Department stores that can survive the “Retail Apocalypse”

[I-39]

What are some department stores that you believe could survive and possibly even thrive in the digital era? It seems every major department store brand in the US and elsewhere is struggling in some form or another.

I think JCPenney is a goner long term. Their reason for existence has been greatly diminished. Kohl's is too oversaturated with locations and overpriced IMO.

However, I think Macy's and Nordstrom can survive if they focus on the niches they do well. Macy's is doing the right thing and focusing on A malls and high traffic off mall locations in decent income areas. Nordstrom has strong e-commerce sales among department stores and is concentrated in wealthier areas so they should be fine.

[SkyPesos]

Off-price department stores like TJ Maxx/Marshalls, Burlington, Saks Off 5th, Nordstrom Rack, etc look well positioned to survive in the digital retail era atm.

[Max Rockatansky]

A lot of the bargain basement stuff like Ross seems to be thriving while the upscale chains die slow deaths.

[Scott5114]

My last job was with a 7500-person company that was the 4th largest employer in Oklahoma. The dress code for non-uniformed employees (which I always was, so I never had to worry about any of this) was business casual. Business casual is pretty much JCPenney's bread and butter, and the mid-range price point was squarely in the affordability range of most of the employees.

So the business was somehow able to cut a deal with JCPenney to provide a discount to their employees. They sent an email out to all of us telling us this. Apparently it was so heavily used that JCPenney had to go back and renegotiate the terms of the deal to be a tad less favorable (I forget what the change was, maybe it was a cap on the amount of merchandise the discount was applicable to in one transaction), since we got a second email a month or so later with the updated details.

If JCPenney were to make similar deals with large businesses nationwide, they might well squeak through this thing.

[WillWeaverRVA]

Off-price department stores like TJ Maxx/Marshalls, Burlington, Saks Off 5th, Nordstrom Rack, etc look well positioned to survive in the digital retail era atm.

T.J. Maxx has already survived a couple of retail apocalypses, first in the late 1980s when Zayre (its former parent company) was acquired by Ames and ceased to exist, and then the rise of Walmart and Target killing off Ames/Hills/Jamesway/etc in the late 1990s and early 2000s. They still seem to be doing fairly well in the modern era.

[SP Cook]

The death of retail is vastly over stated. 

First, clothing.  For many, if not most, people, particularly females, dress clothing is not something they want to, or can, order on line.  Amazon has tried to work with this with its "wardrobe" program, but this is still not the same as trying on things. 

Second, there are items that simply are "internet proof".  Either because the shipping costs are too high relative to the value (major appliances, construction materials, etc) or because the need of getting it RIGHT NOW is greater than the tiny savings you get from ordering it on line (auto parts, plumbing parts, etc).  Which is why places like Home Depot and Advance Auto Parts will not just survive, but thrive.

[RobbieL2415]

Off-price department stores like TJ Maxx/Marshalls, Burlington, Saks Off 5th, Nordstrom Rack, etc look well positioned to survive in the digital retail era atm.

T.J. Maxx has already survived a couple of retail apocalypses, first in the late 1980s when Zayre (its former parent company) was acquired by Ames and ceased to exist, and then the rise of Walmart and Target killing off Ames/Hills/Jamesway/etc in the late 1990s and early 2000s. They still seem to be doing fairly well in the modern era.

The problem in the 90s is that the New England retail market was saturated with discount chains.
There was a point when Ames, Bradlee's, Caldor, Kmart and Walmart all operated stores close to each other. Walmart outlasted them all because it was able to undercut them in terms of variety and value and operated with a very low debt-to-equity ratio.

TJX/HomeGoods draw customers away from Walmart because they have more specific product lines; softlines, domestics, and home furnishings, and often those specific things aren't well stocked at Walmart or are not of the quality some people desire.

[hbelkins]

The death of retail is vastly over stated. 

First, clothing.  For many, if not most, people, particularly females, dress clothing is not something they want to, or can, order on line.  Amazon has tried to work with this with its "wardrobe" program, but this is still not the same as trying on things. 

Second, there are items that simply are "internet proof".  Either because the shipping costs are too high relative to the value (major appliances, construction materials, etc) or because the need of getting it RIGHT NOW is greater than the tiny savings you get from ordering it on line (auto parts, plumbing parts, etc).  Which is why places like Home Depot and Advance Auto Parts will not just survive, but thrive.

I'd add groceries, especially meat and produce, to the list.

A can of Campbell's chicken noodle soup is the same no matter whether it comes from Dollar General or Walmart or your local independent grocer. If you want to order canned goods or prepackaged foods online, go for it. But most people are going to want to eyeball the steaks or chops or heads of lettuce or containers of strawberries to make sure they're acceptable.

And honestly, some of the search functions on online sites are awful. You can search a specific item on Amazon or Walmart and get all sorts of results you're not looking for, often before the item you want, and especially if they are "featured" or "sponsored" items. If I'm looking for Wrangler jeans, I don't want to see Levi or Lee jeans before the Wranglers.

[SectorZ]

Off-price department stores like TJ Maxx/Marshalls, Burlington, Saks Off 5th, Nordstrom Rack, etc look well positioned to survive in the digital retail era atm.

I'd agree with most, but not with Burlington. At least the one closest to me (Billerica, MA) has put temporary walls in to make the retail space smaller, and even that area is incredibly bare. Maybe others are doing better. Hell, maybe they're all doing great and that's just a one-off failure and that's my only exposure 

[PastTense]

The U.S. is overstored: it has three to four times as much retail square footage per capita as equally rich Western European countries.

