Pre-pandemic, there was a fairly widespread sentiment against the continued value of the department store. And with news around store closings and bankruptcy proceedings dominating headlines in the last year and a half, it’s clear that the pandemic hasn’t done the sector any favors.
Yet, the tide does appear to be turning with key trends working in the sector’s favor ahead of the holiday season.
Visits on the Rise
Comparing visits to 2019 shows just how challenging the situation was for leading department stores in early 2021. In February and March, six top department store chains saw visits down 34.5% and 25.9% on average, respectively, when compared to the same months in 2019. Yet, by August that average visit gap was down to just 6.7%. While the sector saw a step back in September with the visit gap increasing to 13.1%, by October the average decline was just 2.4% - the best it has been since the start of the pandemic’s retail impact.
And the success appears to be fairly widespread, with luxury oriented department leaders and those targeting the middle seeing equally significant improvements in visit levels. This is all the more significant for brands like Macy’s and JCPenney, where store closures create a situation where declines are almost guaranteed.
The timing here is critical. Visits rose across the chains by an average of 10.9% in October, a huge step forward considering September saw a decline of 15.8% compared to August. And this is incredibly important, as visits are growing into a critical holiday season where players across the department store spectrum will be seeing a unique combination of trends that could drive a very successful season.
The combination of pent-up demand for the holiday retail season, declining COVID cases, limitations on international travel, and the success of this past Back-to-School season all speak to the potential for a big season. Essentially, when pent-up demand meets an excuse to shop – the potential for significant success is present. This is especially true for this sector where malls – the traditional home for most of these brands – are also seeing a boost. Add to this more disposable income among high earning individuals, and the heights that could be reached are unique. Department stores, especially Macy’s, Kohl’s and JCPenney, have also traditionally seen strength throughout the holiday retail season, indicating that they could be well positioned for a year when shopping should be less centered around Black Friday weekend than it had been in recent years.
Ultimately, we are seeing a unique confluence of factors that all point to the potential for an especially strong holiday retail season in the department store segment.
Will leading department store chains see a strong end to 2021?
Visit Placer.ai to find out.
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