Department Stores

Industry Profile Report

Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters

Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Call Prep Questions, Industry Terms, and Weblinks.

Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.

Industry Profile Excerpts

Industry Overview

The 17 department store companies in the US carry a variety of merchandise organized into separate departments, with no one line of merchandise dominating sales. Major product categories include women’s, men’s, and children’s apparel; cosmetics and fragrances; footwear and footwear accessories; and accessories. Other product categories include domestics (sheets, tablecloths, towels) and other textile home furnishings; fine jewelry and watches; and small household appliances.

“Retail Apocalypse”

The impact of digital retailing hit department stores especially hard.

Trends and Fads

Because apparel generates over 50% of industry sales, department store business is subject to fashion trends and fads.

Industry size & Structure

The average department store retailer employs over 56,000 workers and generates almost $7 billion annually.

    • The department store industry consists of 17 firms that employ about 954,000 workers and generate over $117 billion annually.
    • The industry is highly concentrated; the top 4 companies account for over 70% of industry revenue; the top 8 companies account for over 94%.
    • Large firms include Kohl’s, Macy’s, JC Penney, Nordstrom’s, and Transformco (Sears/Kmart). The largest companies have locations in almost every state
                              Industry Forecast
                              Department Stores Industry Growth
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Mar 2, 2023 - Sales Climb for Department Stores
                              • Department stores saw a sales jump of 5.4% in January 2023 compared to a year ago and a rise of 17.5% from December 2022, according to US Census advance monthly trade data reported in Chain Store Age. Overall retail sales increased 6.4% year over year and were up 3% month over month, a better-than-expected result than the 1.5% monthly rise predicted by economists. The department store increase also bucked the tradition of sales falling post-holiday shopping season. According to Naveen Jaggi, president of Retail Advisory Services, JLL, “In December, the holiday shopping season was a bit underwhelming because consumers started their holiday shopping in October, so by December most consumers had finished their shopping. But the shopping pause in December meant for some revenge shopping in January. Additionally, many retailers showed weaker earnings in January due to price cuts to move inventory, which means there were bargains for consumers.”
                              • About 40% of shoppers said in a recent survey that the quality of in-store shopping is less enjoyable than pre-pandemic, according to Home Textiles Today. Major shopper complaints were poorly trained or prepared retail staff (64%) and inadequate staffing levels (60%). Regarding the in-store experiences least enjoyed by shoppers, supermarkets topped the list at 38%, followed by department stores (34%) and convenience stores (30%). Shoppers said they were least likely to have an unenjoyable in-store experience at a clothing store (16%), furniture store (14%), and mattress store (12%). Other frustrating aspects for consumers in stores were long lines and crowds (71%), high prices (39%), limited product availability (32%), and rude or difficult staff (29%). The poll of 600 US adults was taken by Pollfish for mobile communications company Theatro.
                              • More than 60% of retail companies are operating with a shortage of frontline staff, according to a study published in Chain Store Age. The survey of more than 500 global business leaders, commissioned by digital frontline workplace company WorkJam and conducted by Forrester Consulting, found that only 8% of companies plan to invest in improving the frontline experience in the next year to address their labor shortages despite the deficit. More than 80% of decision-makers across industries and geographies want to leverage technology to improve the frontline experience. However, more than 70% of retail decision-makers say digital transformation initiatives have yet to reach the frontline. Frontline employees are also expressing their dissatisfaction with the current conditions. Per the survey, 74% say frontline employees are rejecting work conditions that went unchallenged two years ago, and 80% say frontline turnover has increased, which challenges companies to deliver a positive customer experience.
                              • Online retail sales, excluding travel, climbed 11% to over $1 trillion in 2022 for the first time in history, according to a Comscore “State of Digital Commerce” report in Retail Dive. Online retail sales also had its “highest quarter ever” in the fourth quarter of 2022, reaching sales of $332.2 billion. Consumers are also increasingly shopping on mobile devices. Mobile sales grew by more than a quarter in the fourth quarter of 2022 over the previous year and now account for nearly 40% of overall digital commerce sales. According to the report, the top grossing digital commerce categories in 2022 were food, pet, and baby goods ($219 billion), apparel and accessories ($175 billion), and computers and peripherals ($117 billion). High growth categories included apparel and accessories (up 37%), video games and accessories (up 31%), and home and garden (up 25%).
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