What: Forbes’ Walter Loeb reviews what missing, in his views, for US department stores to thrive again.

Why it is important: Among many interesting points, he notes that organizations are too heavy and cluttered, and smaller stores are not the answer to rightsizing if there are not enough to cover a market.

The sustainability of traditional department stores in the digital age is challenged by a variety of operational and strategic missteps. A primary concern is the excessive management layers exemplified by Macy’s, which maintains nine chief executives, each with significant overhead costs, in contrast to more streamlined operations like those at TJX Corp. This bloat in leadership contributes to inefficiencies and inflated costs.

Another significant issue is the slow delivery times compared to digital competitors like Amazon, which often offers overnight delivery. This expedience meets immediate customer needs and diminishes the appeal of shopping at physical stores. Additionally, department stores often sustain unprofitable locations that negatively impact overall financial health. Macy’s plans to close such stores by 2026, but the urgency to act sooner is evident as digital entities continue to capture their market share.

Pop-up shops within department stores also suffer from poor execution and lack of publicity, failing to engage even loyal customers. Furthermore, the strategy of opening mini-stores, such as Bloomies and Mini Macy’s, is only effective if executed on a large scale, which current management structures seem ill-prepared to support.

Private labels, while successful in some cases, often fall behind national brands in style, design, and market acceptance. Better investor relations management is also crucial, as effective communication with stakeholders is essential during times of change.

Customer service in many department stores does not meet the high standards set by competitors like Nordstrom, which actively engages customers with personalized services. This deficiency in customer service, combined with an overreliance on constant sales promotions, undermines the potential for department stores to effectively attract and retain consumers.

Rebuild Department Stores For Success In A Digital World