[Dirt Roads]

The U.S. is overstored: it has three to four times as much retail square footage per capita as equally rich Western European countries.

I agree with the first statement.  However, retail square footage doesn't seem like a good measure.  Americans love their wide open spaces, outdoors and indoors (not that this is a good thing, mind you).  Seems like a better measure would be the number of storefronts (large chains versus main street small businesses), which would also make a better comparison with Western Europe. 

Here's a listing from NAICS of the numbers of various types of retail sectors in the United States:

• Building Materials, Hardware, Garden Supply & Mobile Home Dealers (112,321)
• Lumber and Other Building Materials (39,893)
• Paint, Glass, and Wallpaper Stores (27,781)
• Hardware Stores (22,041)
• Retail Nurseries and Garden Stores (18,589)
• Mobile Home Dealers (4,017)
• General Merchandise Stores (61,755)
• Department Stores (20,006)
• Variety Stores (26,811)
• Miscellaneous General Merchandise (14,938)
• Food Stores (282,202)
• Grocery Stores (147,183)
• Meat and Fish Markets (11,856)
• Fruit and Vegetable Markets (7,366)
• Candy, Nut, and Confectionery Stores (10,959)
• Dairy Products Stores (2,943)
• Retail Bakeries (60,489)
• Miscellaneous Food Stores (41,406)
• Automotive Dealers and Gasoline Service Stations (290,768)
• New and Used Car Dealers (65,361)
• Used Car Dealers (39,326)
• Auto and Home Supply Stores (74,099)
• Gasoline Service Stations (66,179)
• Boat Dealers (12,059)
• Recreational Vehicle Dealers (4,376)
• Motorcycle Dealers (9,908)
• Automotive Dealers, NEC (19,460)  [not elsewhere classified; I believe this is primarily classic car sellers, which oddly is a name in the U.K. for classic car shows]
• Apparel and Accessory Stores (196,612)
• Men's and Boys' Clothing Stores (14,517)
• Women's Clothing Stores (94,262)
• Women's Accessory and Specialty Stores (9,738)
• Children's and Infants' Wear Stores (7,383)
• Family Clothing Stores (23,378)
• Shoe Stores (19,430)
• Miscellaneous Apparel and Accessories (27,904)
• Home Furniture, Furnishings and Equipment Stores (198,750)
• Furniture Stores (50,262)
• Floor Covering Stores (48,938)
• Drapery and Upholstery Stores (2,841)
• Miscellaneous Homefurnishings (23,842)
• Household Appliance Stores (11,454)
• Radio, Television, and Electronic Stores (14,219)
• Computer and Software Stores (27,973)
• Record and Prerecorded Tape Stores (8,973)
• Musical Instrument Stores (10,248)
• Eating and Drinking Places (766,904)
• Eating Places (690,096)
• Drinking Places (76,808)
• Miscellaneous Retail (727,769)

I removed the totals because there appears to be some overlap between categories (double and triple counting).  You have to be careful with this type of data.  One of the organizations that was given business counts was obviously treating all the Walmarts and McDonalds as one business each.  But this listing can give you a feel for how overbuilt America is in certain sectors.

[kurumi]

^ SELECT location_count, category FROM `NAICS` ORDER BY random()

I massaged it a bit to put the most numerous first:
766904 Eating and Drinking Places
748625 Mattress Firm
727769 Miscellaneous Retail
690096 Eating Places
290768 Automotive Dealers and Gasoline Service Stations
282202 Food Stores
198750 Home Furniture, Furnishings and Equipment Stores
196612 Apparel and Accessory Stores
147183 Grocery Stores
112321 Building Materials, Hardware, Garden Supply & Mobile Home Dealers
94262 Women's Clothing Stores
76808 Drinking Places
74099 Auto and Home Supply Stores
66179 Gasoline Service Stations
65361 New and Used Car Dealers
61755 General Merchandise Stores
60489 Retail Bakeries
50262 Furniture Stores
48938 Floor Covering Stores
41406 Miscellaneous Food Stores
39893 Lumber and Other Building Materials
39326 Used Car Dealers
27973 Computer and Software Stores
27904 Miscellaneous Apparel and Accessories
27781 Paint, Glass, and Wallpaper Stores
26811 Variety Stores
23842 Miscellaneous Home furnishings
23378 Family Clothing Stores
22041 Hardware Stores
20006 Department Stores
19460 Automotive Dealers, NEC  [not elsewhere classified; I believe this is primarily classic car sellers, which oddly is a name in the U.K. for classic car shows]
19430 Shoe Stores
18589 Retail Nurseries and Garden Stores
14938 Miscellaneous General Merchandise
14517 Men's and Boys' Clothing Stores
14219 Radio, Television, and Electronic Stores
12059 Boat Dealers
11856 Meat and Fish Markets
11454 Household Appliance Stores
10959 Candy, Nut, and Confectionery Stores
10248 Musical Instrument Stores
9908 Motorcycle Dealers
9738 Women's Accessory and Specialty Stores
8973 Record and Prerecorded Tape Stores
7383 Children's and Infants' Wear Stores
7366 Fruit and Vegetable Markets
4376 Recreational Vehicle Dealers
4017 Mobile Home Dealers
2943 Dairy Products Stores
2841 Drapery and Upholstery Stores

(ok, Mattress Firm was not in original list)

[GCrites]

The U.S. is overstored: it has three to four times as much retail square footage per capita as equally rich Western European countries.

Is that leased space only or does that include vacant space? Western Europe doesn't have nearly as much vacant space as the U.S.

[tolbs17]

Belk.