This trend isn't new. It has been going on for several years (remember Sears?). But the 2019 holiday shopping season brought their troubles into stark relief.
Despite low unemployment and high consumer confidence, JCPenney (JCP) had a dismal holiday. Kohl's (KSS) and Macy's (M) suffered, too. And Victoria's Secret parent L Brands (LB) continued its years-long run of losses.
JCPenney's sales at stores and websites open for a year fell 7.5% during the holidays compared with last year. Kohl's and Macy's sales dropped slightly, and Macy's said it will close 28 stores. Victoria's Secret sales at stores and websites open for at least a year fell 12% and its parent cut its earnings forecast.
JCPenney's results raise "continued questions about the chain's long-term viability," Neil Saunders, analyst at GlobalData Retail, said in a note to clients Thursday. "Once loyal customers now avoid the chain and shop elsewhere."
Americans are still shopping, and consumer spending in the United States remains strong. But shoppers they are hunting for bargains at big box chains such as Walmart (WMT), Target (TGT), Costco (COST) and online. Costco said Wednesday that sales in the United States during December jumped 9.4%. These companies are taking market share from department stores, according to analysts.
There is no shortage of competitors to blame for department stores' woes. The big box chains have been able to use their scale to muscle down prices on everything from televisions to clothing. Discount retailers, including TJMaxx and fast-fashion chains, continue to grow sales.
That has suqeezed department stores, forcing them to lower prices on clothes or put them on sale, which has pressured profits.
Macy's, JCPenney and Victoria's Secret are also located in older malls, while Target and TJMaxx's stores are typically standalone, independent of malls. This is a major advantage to draw in customers, according to analysts.
But department store leaders have also their own strategies to blame. Department stores are making changes to stores to boost the customer experience. But they are taking incremental steps, rather than implementing sweeping overhauls.
At Kohl's, the "single biggest initiative" of 2019, according to CEO Michelle Gass, was a partnership with Amazon to accept returns for free. Kohl's hoped that the partnership would draw customer traffic, but some analysts are starting to question whether Amazon has delivered.
"We continue to be surprised that Kohl's isn't seeing much in the way of a traffic bump from its partnership with Amazon," Chuck Grom, analyst at Gordon Haskett Research Advisors, said in a note to clients Thursday.
https://news.google.com/__i/rss/rd/articles/CBMiWWh0dHBzOi8vd3d3LmNubi5jb20vMjAyMC8wMS8wOS9idXNpbmVzcy9qY3Blbm5leS1tYWN5cy1rb2hscy1kZXBhcnRtZW50LXN0b3Jlcy9pbmRleC5odG1s0gFdaHR0cHM6Ly9hbXAuY25uLmNvbS9jbm4vMjAyMC8wMS8wOS9idXNpbmVzcy9qY3Blbm5leS1tYWN5cy1rb2hscy1kZXBhcnRtZW50LXN0b3Jlcy9pbmRleC5odG1s?oc=5
2020-01-09 15:19:00Z
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