Consumer are gaining confidence, in some parts of the world the real estate prices are going up, and consumer spending are inching forward. This can be seen as a sure sign that the crisis is winding down. Is it over? Not by a long-shot, but at least “we” feel more comfortable that we can manage whatever it still has to throw at us. Department stores were particularly hard hit over the last couple of years, and while consumer spending is up, it does not seem to help department stores too much. In France some Lafayette stores have closed, in the Netherlands V&D went bankrupt and in the US Sears and JC Penney seem in real problems. The reason is that consumers are changing.
The digital era has changed the way consumers shop and department stores haven’t come up with the right answer to counter the effect, and make it work for them. (Warm winters aren’t exactly helping either, but that is besides the point of this blog) So what has changed?
There are a couple of reasons we can think of:
- The consumer gets it’s inspiration online. Where consumer used to visit a department store, and found the products they liked by browsing the store, we can see the reverse taking place. Consumers no longer buy what the department store has on it’s racks, but come into the store to buy what they have already seen and want.
- Speed of change H&M turns out a new collection every few weeks. Over are the times when a department stores could have a winter and a summer collection. If consumers visit department stores and find the same collection, they will not return.
- Same stuff everywhere Allthough a high-end product, you can find Dolce and Gabbana in a lot of department stores: not very differentiating. Consumer go somewhere because of products or brand of the department store. Obviously, the last has to stand for something.
- Where is the value-add? While department stores try to differentiate themselves just by housing a large number of brands, this does not change the fact that these brands can be bought everywhere else. The quality of service that online stores are giving is going up. Ordered today can be delivered tomorrow. If consumers don’t like the product they can return it. If consumers complain, online retailers react like stung by bees since they know the value of ratings. If if they don’t: the consumer is already gone on to the next webshop.
- Price Bricks will always be more expensive then clicks. Where lies the answer? It would be too easy say “this and this”. The consumer is an ever moving target, and it only started moving faster. We expect the answer to lay in a combination of (department store) brand-building, (product) uniqueness and target selection (department stoes can no longer be everything to everyone)
Can we prove it: no. We can only learn what creativity will bring us in the future.