the U.S. market in the coming five years.”