Making department stores relevant again is tantamount to changing a jet engine while the plane is flying. These are large enterprises, weighted down by legacy systems and capital constraints. Unfortunately, everything department store operators do seems like incrementalism in the big scheme of things – when disruption is what’s needed. I do believe department stores will be around in 10 years, but they will be smaller, more specialized and fewer in number.

I’ve been in two Macy’s stores in South Florida in the past week — in the Treasure Coast mall (approaching zombie status) and Palm Beach Gardens (much healthier). I saw nothing especially innovative in either store; it’s one thing to test in Herald Square but another thing entirely to roll out new ideas quickly.

Macy’s is the only “traditional” mall-based department store operating nationally. (Belk and Dillard’s are super-regionals, and Nordstrom has a unique niche.) For the category to stay relevant, Macy’s needs to move faster.

It’s good to see Macy’s talking a good game, but the reality on the ground in most stores is entirely different: they are dull, uninspiring, uncared for and a mess. That’s just not going to cut it. Nordstrom is in a different place. It suffers from the structural change in the sector but, by and large, it still gets the basics right and has successfully moved into off-price and is trying new formats. In my view, for department stores to survive they need to be radical. They need to completely reinvent the shopping experience, including adding more services alongside their goods, especially in foodservice. They need to develop their own exclusive brands – and these need to be compelling. They need to partner with niche players to create unique experiences. And they need to right-size the amount of space they have, which includes developing a more flexible store format model so they can operate smaller stores in locations that don’t justify a full-line outlet. Most of all they need to invest in stores, customer service,… Read more »

Nordstroms and Macy’s are certainly on the right path to reimagine what the department store of the future could be, especially with the experiential, digital first, customer-focused smaller format stores. It’s commendable that Macy’s has acquired STORY, and is leveraging the talents of Rachel Shechtman and the team, to build the smaller scale department store of the future. However, the challenge remains for Macy’s and Nordstroms to translate these experiential centers to the scale of their larger department store formats. The consensus is that bigger isn’t always better. Especially if you look at things from a costing and sales per square foot perspective. Today’s customer has neither the patience or desire to navigate large scale department stores, and the smaller scale formats have really resonated. The department store of the future or even the immediate future will be a place of media for the brand, a place to connect, learn and experience. Macy’s and Nordstroms may divide up their legacy department stores into mixed-used retail, by leasing out space for restaurants, shared office spaces and… Read more »

How many different departments does a store have to have to be called a department store? Will a department store have a home electronics department as a convenience to customers, or let Best Buy and online retailers eat that slice of the pie? Will there be a notions department in the future? Will department stores offer furniture? Without the departments with which some of us grew up, we may have to call these smaller stores something else. Now we need a name…

It has been a tough road for sure. Early inertia has forced most department stores to play catch up. However, I think what chains like Macy’s and Nordstrom are doing is smart and innovative. Smaller formats, showrooms, and probably most notably, marketplaces, are where the department store is going. Department stores have some prime real estate and brands still need them as a channel – I see what Macy’s is doing with their Market @ Macy’s as the likely future of department stores. Brands leverage their retail expertise and real estate (retail as a service) while department store take on less and less inventory but create environments and experiences for fresh merchandise.

“Living brand labs” is a great place to start. I also think Ron Johnson’s plan for J.C Penney is a great place to start. Ron was just slightly off on his calendar and breadth of mission. He provided a template for all department stores over the course of a decade, not just J.C. Penney in a year or two. Unfortunately Macy’s put themselves on an evolutionary path to TJMaxx with Backstage. Now they have to reconcile that with current efforts. Tough. And Primark proves it possible to have great looking stores AND great value. They are not mutually exclusive. Movie title for retail in the near future = “The Agony and The Ecstasy.”

Department stores are definitely changing, just not as fast as the purchase behavior of consumers. The moves by Macy’s and Nordstrom are going in the right direction, yet they are architected within an existing design and format mindset that continues to lose relevance.

Future success and relevance will depend on the speed and extent by which the ongoing testing of new concepts stretches and changes the department store mental model and associated organizational structure. So the department store as we know it will not be the same 10 years from now. While physical format, size, and assortment is undergoing changes, the organization will be much more internally flat, nimble and highly responsive to the immediate needs of customers. There’s an ongoing collapse of time in the execution space, the winners will be those that are better able to define the right business risks and turn them into advantages that translate to new operational models.

Acting smaller and becoming more nimble I get, but an app is not a store window and a place that only offers services is not a store.

