2. Hard to Find a Silver Lining
Continuing a downward trend since 2004, department stores’ revenues decreased from $164.7 billion during 2015 to $154.6 billion during 2016, or a decline of 6.1%.
According to the US Census Bureau, U.S. department stores’ revenues continued to decrease during the first 6 months of 2017 by 4.2%, or $58.5 billion compared to $61.2 billion for the same period during 2016.
Department store foot traffic was flat or decreased during Q (April, May and June): Macy’s, 60, 60 and 57; Sears, 45, 47 and 45; JC Penney, 35, 37 and 36; and Kohl’s, 22, 25 and 25; respectively. (Based on Placed’s 100-point scale.)

3. Much of Brick-and-Mortar Retail Sector Is Crumbling
Macy’s and Sears, and specialty retailers, Sports Authority, Payless and RadioShack. American Eagle, Lululemon and Urban Outfitters’ stocks hit multi-year lows.
E-commerce sales continue to increase, led by Amazon, with its North American sales totaling $80 billion during Retailers’ mobile apps, lower prices, quick shipping and easy returns have made buying online easy and convenient.
As the “experience economy” takes hold, consumers are spending more of their money on travel, restaurants and bars rather than clothing and other goods.

4. Shaken to Their Very Foundations
During the first half of 2017, Sears/Kmart announced it would close 226 stores, JC Penney 138 stores and Macy’s 100 stores. Nordstrom plans to open 10 stores. According to Credit Suisse, 20–25% of American malls could close during the next 5 years.
Many discount retail stores are expanding during 2017, however, as consumers seek value, including Dollar General, 1,290 new stores; Dollar Tree, 650; TJ Maxx, 111; Ross, 90; Walmart, 59; Target, 30; and Macy’s Backstage, 19.
Nordstrom has bucked the trend with the success of its off-price stores, Nordstrom Rack, and its e-commerce, which generates almost 25% of the company’s sales. It is initiating a program for consumers to set aside items online for them to try in-store.

5. Identifying and Connecting with Shoppers
According to a Viant report, the average department store shopper is female, married and uses an iPhone. Shopping in-store, the average customer is 32; online, 18–35.
Optimal dayparts for TV advertising are: Nordstrom shoppers, afternoons and early evenings; Macy’s shoppers, early morning; and Kohl’s shoppers, early morning.
Macy’s had the most diverse shoppers, who were 2.5x more likely to be African-Americans than Kohl’s and 2x than Nordstrom. Macy’s shoppers were also 2.4x more likely to be Latino-Americans than Kohl’s and 1.6x than Nordstrom.

6. Department Store Shoppers with Deepest Pockets
A Viant report found that the heaviest department store spenders consisted of three groups: digital introverts, dads and convenience shoppers. These customers accounted for 80% of the total spent in department stores.
Digital introverts spent the most, averaging $665 during the past 90 days, followed by dads at $617 and convenience shoppers at $576, with the average spent for all of $260.
Compared to medium and light spenders, heavy spenders were more frequent gift givers (+29%), value a seamless online/offline retail experience (+44%) and were more likely to shop on a smartphone (+59%).

7. Fighting the E-commerce Onslaught
Department stores can convert their space to a showroom, showing differentiated goods that consumers can see, feel and try, and offering advice, but without the need to carry so much inventory or use so much space. Customers can order online or at the store.
Macy’s is shifting towards providing entertainment and experiences in its stores, such as lessons and interactive kiosks, where customers can try different products.
Macy’s, JC Penney and Kohl’s have started to dedicate space in their stores to mini-shops for brands, including Nike, Under Armour, Apple, Brookstone and Etsy.

8. Advertising Strategies
Target heavy spenders with emphasis on the social aspect and features of the shopping experience, seamless integration between online and offline and convenience of parking and short lines.
Show shopping as being a multi-faceted experience with food, entertainment and interactive lessons and displays.
Emphasize the uniqueness of the products sold, and that a complete range of sizes are available online if they are not in the store.

9. New Media Strategies
Consumers who shop at Macy’s, Kohl’s and Sears all are likely to have Groupon and Starbucks apps on their phones. Department stores can dispose of old inventory on Groupon.
Offer special discount to customers with the Starbucks app on their phone and proof of a recent Starbucks purchase.
Smaller department store chains and locations may be able to attract Sephora shoppers from JC Penney and their other locations with a mobile coupon on a complementary apparel/fashion item with a Sephora proof-of-purchase.