I was heavy into a store remodel the week of ShopTalk so I didn’t get to hear the speakers, but I do know that a department store is too big when it doesn’t have enough salespeople to help shoppers, and that when your store becomes a giant box filled with stale product and uninspired merchandising it’s time to change. I applaud the smaller, standalone things Macy’s and Nordstrom are doing to move forward, but those things are not helping customers who visit the actual department stores. What’s the plan to change the shopper experience in those physical spaces? No one seems to be talking much about that.

What will department stores look like in 10 years? The only thing we may recognize is the banner over the store. In 10 years there will be nothing resembling the traditional department store. (To Art’s comment: …they are no longer department stores and have not been for a long time.)

My question is, why do we keep talking about this?

Department stores are still relevant – look at Target.

Being nimble, experimenting, and constantly changing are requirements for today’s marketplace. There is no one formula for success. There is no formula that will work for a long time. With experimentation that occurs often and quickly, retailers can identify changing consumer trends, different geographic preferences, technology use, and respond accordingly. Creating pop-up stores to do this is relatively easy. For success across established stores, purchasing, logistics, and marketing departments need to be nimble and adaptable to capitalize and adapt to changes.

I’m not hopeful for the broad “department store” model. And although Nordstrom is technically categorized as a department store, in my customer mind they are a large high end clothing store — that’s a separate thing.

So why not department stores? Over the past 20 years consumers have voted with their money for one of two alternatives to department stores: Specialty stores (most off-mall) like Old Navy or Melvyn’s Or Kohl’s or Bed, Bath & Beyond or cooking stores — OR they’ve shifted to low-touch bulk discount like Costco for vacuums, appliances, and more.

That means the department store has no key place in customer lives. Is Macy’s, like Nordstrom, a big clothing store? If so, then they need to radically dash after that model.

Truth is, I do believe the “department store” is dead — but these retailers can find life if they accept that idea and sort out a place they can fit in customers’ shopping lives.

First, of all, it’s a long slog to relevancy. Secondly, these new formats are department stores in name only. I have supreme respect for Rachel Shechtman. She might get my vote for the most creative mind in retailing today, but even her vision can’t save oversized Macy’s units anchoring dying malls. So, will the future of these companies be in smaller, standalone stores? Maybe, after all, it is entirely possible. But will those huge, empty, cavernous mall units be restored to their former role and glory? I’m not taking that bet.

We just did a study on this and the answer for D stores and retail spaces in general was a complete re-think. Consumers wanted to see grocery stores, food halls, fitness centers, co-work spaces, health centers, beauty mega stores (you know, relevant retail) vs apparel, apparel, apparel. It was pretty clear; the space needs a clean slate and needs to understand that Story alone, is about 1% of the solve.

Department stores face a stark choice — adopt a wholly new paradigm or fade away. The vast real estate holdings that once constituted the basis of their power have evolved into another kind of “anchor stores” — the kind that puts a drag on maneuverability.

Excess square footage is just a symptom of the larger problem, of course. Shopper behaviors and expectations have changed profoundly in the digital era. The journey downtown or even to the regional mall has been displaced by a tap on the app. Large physical assortments are unwieldy compared with digital’s long tail.

Against that backdrop, recent innovations from Macy’s and Nordstrom may be viewed as admirable — even heroic. There is still a role for upscale showcase emporiums in major markets. There is a crucial role for merchandising creativity and enhanced experience in all stores. But the era of the mid-market, multi-level mall department store is drawing to a close, I think.

What we define as department stores have changed dramatically in recent years. Frankly, Target and Walmart are more “department store” by traditional definitions than a Macy’s. So let’s stop talking about how department stores find relevance with consumers (it’s too late for that now) and talk about how these retail brands will reinvent themselves for the future under a new definition. My money is on taking the online marketplace and bringing it to physical space. Much like what Macy’s is doing with Market @ Macy’s and b8ta. But at a larger scale. Can you envision a future Macy’s store that includes large square footage chunks of marketplaces alongside highly curated themed “departments” much like STORY, followed by VR-based furniture shopping experiences? What about apparel, you say? Well, this is where the future remains murky — do they go with store-in-a-store concepts based on designer and private label brands? Or something completely different? I vote for something different as the brand islands are no better than a specialty store and consumers have already voted they prefer… Read more »

There are three big issues with the reinvention of moderate department stores. The first is that there has been a long-trend secular decline in the sector. It’s easy to blame Amazon, but the decline has been more than two decades in the making. At this point, it’s primarily a market share game.

Second, as I’ve been saying for years, the middle continues to collapse and too many of these retailers think that a slight better version of mediocre is a long-term strategy.

Third, massive investment is likely required to not only turn their existing real estate into something remarkable, but to invest in alternative formats (like Nordstrom with Local). It’s a long, tough journey that few will survive.